Prosperity and Work

Partnership in Power - Draft Final Year Documents
DRAFT - This is a discussion paper only. The content of this document does not necessarily reflect Government or Labour Party policy.

Introduction

Britain is a more prosperous and fairer country than the one Labour inherited in 1997. The tough decisions we have taken - such as Bank of England independence - have provided Britain with a platform of stability with low inflation, low interest rates and record levels of employment. Living standards have never been better. The number in work has never been higher. And the opportunities for work and higher living standards have been widely shared. Britain's economy has become more resilient and is better placed to cope with the current economic and financial turbulence.

We face a period of global economic turbulence caused by the problems in the US housing market. This turbulence will affect every major economy and we are not immune. The world economy is slowing down in the face of two pressures. The first is the global 'credit crunch', where lenders are becoming increasingly risk adverse, which has its origins in the under pricing and under-reporting of risk by parts of the financial sector. The second is the growing commodity price inflationary pressure as the fast growing economies raise their demand. World oil, coal and gas prices are up by 60 per cent, while wheat prices have doubled. Consumers around the world are finding the bills for many of the basics are rising and are feeling their family budgets are being stretched.

It is understandable that people are concerned by these challenges. But under Labour Britain is far better placed than most other countries. Over the last decade, the Labour Government has taken tough decisions to build the country's economic resilience. In the 1990s, our economy was the least stable among the G7. Today, it is amongst the most stable. As a result, we face uncertain times with an economy that is strong. Last year we had the fastest growth rate amongst the G7 major world economies. Inflation here is almost half the level in the US and significantly below the European average.

Since 1997 Labour has always acted to support stability in the economy. Our approach is no different today. We will take the tough decisions that may be needed to keep inflation and interest rates low, and mortgages down. We are determined that Britain will never again return to interest rates at 15 per cent, soaring mortgage costs, three million unemployed and our public services suffering from lack of investment.

The challenge ahead

Labour will build on what we have achieved to extend further opportunities for people to work and continue to help hard working families improve their standard of living. As globalisation intensifies competition, consumers become more demanding and science and technology extend the boundaries of what is possible, businesses and people at work will need to be more adaptable, flexible and innovative. Government's task is to make sure we have the right framework for that to happen and for Britain to succeed.

We will clear away obstacles holding back enterprise and foster employability. People are Britain's main resource. And investing in their education and skills has to continue to be at the core of our economic policy. We will encourage more businesses to grow and to employ more people. We will maintain a competitive business taxation regime to boost enterprise.

We will avoid placing excessive burdens on business and red tape. We will foster competition to spur innovation and build strong links between our business and universities. We will make sure Britain has the communications and transport infrastructure a strong economy needs. We will reward enterprise, talent, creativity and skills. And we will continue to invest in our public services and promote greater fairness to provide robust foundations for a modern Britain with a strong, competitive economy.

The government has already laid out an ambitious programme. But we are determined to go further still. Our key focus as a party and as a government is to develop policies that makes sure Britain continues to prosper in the decade ahead and meets the challenges facing our country. We take seriously the importance of providing everyone in our workforce with the right skills and support, fostering sustainable growth and fostering new green industries that meet the environmental challenges, encouraging a better work-life balance and eradicating child poverty.

Since 1997, Labour in government has demonstrated its commitment to making Britain fairer and that we have the courage and intelligence to make the tough, long-term decisions needed for Britain to be prosperous. In the next few years decisions will need to be taken that will shape what kind of society Britain is for the decades ahead. On education, skills, the environment, energy, science and infrastructure decisions will be made that will determine how prosperous and how fair Britain will be in the 21st century. This document sets out Labour's approach.

Economic stability

We've seen 10 years of economic stability and growth, and the UK economy is stronger than most of our competitors and well placed to respond to global challenges. The UK economy is now the most stable in the G7 and GDP per capita has increased faster than in any other G7 economy over the past decade.

The problems caused by the US housing market and the current global financial turbulence make it more important than ever that we steer a course of stability. However we start in a strong position, ready to respond — unlike in the past under the Tories. That is why the IMF is predicting we will be the joint fastest growing G7 economy next year.

It is why the government is in a position to invest in public services and support families because of the choices it has made. The tough, long-term decisions we have taken — independence for the Bank of England, new fiscal rules and a reduction in debt — have created a strong platform of economic stability. With low and stable inflation, interest rates set by the Monetary Policy Committee to meet the government's symmetric inflation target, and fiscal policy supporting monetary policy over the cycle, the economy has grown continuously for 62 consecutive quarters.

Under Labour we have the longest period of sustained low inflation since the 1960s, the lowest interest rates since the 1960s and the lowest unemployment since the 1970s with more people in work than any time in our history.

Our economic reforms from tougher competition rules to liberalising our energy markets and investing in science have provided business with strong foundations for growth, creating new jobs and opportunities. We will continue to do more to boost productivity and support enterprise and innovation.

Britain is the only major industrial economy to see an increasing share of trade in global services — from 7 per cent a decade ago to 8.25 per cent today. In knowledge intensive services, the UK is second only to the United States and high-tech manufacturing has grown by 30 per cent in the last ten years. Driven by improved productivity, the UK's GDP per head - the average income for every man, woman and child - has gone from the lowest amongst the group of seven leading industrial economies in the early 1990s to being second only to the United States last year.

Labour's priority must be to maintain stability in the face of global economic uncertainty. Despite the slowdown in the world economy, that came out of the US last summer, the British economy grew by 3 per cent last year — the fastest growth of any major economy. The UK economy is forecast to continue to grow — a view supported by the Bank of England, the International Monetary Fund and the Organisation for Economic Co-operation and Development.

