Ed Balls has got it right - and wrong. And so have the unions

Or: What Labour needs to do to win the next election
This article is published in Liberal Conspiracy

Ed Balls thought he was being ballsy when he spoke of his proposed public sector pay freeze at the Fabian conference on Saturday. And he was. He was being realistic, and he thought people would see his honesty as bravery. There’s no point in promising something we can’t deliver, he thought and – with no alternative clearly worked out – the most sensible option is to stay put, hold on tight to the status quo.

But not quite. The Tories are going too hard, too fast, he keeps saying. So he thinks the cuts should take place at a slower rate (this is right) and should be better thought out (right too).

The trouble is this is only half of a plan. What’s starkly obvious is what’s missing. What is Labour’s alternative? Balls came out with his announcement as if it’s the boldest thing he’s said in months. See this Newsnight clip. It’s only common sense, nothing more, and only a short term solution. It’s not good enough. It’s not the answer the nation wants and needs.

His error was two-fold. First, in his communication – telling the world as if he came up with something original and as if it’s the solution. Second, for not being more imaginative. People want a long term solution. We need to be radical.

And what of the unions? They have reacted angrily to his proposal and are threatening to withdraw their support – these are the unions who got Ed Miliband elected. The unions are right to protest. They represent the workers who are severely badly hit in this recession and especially as a result of public sector cuts and bad management of them.

But they are right for another reason they may not even be aware of. This reason is innovation. A pay freeze may protect job numbers, but it angers and disincentivises the work force. The result? A stagnant, unproductive public sector. What it much better, much braver and much more radical is to cut or reorganise the areas that are inefficient and provide an alternative. The Coalition has attempted the first half of this, but not the second. Their attempts at restoring the economy have failed, their cuts are reckless and they certainly don’t care about equality.

The key for Labour, the winning formula, is to provide a credible alternative to the Coalition’s cuts while tackling growing in equality (which has been exacerbated by the Coalition) and stimulating growth.
Innovation is the magic word.
People need hope – we have lost that. We must grow and develop – innovation will do this. And we need leadership to guide us.

To transform the country and win back support, Labour needs to:
1. redistribute wealth, radically
2. stimulate growth in all sectors
3. reorganise and improve efficiency of state

How do we do this?
1. Take money off very wealthy and redistribute. Under this government, the rich are getting richer and the poor are getting poorer. Increase inheritance tax for amounts over a certain threshold, tax wealthy corporations more, enforce pay transparency and stricter regulation of wealthy landlords.

2. Provide opportunities, encourage innovation and growth. Identify young leaders in all sectors, give them start-up grants from the state, support and guidance to develop businesses and charities in their communities. Encourage young people to be entrepreneurs. Set up apprenticeships, and ensure there are pathways into jobs at the end of them. Capitalise on the innovative nature of the voluntary sector. The Big Society is a myth, so let’s support the voluntary sector more and we will see returns. Tackle inequality. Contrary to what the Tories think, inequality is not the price paid for growth (they failed on both counts). Provide universal childcare with money raised from increased taxes (see 1) and enforce a culture of flexible working.

3. Reorganise the public sector and resources. Good example is health and social care. Health reforms are needed, but not so that profit takes precedence over patient benefit (the risk and reality of the Coalition’s reforms). Overhaul social care system. Tackle housing issue: many people are without homes, many others are crowded into homes that are too small. At the same time, private properties sit empty. Tax landlords more (see 1) and use money to build more Council homes and increase efficiency and fairness of the system.