Despite Positive GDP Figures, This Complacent Chancellor Should Not Be Relaxing

For most people, life is getting harder as the cost of living rises. So while today's economic growth figures show a small rise in Britain's output - something which is both welcome and long-overdue - the sobering truth is that there has been no recovery yet for people on middle and low incomes.

For most people, life is getting harder as the cost of living rises. So while today's economic growth figures show a small rise in Britain's output - something which is both welcome and long-overdue - the sobering truth is that there has been no recovery yet for people on middle and low incomes.

George Osborne has wasted his first three years in 11 Downing Street and as a result the economy has flatlined, prices have risen much faster than wages and borrowing is billions higher than planned. By any measure - including the tests the Chancellor set for himself - this Government has failed.

Since the Coalition's damaging Spending Review in the autumn of 2010, the UK economy has grown by just 1.7%. This compares to forecasts at the time that the economy would have grown by 6.9% by now. And Britain has experienced its slowest recovery for more than a century. Since that fateful Spending Review, the US economy has grown nearly three times faster than ours. Our economy remains 3.3% below its pre-crisis peak, while the US economy is now 3% above its pre-crisis peak.

At the same time, long-term unemployment has reached its highest level since 1996, one in every five people aged 16 to 24 are out of work and the government is expected to borrow £245billion more than it planned.

Simply to make up all the ground we have lost under David Cameron and George Osborne we would need growth of 5.3% a year, or 1.3% each quarter, over the next two years.

So the complacent Chancellor should not be relaxing as he sets off for his summer holiday. Under his stewardship of the economy, family incomes are facing the longest squeeze since the 1870s and the gradual uptick in growth appears to be mainly helping people at the top of society.

Indeed, the massive rise in financial sector bonuses to £4billion in April, because the City deferred payouts until the millionaires' tax cut kicked in, may go some way towards explain why total consumption has been higher in this quarter.

Yet the bonus binge has been of no help to most ordinary working people. Since the 2010 general election, average pay has fallen by £1,350 a year in real terms, while the Tory-led coalition has handed millionaires an average tax cut of £100,000 a year.

So there is still a huge amount of work for the Chancellor to do because, as the IMF has recently warned, the recovery remains "slow and fragile".

It is not too late for the Chancellor to act and recognise more is needed. He should be bringing forward long-term infrastructure projects to create jobs and growth and secure the stronger recovery he choked off three years ago.

The time has come to focus on the real economic needs of the many, not just the wealthiest few. That's why Ed Balls, the Shadow Chancellor, and former US Treasury Secretary Larry Summers have this week launched a Commission on Inclusive Prosperity.

The Commission will look at the radical reforms that developed economies need to create more good jobs, especially for young people, as well as to raise education and skill levels, reform finance and support innovation and entrepreneurship.

In Britain, Labour has set out how it would boost prosperity across the whole of society. We would help families on middle and low incomes with a 10p starting rate of tax, paid for by a mansion tax. We also would introduce a compulsory jobs guarantee for young people, paid for by a bank bonus tax, to help get the benefits bill down.

And we would bring forward infrastructure investment now. If the £10billion boost recommended by the IMF was invested in housing we could build hundreds of thousands of affordable homes and support major job creation.

We want to see a sustainable recovery for the many, rather than just the few at the top.

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