Our hard-won stability means that — whereas in previous decades the UK economy suffered more than other economies in the face of global economic downturns — we enter this period of uncertainty, better placed than most other countries. From the 1970s until the early 1990s, the British economy suffered through the failure of successive governments to deliver economic stability. The reforms we have made since 1997 mean we can be confident about the inflation outlook. There will be no return to the 15 per cent interest or high inflation rates of the early 1990s.

This has not happened by chance, but as a result of the choices we have made. Labour prioritises stability because we know how much damage economic instability causes. Instability and high inflation hurts the poor, the pensioner, those on fixed savings and low incomes most because without stability we cannot create jobs. In the global economy investment will increasingly flow to those countries that operate policies of stability and ever more quickly away from those that do not.

Sound public finances lay the foundations not only for economic stability but for sustainable investment in public services. We have set tough fiscal rules to promote stability and we are on track to meet these fiscal rules over the economic cycle. The Golden Rule states that over the economic cycle we will borrow only to invest and not to fund current spending; and the Sustainable Investment Rule states that net debt will be kept at a stable and prudent level over the economic cycle.

When in office the Conservatives failed to meet the Golden Rule. From 1986 to 1997 they failed by a margin of £240 billion and in the cycle from 1977 to 1986 by £140 billion. They borrowed only to fund the immediate pressures of the day with no long-term return to the taxpayer and our vital public services were damaged as a result.

Meeting our fiscal rules has meant that borrowing has averaged just 1.2 per cent of national income compared to the Tory years when it was 3.4 per cent. And debt which — at the start of the economic cycle in 1997 — was 43.3 per cent of GDP had fallen to 36.6 per cent of GDP by the end of 2006-7. Keeping debt low and stable; borrowing only for investment over the economic cycle; has delivered sound public finances in the medium term. This discipline has protected public investment and has allowed fiscal policy to support monetary policy at the right time to sustain economic stability and growth.

Under Labour our fiscal discipline means that over the economic cycle we will borrow only to invest meaning that vital investment — in transport, schools and hospitals — has been protected and increased. Between 1979 and 1997 investment increased by only 20 per cent in cash terms and reached a low of just 0.3 per cent as a share of national income. In stark contrast we can be proud that by 2011, investment will have increased by 500 per cent and will have trebled as a share of national income; meaning that we will have seen the longest sustained expansion of investment in public services since 1945.

Making globalisation work for Britain

The global economy will double in size over the next 25 years with an extra billion skilled jobs available. The latest wave of globalisation is happening with unprecedented speed and intensity as political, economic, social and technological forces combine together. China and India are now major forces in the global economy. Adding many millions of people to the global labour market and creating as many new consumers. As the pace of this latest wave of globalisation intensifies, people and businesses face growing challenges and opportunities. Rather than peddle the illusion that protectionism can provide a lasting shield for people from economic change Labour in government's approach is to equip people and business with the skills, support and framework they need to change, adapt and prosper by taking new opportunities.

Britain is one of the world's most open economies and benefits from it. We have many of the world's leading companies headquartered here. We are a global centre for international finance and commerce. Our openness to inward investment brings global best practice to the British economy and improves performance across the economy.

And it has seen overseas companies like Honda, BMW, Nissan and Toyota rejuvenate Britain's car industry. In total, foreign owned businesses account for around 9 per cent of UK service jobs, 20 per cent of UK production jobs and undertake as much as 40 per cent of business Research and Development.

"New plants built in the UK by emerging Chinese and Indian owned multi-nationals should be encouraged both for its own sake and to emphasise the 2-way relationships that we are trying to build." Reading and District Labour Party

Economic change brings the prospect of greater prosperity, but it can create uncertainty for hardworking families. Labour believes government has the responsibility to help people and their communities respond to change and to take new opportunities.

"Training is vital for people at all ages especially for changing jobs." Bexleyheath and Crayford CLP

This is why we recognise that our future economic success will depend on Britain developing the skills of our people. To do this we need to offer greater opportunities for people to get the right skills and training throughout their careers. We are strengthening the entitlement for adults to training in basic literacy and numeracy with adults having for the first time a legal right to free training. A new adult careers service will offer tailored employment and skills advice that meets the needs of low-skilled and unemployed adults.

The new Commission for Employment and Skills and reformed Sector Skills Councils give employers more say in the content and delivery of skills and employment programmes. Train to Gain — the employer demand-led training programme — is now available in all regions.

"We need to provide more apprenticeships." Wittering Branch, Chichester CLP

"Usdaw agrees that improving skill levels will be a key part of equipping the UK workforce to meet the global economic challenges of the future and improving the skills of our own members is a key priority for Usdaw." Usdaw

By bringing qualifications and skills closer than ever before, business, employees and the state will all benefit. The Skills Pledge — where employers voluntarily sign up and guarantee to provide training to their employers - has proved successful with nearly 550 companies signing up to the pledge, covering over 3 million employees. High quality union learning is responding to the pressures of globalisation by making workers aware of the opportunities available to improve their skills.

We are increasing the education budget for our schools and colleges to £90 billion by 2010- 11. That extra investment will double apprenticeships to 500,000, increase students in higher education by 1.2 million and more than double the amount we spend on each pupil from £2,500 in 1997 to £6,600 by 2010 — continuing to narrow the gap in investment per 20 pupil between state and private schools.

More details on skills and apprenticeships can be found in the Education and Skills policy document.

We will only be able to compete globally if we harness the talents of everyone in our society, without discrimination. One key measure that may have a long term impact tackling barriers to women's achievement in the workplace is a national education standard in schools, to step up cultural change by making girls aware of non-traditional career opportunities. This will ensure all young people receive careers information, advice and guidance free from gender stereotyping. On top of this a capital fund of £12.5 million has been set aside to encourage more women to set up businesses.

