Paul Nowak, TUC general secretary, opening address to economics conference

Thanks Kate.

And thanks everybody for coming along today.

Real pleasure to welcome you to Congress House, home of the British trade union movement.

Now, some of you may have noticed that unions are back in the news.

Perhaps not a surprise.

It’s one of life’s truisms that unions only make the front pages for three reasons:

1 - We've fallen out with the Labour party

2 - We haven't fallen out with the Labour Party and therefore Keir Starmer, Jeremy Corbyn, Ed Miliband, insert name of Labour leader, is in the pockets of unions

· And of course, the third story that attracts attention is unions on strike.

Yesterday, around about half a million union members did exactly that.

And we know many more have already taken action, have voted to take action, are about to take action or have balloted for action.

Now, those battles are important. But they are the not only thing that unions can and must do to win for their members.

Eighty years ago, the great T&G leader Ernest Bevin asked:

“Is the strike the only way to fight? Cannot we fight by discussion as well as starvation? Cannot we fight by intelligence?”

And that quote I think helps set the scene for todays’ event and the conversations we will be having.

All focussed on seeking to answer a very simple question:

How do we build an economy that rewards work and workers – not wealth?

And our argument is equally straightforward.

We need bold, radical, progressive change.

After the war, policymakers grasped the need for root-and-branch reform.

For an economy managed in the interests not of big business, finance capital and the rich.

But of working people – the real wealth creators.

And we stand at a similarly momentous crossroads now:

The pandemic, the cost-of-living crisis, the climate emergency – all demand we do things differently.

That we ditch a model of free-market capitalism that has enriched a tiny elite.

And embrace a new approach:

Not just more interventionist.

Not just fairer, greener and more equal.

But pro-worker and pro-union.

Levelling the playing field for labour.

Both here in the UK – and right across the world.

Because our current economic system is failing working people.

The respected economist Ha-Joon Chang has warned that “economics has become like Catholic theology in medieval Europe. It has become the language of the rulers”.

And it’s clear their interests are crushing ours.

We’re in the midst of the longest pay squeeze since the Napoleonic Wars.

Two decades of stagnant real wages.

Keyworkers now £180 a month worse off than a year ago.

In modern Britain, of the 15 million people living in poverty, more than half are in work. For them work is not a route out of poverty, it has trapped them in poverty.

A devastating indictment of economic failure.

But it’s also clear that our current model is failing on its own terms too.

• · Inflation has surged to a 40-year high.
• · Investment and growth are the lowest in the G7.
• · And the IMF says the UK will be the only major economy to shrink this year.

A recession from which recovery will be painfully slow.

Now it’s not exactly news that we face a profound economic crisis.

But the rot set in long before the pandemic.

Long before the damage unleashed by Brexit.

And long before the financial crisis of 2008.

If we’d pursued a different course over the past four decades, our economy would now be twice the size it is.

Instead, over that period, the benefits have accrued to the few not the many.

Wealth has nearly trebled.

The rich have become exponentially richer.

And the global economy has become much more unstable, lurching from crisis to crisis.

And that underlines why we need for a completely new way of thinking about economics – and doing economics.

And I want to make three point to kick start our conversation.

The first one is this: we have to challenge the prevailing economic assumptions head on.

In a sense, Liz Truss was right in her diagnosis about the Treasury orthodoxy hindering growth.

But her prescription – free-market capitalism breaking bad – was completely wrong.

And it very nearly killed the patient.

From the TUC’s perspective, the current orthodoxies are a big part of the problem.

A Bank of England that, like other central banks, preaches wage restraint.

And then allows profits, dividends and asset prices to soar.

And CEO pay and City bonuses to follow suit.

And a Treasury that sees cuts, not growth, as the route to sound public finances.

We cannot – and must not – repeat the austerity mistake that caused so much damage after 2010.

The Treasury doom loop:

Slash spending. Destroy growth and tax revenues. Undermine the public finances.

And then repeat, repeat, repeat.

Sending us into a downward spiral which damages the economy, hits our living standards and wrecks our public services.

And Britain is still paying the price.

With pitiful growth and investment.

Millions of families struggling to keep their heads above water.

And our public services crumbling.

