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Economy and Jobs

Part of the debate – in the House of Commons at 4:21 pm on 20th January 2020.

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Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer 4:21 pm, 20th January 2020

That is just income tax. It is interesting that the lowest earners pay 40% of their income in tax while the highest earners pay 34%. We know who is paying more in comparison with what they earn.

There is nothing in this Queen’s Speech that will address the grotesque levels of inequality. Actually, the reverse is true because the Government are now launching another assault on trade union rights and, in particular, the human right of the ability to withdraw one’s labour. The Chancellor has also rejected future dynamic alignment with EU employment rights and standards, and there is a real fear—let us express it now—that this prefaces the fulfilment of ambitions of Conservative Members to undermine workers’ rights and conditions. Maybe that is what some of their campaigning for Brexit was all about. Wage levels are low, in part because this Government have produced a productivity crisis. Over the past decade, productivity grew at its slowest level in 60 years. A German or French worker produces in four days what a British worker produces in five, not because the UK worker is any less industrious; far from it. It is because investment in the UK has been broadly weaker than in the rest of the G7 countries, especially since 2016, and investment is currently stagnating.

This has been exacerbated by the lack of investment not just in capital but in human capital—in training and skills. In his interview at the weekend in the Financial Times, the Chancellor highlighted the role of further education colleges, and I agree with him. He talked about the role they could play in raising productivity by promoting lifelong learning and skills training. As someone who benefited from further education while I was on the shop floor, I fully agree, but the reality is that this Government have brought FE to its knees, with the IFS suggesting that at least £1.16 billion is needed just to reverse the cuts that the Government have imposed on further education. We have seen a decade of a Government denying opportunities to the very people whose skills have been desperately needed, not just to fire up our economy but also to lift their families of poverty.

Alongside skills, a vibrant economy needs to invest in the future if we are to compete in the fourth industrial revolution, but on investment in research and development, the UK is now 11th in the EU. We await the Government’s detailed proposals on investment in R and D, and if they are of a scale we will support them, but it will take a lot to make up for the lost decade in this field. A lack of investment in infrastructure and R&D has resulted in productivity going backwards in many regions of the UK. The 2017 Kerslake report identified a £40 billion productivity gap in the three northern regions compared with the south, which has produced some of the worst regional inequality in all of Europe.