Britain in a global economy

Labour knows that no country has ever prospered by protecting itself from global trade. So we will work to ensure Britain continues to attract the best international talent in the world - offering better opportunities, experience and a competitive business environment. We will welcome foreign investment, skilled workers and business because we understand the edge they give us in the UK for innovation and competitiveness.

And we recognise that if we remain open to others, new markets will open up for us — at home and abroad. Labour will continue to invest in working to open up overseas markets, drawing high-value inward investment to UK business and promote both UK private and public sector goods and services abroad. We will develop global business partnerships, trade routes and research relationships that will help us tackle key issues facing the world, like climate change.

As a trading nation our membership of the EU Single Market of 480 million consumers is invaluable. The European Union is vital for the success of business in the UK and any isolation of Britain in Europe would have dire consequences for our economic strength. Our relationship with the rest of Europe accounts for nearly 60 per cent of our trade, 700,000 British companies have trading ties to Europe and 3.5 million jobs depend upon it. Unlike the Tories, Labour will remain signed up to the Social Chapter, maintaining key rights for working people.

But Europe itself must look outward to focus on increasing competitiveness in the global world. It is vital that European member states renew their ten year commitment to prioritise jobs and growth as agreed by the Lisbon agenda in 2000. So Labour will lead in Europe with a focus on high levels of growth and employment focussed on promoting competition, reducing the burden of regulation and encouraging innovation.

More information on Britain's role internationally can be found in the Britain in the World policy document.

Business success

Successful, profitable businesses are one of the foundations of a fair and prosperous Britain. We are committed to working closely with the business community to ensure that the business tax system reflects the needs and concerns of business while at the same time ensuring the tax system is fair, competitive and simple as possible. The reduction in the main rate of Corporation Tax to 28 per cent will deliver the lowest ever rate in the UK and the lowest in the G7, improving competitiveness and encouraging investment.

We are actively fostering a stronger enterprise culture with the creation of a National Enterprise Academy and we want to close the enterprise gender gap by encouraging more women to start and grow their own business.

We will ensure Britain has the necessary infrastructure for business success. So we will reform the planning regime to ensure it does not hold Britain back from facing up to new challenges.

A sustainable and secure energy supply will be an integral part of Britain's infrastructure requirements, so Labour is committed to a diverse balanced energy mix in future years. We will help British companies be world technology leaders with a technology strategy that develops some of the key emerging new technologies. And we will ensure Britain has the technological infrastructure to remain competitive, enabling the UK to be ready to respond to future technological developments, which will create unprecedented challenges for our communications networks over the coming decade.

We want all parts of the UK to share in and contribute to the country's prosperity. Regional Development Agencies (RDAs) will continue to act as strategic leaders in promoting economic growth. We will move forward in closing the gap between the best and worst performing regions to ensure that no one is disadvantaged by where they live.

We will continue to create the right environment for businesses to invest and innovate in the UK, work to make Britain one of the best places in the world for business to research and develop new products. By 2010 we will be spending over £6 billion a year supporting British science and innovation.

The Science and Innovation White Paper sets out the proposal of a Further Education Innovation Fund to help support businesses to develop their potential. With a growing need to build stronger links between business and our colleges and universities we will encourage turning bright ideas in these institutions into successful businesses and enterprises.

"If we train more scientists, then we need to ensure that there are jobs for them when they leave university. There is a real need to give scientists and engineers business skills so that they can become entrepreneurs as well as employees." East End Branch, Dundee East CLP

Research and Development Tax Credits are a major incentive for businesses to grow and create prosperity. Although £600 million is claimed annually by about 6,000 companies the UK lags behind other countries on R&D spend. We need to broaden our understanding of innovation to incorporate all parts of the economy. Research and development not only helps the firms that invest in it, but it can benefit the whole country as new technologies are adapted for different purposes across society and the economy.

13 million people work in small and medium sized businesses. There are over 750,000 more firms than in 1997. In 2008, a record 800,000 businesses will benefit from the local Business Link service and one million businesses a month will benefit from its award winning web portal. The government will also simplify business support and ensure better access to government procurement for small firms. We will make it easier for businesses to plan ahead by improving the Small Firms Loan Guarantee (SFLG) and Enterprise Capital Funds to support small firms.

Small businesses make an important contribution as suppliers to the public sector so we will work to reduce barriers that prevent small businesses from competing for public sector contracts.

Labour is committed to ensuring that the City of London remains the world's leading international financial centre. The financial services sector makes a significant contribution to the UK economy, accounting for 9.4 per cent of GDP in 2006, up from 6.2 per cent in 1997, and supporting over 1 million jobs. The continued prosperity of the sector is vital to the UK's national economic interest.

Some regulation is essential in any progressive, modern economy — new regulations implemented since 1997 have secured critically important improvements to standards for working people and consumers, as well as enabling markets to function properly. Yet in an increasingly competitive global economy, we should avoid burdensome approaches to regulation that can harm our competitiveness and see fewer people able to find work.

Labour has already set an ambitious target to save businesses over £3.5 billion by reducing red tape and transformed how we scrutinise the impact of any new policy proposal on business and other sectors.

As we demand that everyone who can work provides for themselves and their family, so government has a duty to do everything it can not to endanger people's opportunity to work by compromising business success.

Supporting thriving manufacturing

Britain is the sixth largest manufacturing economy in the world today. Manufacturing contributes over £150 billion to our economy, generates more than half of all UK exports, employs around 3 million people and drives three-quarters of all business Research and Development. Manufactured goods make up 50 per cent of UK exports and manufacturing accounts for 14 per cent of GDP, a seventh of our national wealth. Almost twice as many cars were manufactured in the UK last year than at any time since the 1980s — and 70 per cent of all vehicles are exported.