Everyone in this room will have their own experience.

Trying to get a GP appointment. Waiting for an ambulance. Applying for a passport. Taking a train. Disruption caused not by industrial action but by a lack of investment and outrageous profit taking at the expense of delivering services.

Yet even now, there are those who still talk about the risks of a fiscal black hole and the importance of adhering to a self-imposed fiscal rule about a falling debt-to-GDP ratio.

A complete fiction.

Because the only black hole we should be talking about is our economy.

The doom-mongers have got it the wrong way round.

It’s GDP we should be worried about, not debt.

As Keynes famously put it: “Look after unemployment, and the budget will look after itself”.

So we now have a choice.

Do we cut our way to a prolonged slump?

Or invest our way to way to higher growth, more and better jobs and rising living standards?

Do we want a doom loop or a boom loop?

And this takes me onto my second point: we must put demand at the heart of a plan for growth.

There is nothing inevitable about long-term decline – if, that is, we rebuild demand:

By giving workers more confidence.

More of the spoils of growth.

And more spending power.

Remember, the wealthy speculate.

Workers spend.

And that’s exactly what our economy needs – now and in the future.

And let’s not fall for the lie that we can’t give workers more.

We are not on the cusp of a wage-price spiral.

Many firms can afford to raise wages without rising prices.

And government can do its bit to put money in workers’ pockets.

With a decent pay rise for public sector workers who got us through the pandemic.

A real living wage of £15 an hour.

And inflation-proof rises in benefits and pensions.

But in the long term, we need radical, fundamental, structural reform.

That means a New Deal for workers, including action on abuses like fire and rehire and zero hours.

It means investment in our public services, funded by fair taxes the rich can’t dodge.

And it means a green industrial strategy.

To decarbonise our country.

Nurture the growth sectors of tomorrow. Secure energy intensive jobs in the here and now.

And address our dismal productivity performance.

And as we build that new economy, I want unions to be consulted, engaged and involved.

Because my third and final point is this: we need a worker-centric economy.

So that working people don’t just get fair pay – they get a fair say too.

Across the world – from the United States to Australia, from Spain to New Zealand – governments are levelling the playing field for workers and their unions.

But in the UK, we’ve got a government that is going in the opposite direction.

• · Attacking our already limited rights.
• · Undermining a fundamental British liberty, our right to strike.
• · And further eroding working people’s bargaining power.

This is a government that’s made a political choice to hold down the pay of public sector workers – not just this year, but year after year.

That even now, is refusing to negotiate seriously with trade unions.

That is determined to make it harder for workers to stand up for fair pay.

Instead of bashing organised labour, it’s time to empower it.

• · By promoting collective bargaining.
• · Delivering industry-wide fair pay agreements.
• · And seeing us as part of the solution, not part of the problem.

When the IMF and OECD are urging governments to boost workers’ bargaining power;

When even the editorial pages of the FT and Economist urge radical change;

When so many workers feel they have no alternative but to strike for decency and dignity;

It’s about time trade unions got a fair crack of the whip.

• · Building a worker-centric economy.
• · Putting demand at the heart of growth.
• · Challenging economic orthodoxy.

These must be our objectives as we emerge from the pandemic, grapple with the cost-of-living crisis, and equip ourselves for rapid industrial, technological and environmental change.

As always, what happens in the future depends on the choices we make now.

And it’s clear we need action at international, as well as domestic, level.

“Workers of the world unite” was never glib rhetoric, but a recognition that labour’s economic interest is global.

As we emerge from the pandemic, IMF director Kristalina Georgieva has rightly urged a “new Bretton Woods mindset”.

Back then, policymakers recognised we needed a new international regime to prevent the disasters of the inter-war years, and allow countries to aim policy at full employment.

That was the backdrop to the astonishingly successful policies of the Attlee government, and the broader post-war consensus.

Between 1945 and 1979, we delivered rising wages, higher living standards and more equality.

Between 1979 and now, many of these gains were reversed as economies were run for the wealthy.

And at this historical tipping point, we must get the pendulum swinging the other way.

By making a clear political choice for economic change.

It’s time to go for growth.

Time to boost wages and demand.

And time to put workers before wealth.