Progressives share some important perspectives in common. First, our firm belief that we cannot leave people simply to sink or swim against the tide of change facing societies across the world; a fair society must give to each person the chance to succeed in life. Second, our view that through our collective endeavours we can change the future for the better.
In the UK during the past 10 years we have enjoyed our longest and most sustained period of economic growth in over 200 years. Such growth has enabled us to both invest in our public realm and, critically, begin to turn back the tide of gross income inequality and rising poverty that was created during the 1980s. Levels of relative child poverty have fallen, even though incomes have risen sharply. The incomes of the poorest in Britain are now rising faster than those at the top.
The challenge for New Labour as we look to the decade ahead is the challenge faced by any progressive political party that has been in office for 10 years or more: how to renew in government; and how to face the future with confidence, a sense of purpose, energy, vigour and, of course, humility. An ability to reflect on what we have got right, and be honest enough to say, ‘we should have done that differently’. In politics, the latter is never easy. But it is essential none the less.
There are three issues in particular that are placing pressures on our society and welfare system. First, the welcome fact that we are all living longer. Today, there are four people of working age for every person of retirement age in Britain. By 2050 there will only be two. These demographic changes will create seismic pressures on our economic and welfare systems.
The second challenge we face is the inevitable shift, as the global economy develops with increasing pace and openness, for a greater share of the nation’s wealth to be generated through intellectual capital and services. Twenty years ago, manufacturing accounted for 33 per cent of GDP in the UK. Today, that share has fallen to 16 per cent, while the service economy generates nearly three-quarters of GDP.
This creates a new challenge for our welfare system of how to engender a new sense of confidence in those who fear being left behind by this changing economy. This can’t be done simply by putting people onto long-term social security benefits, and hoping that things will somehow get better. The right response is to extend more widely the opportunity to work in these new industries of the future. Everyone who can work should be helped to work. That is the mission now of modern, active, labour-market policies.
The third and related challenge is how we deal with low aspiration and entrenched poverty. In the UK, we have one of the highest lone parent rates in Europe. Seven hundred thousand lone parents rely on state benefits as their primary source of income. The intergenerational cycle of dependency and poverty that is created by the breakdown of family, and the all too often cavalier attitude of absent fathers towards their children, is a price paid across society – but most importantly by the children themselves.
It is because we must raise our game to deal with these new challenges that I recently commissioned a major review of our welfare state. It proposed a renewed contract of rights and responsibilities, and more support for lone parents to get back into work in exchange for a new set of responsibilities to engage in the system. With this must come a serious overhaul of the way in which we support people to get back into work. Modern welfare systems must lift their sights and ambitions. No longer should we be content to just get people into a job, we must help them get a career. We must support the acquisition of the hard and soft skills that are so vital to prospering in a rapidly changing service-based economy.
Of course, there is a debate across the centre left about how we should respond to these challenges. There should be, and we always enjoy a good debate. There are different models for reform, and we all come from different starting points. But progressives should have the confidence to go forward both united in our common goals as well as bound together in the ties of friendship and respect