Labour sees manufacturing as central to Britain's future, not just part of its proud past. Manufacturing is changing and Britain is responding to the challenges and opportunities of globalisation. 25 years ago, 25 per cent of developing country exports were manufactured goods. Today it is 80 per cent. And while China may produce half the world's computers, UK 15 exports to China have risen significantly since 2000.

We will work with manufacturers and trade unions to renew our manufacturing strategy for Britain — paying particular attention to the need to seize the opportunities created by hitech manufacturing and the world's transition to a low-carbon economy. An effective renewed strategy will enable Britain to win more high skill, high wage manufacturing jobs in the future.

Labour is committed to helping manufacturers to gear up to compete for public procurement opportunities. Ensuring a healthy and competitive public marketplace in the UK ensures that the government is able to achieve best value for money for the taxpayer in the goods, works and services that it procures, and also that UK industry is well equipped to compete for contract opportunities against overseas suppliers.

Labour will continue to develop effective policies — such as aerospace launch aid and regional assistance - that support our outstanding examples of regional success and encourage new innovation. The government is committed to supporting national assets such as our aerospace industry by ensuring the right environment for research and development of new technologies that will underpin future growth.

A greener economy

Our generation will need to show that we can meet and master the challenge of combining economic growth and environmental stewardship with social justice. If we are to further our action on tackling climate change we will need to embark on a technological transformation to low carbon and energy efficiency. Moving towards a low carbon economy offers Britain the chance to create thousands of new British businesses, hundreds of thousands of new British jobs and a vast new export market in which Britain can be a world leader.

"We clearly need to invest in environmental industries." North Beds. Branch, North East Bedforshire CLP

The need to tackle climate change will create perhaps the most significant new market for investment and manufacturing in the decades ahead.

Globally, the overall added value of the low carbon energy sector could be as high as 3 trillion dollars per year worldwide by 2050, and it could employ more than 25 million people. If Britain maintains its share of this growth there could be over a million people employed in our environmental industries within the next two decades.

Recently the Labour Government has identified a number of opportunities for businesses in the development and manufacture of low-carbon cars as a location for high technology companies which will act as a leader in key areas of science and engineering. We will move towards a greener Britain where a new green economy provides greater prosperity and high quality jobs even as it protects the environment and provides a better quality of life for all.

More information on energy policy can be found in the Creating Sustainable Communities policy document

On the side of hard-working families

A strong economy is vital for hard-working families who have benefited from ten years of growing employment, low inflation and low interest rates. Despite rapid social and economic change we must continue to ensure that all families with children are treated with fairness so that they get the support they need both at home and in the workplace.

We have done a great deal to help increase family incomes. Real household disposable incomes have risen by around 27 per cent in real terms since 1997 with growth for the bottom 20 per cent of households exceeding that for richer households.

The Tories opposed every major measure the government introduced to help low income people. They opposed the introduction of the Minimum Wage. They opposed tax credits. They opposed the New Deal. They opposed the Winter Fuel Payment and pension credits.

We have targeted financial support at working families whilst not making reckless and unaffordable promises that would put economic stability at risk. Our tax reforms mean that the basic rate of income tax was cut to 20p from April 2008 — its lowest level for over 75 years. Labour's tax and benefit package is designed so that the biggest gains go to the poorest 30 per cent of people in our society. These changes mean we have been able to target support through tax credits for families with children, helping meet our child poverty target and extra support for pensioners. Overall, these changes target help at some of the most vulnerable in our society.

The government has always placed great importance on tackling child poverty. But it also wants to go further to help low paid workers without children and pensioners under 65. For pensioners aged 60-64, where incomes tend to be more stable, the government is going to see if households who lose out from the removal of the 10p starting rate of income tax can be helped through the mechanism that already exists to pay the Winter Fuel Allowance.

For other low paid families currently outside the working tax credit system, while the government will examine all practical propositions, the focus is on potential changes to the tax credits system to allow the average losses from the removal of the 10p starting rate of income tax to be offset.

At the same time, the government has asked the Low Pay Commission to report on what changes could be made to the minimum wage regime to support younger workers. We will look at other measures alongside this.

As a result of the government's recent reforms to the tax and benefit system households with children will be on average £200 better off. Households with children in the poorest fifth of the population will be on average £340 better off a year. And 600,000 pensioners will be lifted out of paying tax altogether. We are increasing Child Benefit so that it reaches over £1,000 a year by 2010. For most of the 5.5 million families on both child benefit and the family element of the child tax credit — that is the vast majority of families — the minimum payment which was just £11 in 1997 will rise to £31, a rise from £575 a year to £1,600.

Labour's tax credits make a huge difference to large numbers of British families by topping up their income and providing the security that parents need when bringing up their children.

"The tax credit system has done so much to lift many UK households out of poverty and as such is worthy of support. Working Tax Credit and Child Tax Credit have helped lift hundreds of thousands of children out of poverty and if the Government is going to achieve its tremendous ambition of ending child poverty by 2020 and halving it by 2010 then tax credits will be key to this." Transport Salaried Staffs' Association

Tax credits mean that while we have rates of 40 and 20 per cent for income tax, we have effective tax rates of minus 1 per cent right up to minus 200 per cent through tax credits so that the tax and benefits system pays more to people on low and middle incomes.

As a result of the tax credit system, four in ten families — over 3 million families — now pay no net tax. A family with two children and one full time earner will pay no tax until they earn £21,000. In 1997, the payment for the poorest children stood at £27 a week. Today it is £70. In addition, child benefit has risen too. In 1997, child benefit was £11 a week for the first child. As of next year, it will be £20. For the first time, families have a minimum guaranteed income. After the reforms of this year, a couple with one child and one earner working full time is guaranteed a minimum income of over £15,100 a year.

And it's not just families with children who have benefited. Through the pension credit no pensioner need live on less than £124 a week — far more than can ever be delivered through the income tax system. And all working adults over 25, regardless of whether they have children can call on the support of tax credits to help ensure work pays. The credit today is worth over £1,100 for a single person working full time and earning £10,000 and £2,900 for a full time single earner couple.

The changes we are making are part of the long term plans to lift more people out of poverty and simplify the tax system, meaning tax credits increasing faster than inflation for lower paid workers and families.

We will continue to look for opportunities to improve the experiences of the 6 million families who benefit from tax credits. The system has been reformed so that, for example, when a household breaks up, customers can make claims by telephone to ensure their payments continue. Similarly, this year for the first time before the renewal deadline vulnerable people are proactively contacted offering additional support so they can renew their claims. We need to continue to increase take-up of tax credits so that everybody who is entitled to them receives what they deserve.

Parents get help saving for their children's future with the Child Trust Fund, the most going to the poorest children and children in care. All newborn children receive a government contribution of £250 (£500 for children in lower income families). In 2010 the government will introduce the Saving Gateway for those on lower incomes to promote financial saving by matching the money people save. We will support credit unions to further their good work of socially responsible financial lending. In the next Parliament we will move towards removing the scourge of loan sharks who too often prey on our most deprived communities.

Flexible working

More and more parents are in work, but we have to recognise the extra costs of bringing up children and the extra pressures that work puts on family life. Crucial to this has been our decision to double the amount and period of maternity pay, and triple the length of maternity leave.

More flexible working is also vital. The CBI, parents groups and unions in particular have pointed to the success of Labour's right to request flexible working for parents of young children. The childcare element of the Working Tax Credit provides help with childcare covering up to 80 per cent of childcare costs up to a maximum cost of £300 per week (£175 per week for one child).

So we will ensure people are able to exercise real choice about the hours they work. The introduction of the right to request flexible working was a significant advance. Currently employees with disabled children, or children under the age of six, have had the right to ask for flexible working arrangements. In Britain 14 million employees have worked flexibly within the last 12 months.

"4Children welcomes the Labour Government's measures over the past decade that have improved the lives of children, parents and families, including extending maternity leave allowance; introducing paternity leave; the right to request flexible working for parents of younger children; the introduction of child tax credits ad child trust funds; the uprating of child benefit and the commitment to eradicate child poverty by 2020, which has already seen 600,000 children lifted out of poverty." 4Children

We will now extend it to parents of older children — giving many more families increased options over how they balance work and family life. We must also ensure that more people — including more fathers — are aware of their right to request flexible working.

To support working families, Labour has invested in free nursery places for every three and four year old, nearly 10,000 extended schools providing wrap-around childcare from 8am to 6pm for school age children, and there are now more holiday clubs than ever before. Labour has also created almost 2,500 Sure Start Children's Centres providing childcare, early years education and family support to one million children and their families.

Carers

More and more families are not only looking after children, but are also looking after elderly or disabled family members. To help them balance work with their responsibilities as carers, we are giving all carers the right to request flexible working as well as increasing the Carers' Grant to give carers a break or provide direct services for them. Parents with disabled children now also have the right to request flexible working and we have invested £370 million on respite care and short breaks for severely disabled children and their families.

The government's National Carers taskforce will publish the Carer's Strategy shortly. It is clear that we need to address the continuing challenges faced by the most vulnerable carers in society. The new Social Care Reform Concordat aims to ensure that every individual with a personal budget and those using direct payments has access to advocacy and support according to their particular needs.

There will be a major new 'Exemplar Employer Initiative' under which the government will work with employers to develop programmes such as helping women access quality parttime work, flexible working for women and setting up job share registers. Over 100 organisations have already signed up for the scheme, ranging from high street names to small business to public sector organisations. Further work is needed to tackle some of the more entrenched discriminatory issues faced by women in the workplace. We recognise that the gender pay gap remains a pressing issue. Labour will deliver on our manifesto commitment to create a Single Equalities Act which will simplify, streamline, harmonise and modernise discrimination law.

More details on the challenges ahead to tackle discrimination and unfairness as well as the Equalities Bill can be found in the Crime, Justice, Citizenship and Equalities policy document.

Child poverty

As the Prime Minister has said, child poverty is the scar that demeans Britain. We must redouble our efforts in completing Labour's historic mission to eradicate child poverty by 2020.

When we came to office we had the highest proportion of poor children in Europe. We can be proud that 600,000 children have been lifted out of poverty. This has been achieved by making our economy fairer, helping more people into work and making sure that work pays through the national minimum wage and tax credits. But if we are to lift more people of working age and their families out of poverty we have to go further and help more people find good jobs.

Since 1997-98 there has been strong growth in real household incomes across the income distribution, with growth in incomes for the poorest 20 per cent exceeding growth in incomes in richer households. The national minimum wage has also made a real difference - just ten years ago home workers could be paid as little as 35p an hour, cleaners £1.30 an hour and security guards £2.25 an hour. From October 2008 the national minimum wage will again go up to £5.73, £4.77 for 18-21 year olds and the youth rate for 16-17 year olds will increase to £3.53.

The Budget 2008 announced measures to lift a further 250,000 more children out of poverty, in addition to the 300,000 announced in the pre-Budget report and last year's Budget, making significant further progress towards the target of halving child poverty by 2010. By changing the rules for Housing & Council Tax Benefit the poorest working parents will be as much as £17 a week better off. The child element of the Child Tax Credit for families on low and middle income will also rise by £50 a year.

To eradicate child poverty by 2020 requires a renewed drive. Ending child poverty: everybody's business, published alongside the 2008 Budget, sets out new strategies the government will pilot to increase parental employment and raise incomes. The Budget announced investment of £125m to support these innovative approaches.

Achieving full employment

Full employment has always been a fundamental aim of the Labour Party. Work is the best route out of poverty yet the right to work was too often denied people in the 1980s and early 1990s as the Tories abandoned a generation of working people. Today we have one of the best performing labour markets in the world. We have reached full employment on the old definition. The contrast with the Tory years when unemployment hit three million, could not be starker. But there are still thousands of people who would be better off, happier and healthier if they were in work, which is why we have set ourselves the ambitious goal of an 80 per cent employment rate. We are reforming the system to reach those people still out of work, simplifying benefits, offering clearer rewards for work, targeting resources towards helping the disabled and tackling poverty.

The Tories used incapacity benefit, without any help or support for claimants, to hide the true level of unemployment. The numbers on incapacity benefit trebled as a result; now they are falling. When people first went on incapacity benefit, 80 per cent expected to get back to work. In fact most claimants stayed on the benefit for three or four years and after two years they were more likely to die or reach retirement age than to get back into work.

Instead of cutting the New Deal like the Tories propose, Labour will renew it to meet the challenges of today's labour market. In October 2009 the Flexible New Deal will be introduced for all Job Seekers Allowance claimants. A new Employment and Support Allowance will give claimants support in helping them overcome barriers to work while providing a higher level of security for people who genuinely cannot be expected to work.

The new Allowance will refocus the capability assessment on what a claimant can do rather than what they cannot and gives more money to the poorest and most disabled in society.

"It is imperative that policy focuses on supporting those workers affected by disability to ensure there is adequate retention as the working population rises over the coming decades." ASLEF

We want to improve the health and well-being of people at work to prevent them from becoming too ill to work in the first place. The Black Report into the health of the working age population marks a turning point in preventing ill health at work recognising the benefits of work in terms of physical and mental well-being.

Labour's Pathways to Work programme now covers the whole country offering a package of support specifically designed to meet the needs of people with a health condition or disability — including back-to-work support, financial advice and the innovative Condition Management Programmes to help people manage their health condition or disability. We recognise that those people who are still out of work often have complex needs. We are using the specialist expertise of public, private and voluntary providers to focus on the needs of the individual so that they receive a tailor-made training and support package to help remove barriers to work.

Support will last 12 months - as opposed to the current maximum of 13 weeks - guaranteeing training for each individual and obliging those on benefit to get the skills to help them into meaningful work.

The Flexible New Deal also means that over 25s will now get intensive help from six months on Jobseeker's Allowance rather than 18 months as now. This brings forward help for over- 25s by a year and means that everyone gets help from six months regardless of age.

Lone parents

There are currently 600,000 lone parents on income support. The New Deal for Lone Parents has helped lift the lone parent employment rate, contributing to a 10 percentage point fall in the chance of a child living in a lone parent household growing up in poverty. But the UK is still out of line with the rest of the world in allowing parents to become distanced from the world of work.

Income Support contains no work test and lone parents can remain on benefit until their youngest child turns 16 without any requirement to engage in work search or work related activity. The result is that when a lone parent's youngest child reaches 16, there is a one in three chance that they will go on to make an immediate claim for incapacity benefit.

We have introduced a contract for lone parents which promotes the value of work as the best route to tackle child poverty. We want lone parents to start preparing for the world of work when their child starts to enter primary school. Because we are serious about our commitment to eradicating child poverty, in 2010 new claimant lone parents will be required to seek work once their youngest child is seven, backed up by the local availability of high quality wrap around child care. They will be given help to discover what skills they need to learn or refresh. These new requirements can help to lift 70,000 children out of poverty.

The welfare state was designed to improve life chances. For the small minority who refuse to take up the opportunities we have developed we will continue to review a strict sanctions regime including either cuts in benefits or an option of permanent work for their benefits.

Disabled workers

For those who cannot work due to disability we want to give the maximum amount of support, however this must not mean giving up on people who would work given the opportunity. Nearly half of working age disabled people are in employment but we must extend the opportunity to work for all. Increased rights such as those in the Disability Discrimination Act are transforming opportunities for disabled people to work.

Negotiations have continued to take place between government and the trade unions to provide further protection for disabled workers at Remploy and to ensure that management and trade unions work together constructively to ensure that Remploy modernises successfully. 15 factories previously proposed for closure or merger have been kept open.

Supported factory based employment as well as integration into mainstream employment are vital elements of a policy mix creating and supporting job opportunities and choice for people with disabilities. Other important elements include programmes like Access to Work which supports 24 thousand disabled people into work each year.

"We believe that if the target of getting one million disabled people into work, and dramatically reducing child poverty is to be achieved, more focus needs to be given to services and provision that supports disabled parents to gain and retain work, as well as balancing their parental responsibilities." Royal National Institute for the Blind

The targets set for public procurement are challenging. Procurement rules which allow contracts to be reserved for supported businesses need to be fully exploited. Guidance on reserved contracts for supported factories will be made available to all public authorities so that best use can be made of these provisions. Government is reviewing the programmes which support disabled people into work and help disabled people stay in work as part of the cross-government Independent Living Strategy. All parties are committed to working together to ensure Remploy is set on a sustainable footing for future years.

Disabled people should have the same choice and control over how they live their lives as everyone else. The principle of individual budgets is an issue increasingly popular with disabled people. We should respond positively to this to ensure that more disabled people enjoy the dignity of controlling the support that they need. Such policies need to be implemented carefully to ensure that undue burdens are not placed onto disabled people and that quality of care is maintained.

Better workplaces

Over the past decade Labour in government has restored fairness at work while increasing employment levels and maintaining labour market flexibility. For the first time ever we have a minimum wage and there is a statutory right to paid holidays, a right extended this year from 20 to 28 days for full time workers. In the workplace trade unions are better able to represent people with our statutory recognition procedure, learning representatives and the Union Modernisation Funds. Rights for part-time workers have been extended. Health and safety law has been strengthened with a new corporate manslaughter law and increasing penalties for transgressions.

Between 1980 and 1997 the relative pay of the least skilled declined. Labour's introduction of the national minimum wage has reversed this decline. The wage, set by the Low Pay Commission with members drawn from the social partners and experts, has brought a significant relative improvement in the position of the lowest paid. Nearly one employee in ten has benefited with women being the biggest gainers.

If we are to compete with countries across the world to reach full employment without compromising hard won standards in the UK, we must prioritise keeping the economy growing alongside improving workplaces. So we will seek new ways to improve standards at work without damaging UK competitiveness and seeing fewer people able to find work.

"The CLP believed that there was a need for stronger monitoring and enforcement of the minimum wage in order to protect the most vulnerable groups in society." Gower CLP

We are now building on the achievement of the national minimum wage by significantly strengthening its enforcement. We are determined to make sure everyone gets what they are legally entitled to. Funding for enforcement is being increased and there will be tough new penalties for rogue employers who underpay staff. And we are introducing a fairer method for dealing with national minimum wage arrears, calculated so that workers do not lose out as a result of underpayment. Employers breaking the law will face tougher penalties by increasing the maximum penalty for non-payment to a potentially unlimited fine. The most serious cases of non-compliance will also be tried in a crown court. And we created the Vulnerable Workers Enforcement Forum to bring together unions, business, government agencies and others to work on how best to tackle abuses where they exist.

The construction industry is now protected by strengthened health and safety regulations contributing to Britain's good record on health and safety. UCATT, who have pointed to unlawful activity in the construction industry, has called for the remit of the Gangmasters Licensing Authority to be extended to the construction sector and has raised the issue of direct employment and the issue of the impact of false self employment in the sector.

A key way to improve the lives of vulnerable workers will be to empower them to speak out against abuse. The Labour Government has worked to ensure that potentially vulnerable migrants understand their rights.

But we must now look to do more to ensure all people know how they can take advantage of strengthened rights at work — including enforcement agencies working together more effectively so vulnerable workers know how to seek help. And consumers themselves are increasingly driving up standards, showing they will often choose products and services that go beyond the legal and ethical minimums if they are given information to choose.

We want people to be more aware of their rights at work, but we also want to empower people to improve their experience at work. We want many more workplaces where all the employees' talents flourish, adding value to business and services, and enriching their own working experience. We want a new culture of involvement and engagement in Britain's workplaces. New rules enabling workers to be informed and consulted of significant changes to their company are in place but have not fully taken off as yet — meaning working people and companies lose out. So we must work with trade unions and build on the insights of many of Britain's most successful companies — ensuring involved and engaged staff at every level of an enterprise is a win-win for staff and company alike.

We need also to cultivate a new attitude to health in the workplace. Britain has a good health and safety at work record. But we are ambitious to see further improvement to tackle new health challenges. Dame Carol Black's report 'Working for a Healthier Tomorrow' has shown employers and workers must work together to change the nature of the modern workplace in Britain and ensure the good health of their workforce. Union representatives have a key part to play in delivering on occupational health issues. By working better together employers and employees will deliver better health in the workplace.

Trade unions

Trade unions are an important voice for people at work and in wider society. In recognition of the importance of this role we created the Union Modernisation Fund and strengthened their ability to represent working people. The current stability in industrial relations, with days lost to stoppages at record lows, is something for unions and government to be proud of because it delivers stability for working people. It is based on the legislation we have brought in to give trade unions the right to recognition for collective bargaining, for employees in larger organisations to be informed and consulted on change in the workplace and protection against unfair dismissal for workers taking lawfully organised strike action.

With rapid global economic change it is just as vital that we continue to have strong and modern growing trade unions in our country as a genuine voice fighting against discrimination and abuse. Trade unions are playing an active role in responding to the pressures of globalisation by increasing workers' life chances and strengthening their voice at the workplace through high quality union learning. Already more than 18,000 Union Learning Representatives have been credited with encouraging over 150,000 people back into learning — particularly workers with literacy and numeracy needs. Unionlearn's key annual target is for 250,000 learners to access learning and skills through the union route by 2010.

Hand in hand with fairness, we must ensure our labour market remains flexible — strengthens Britain's economy by allowing it to adapt to change and extend employment opportunities broadly.

Agency work can provide valuable flexibility at work, for both business and working people. It can be a useful route for people trapped on benefit to get back into the world of work. But we must tackle the minority of agencies who abuse their workers. From April this year, all agency workers have the right to withdraw from services provided by their agency, such as accommodation or transport without suffering any detriment. The Labour Government is also legislating to introduce the potential for unlimited fines for agencies who breach these regulations and to increase the investigative powers of the Agency Inspectorate. The government will continue to work to seek an agreement in Europe on an agency workers directive that offers appropriate protections while maintaining the flexibility of the UK labour market which has helped deliver record employment in recent years.

Dignity and security in retirement

The immediate challenge for Labour in 1997 was lifting pensioners out of poverty who had suffered under the Tory years. 2.7 million pensioners were living in poverty, many living on as little as £69 a week. The challenge now is to provide for today's 5 pensioners, while encouraging and rewarding saving for all people to ensure greater well-being in later life.

Over the last ten years pensioners have done well out of our growing economy. More than £11 billion will be spent on pensioners in 2008-09 compared with policies in 1997, with half the extra spending going to the poorest third of pensioners. Pensioners are no more likely to be in poverty than the rest of the population. Pensioner households will on average be around £1,500 per year, or £29 per week, better off due to the government's personal tax and benefit changes. At the same time, we have lifted over two million of the poorest pensioners out of absolute poverty and a million out of relative poverty. A further 600,000 pensioners are now exempt from paying income tax due to the government raising the higher personal allowance for those over 65.

The Pension Credit continues to provide security in retirement and guarantees £124 per week for single pensioners in 2008-09. Labour has introduced free television licences for 20 the over 75s, free eye tests and now free local off-peak nationwide bus travel in England for the over 60s. This year the over 60s will receive £250 and the over 80s will benefit from £400 in Winter Fuel Payments to pay their heating bills. 9 million pensioner households will benefit from this additional payment.

The Warm Front programme has helped 1.4 million vulnerable households, including the poorest pensioners, to heat their homes to an adequate standard by providing energy efficiency measures. Labour believes further action is now needed to help vulnerable groups with rising energy prices. Energy companies currently spend around £50 million a year on social tariffs; the government would like that figure to rise to £150 million. Acting with these companies and Ofgem the government will draw up a plan to achieve this and will legislate as necessary.

More than ever future policies will need to reflect the specific needs of a growing pensioner population by providing the necessary support and training to stay in work; by offering more positive activities for those in retirement; and making it easier for older people to use their life experience to play a full role in society.

In response to campaigns on behalf of their members from Community, Amicus and others, we have pledged to increase support for members of defined benefit occupational pension schemes which wound up under funded. In December 2007 the government announced a proposal to extend the Financial Assistance Scheme (FAS). All 125,000 victims will be topped up to a level equivalent to 90 per cent of their expected core pensions. We have also announced that payments from the FAS will not be taxed at a higher rate.

Going forward, we have established the Pension Protection Fund to increase security for people in defined benefit schemes. But there are major challenges ahead. There will be 50 per cent more pensioners by 2050.

Around 7 million people are currently not saving enough for retirement. Only half of those aged over 35 are saving for a pension, and only a sixth of 20-24 year olds. The problem of under-saving is particularly serious for those on moderate to low earners, with only 40 per cent of those earning £5,000 to £35,000 a year saving towards a pension compared to three-quarters of those earning 5 over £35,000.

Today, only 30 per cent of women reaching the state pension age are entitled to a full basic state pension, compared to 85 per cent of men. The result is that women reaching state pension age typically only receive around £77 a week in state pension, before that is added to by Pension Credit.

We need to make the pension system fairer, simpler and affordable for the long term in order to make an enormous difference to the retirement prospects of everyone in society, especially women. For example, by changing the basic state pension so that when women and men are bringing up children or caring for relatives, that contribution gets recognition in the pensions system. The result of this change will be that by 2025, 90 per cent of both women and men will retire with a full basic state pension. Almost half a million extra women currently aged between 45 and 55 will retire with a full basic state pension. Around a million more people, 90 per cent women, will build up entitlement to the State Second Pension.

Rewarding saving

We need to ensure that the right framework is in place to encourage companies to continue with good pensions for their former employees. The Pensions Bill implements a radical new pensions settlement — the most momentous change in pensions since the introduction of the state pension a century ago. It tackles the problem of under-saving by ensuring that all eligible workers are automatically enrolled into a qualifying workplace pension, unless they choose to opt out. For the first time employers will be required to make a minimum contribution to employees' pensions. More than 1 million workers who are already saving will have their employer contributions increased to at least 3 per cent.

"We have to encourage more people to make provision for later life especially regarding pensions." North East Scotland CLP's Policy Forum

As a result of these changes, between six and nine million people will be newly saving in a workplace pension or saving more as a result, transforming the savings culture in the UK. Overall annual pension contributions will go up to around £10 billion by 2015. That means that people who had perhaps not known enough about pensions saving to get involved in their company pension scheme, will be automatically enrolled and then only opt out if they choose to.

We will also establish a proper compliance and enforcement regime, ensuring a light touch for good employers while cracking down on those who fail to comply. Employers providing good quality defined benefit schemes will be supported.

We will re-link the basic state pension to average earnings. Our objective is to do this in 2012 subject to affordability and the fiscal position, but in any event, by the end of the next Parliament at the latest.

For the next generation of pensioners in 2050, this will mean a pension worth twice as much than if it had just been linked to prices. In the long term, for this major increase in the basic state pension to be affordable we must gradually increase the state pension age by one year in each decade beginning in 2024, reaching 68 in the 2040s.

Towards a fourth term

Providing opportunity for all remains as relevant to Labour's future as it has done in the past. If we are to win a fourth term we will need to embrace all of the opportunities presented by the global economy to ensure that there is security and prosperity not just for some but for everyone.

Labour will continue to take the tough, long term decisions to maintain economic stability and steer Britain through the turbulent times presented by the world economic slowdown. And we will continue to build on that stability to offer everyone opportunities that were once only open to some.

We want to create a system in which every young person can prepare themselves through education and training to make a success of their life - either though an apprenticeship, a college, school or university place or a job with training. We will provide greater opportunities for people to get the right skills and training throughout their careers because we know that the global economy will demand it.

We will support British business and working people, creating jobs by fostering competitiveness and by taking advantage of the new opportunities in green technologies as we move to a low carbon economy. We will support world-leading industries so that we create not just jobs, but new skilled well paying jobs millions will need.

And we will reform the welfare system to reach those people still out of work, simplifying benefits, offering clearer rewards for work, targeting resources towards helping the most disabled and tackling poverty, including our goal of eradicating child poverty once and for all.

Helping hard working families by improving their standard of living will remain our focus as we encourage more people to take advantage of flexible working and ensuring that financial support is targeted at the most vulnerable in society. Our continuing commitment to maintain economic stability will guarantee no return to the days of 3 million unemployed and 15 per cent interest rates.

As we develop our policies for the next General Election Labour's vision will be guided by our goal to create a society where there is no ceiling on how high people can rise.