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Showing credibility on economy is our biggest challenge

I’m in Liverpool this week for Labour’s annual conference. We meet against a grim backdrop. The world economy is on the brink of crisis once again. At home, unemployment is rising, families are struggling to pay their bills, and people are fearful about the future as services and support are cut.

Labour will use our party conference to show people we have the right values and policies to get Britain through difficult times and build a better, fairer future.

Our biggest challenge is to demonstrate we are credible on the economy.

The Tories say Labour caused the deficit because we spent too much money in Government. The truth is the economic crisis wasn’t made in Britain. It was a global crisis caused by the banks.

Labour wasn’t tough enough in regulating the banks, although it’s worth remembering the Tories wanted even less regulation at the time.

However, when the banks collapsed, Labour took the necessary action – at home and abroad – to stop a recession turning into a depression, and to get Britain’s economy going again. When we left government, growth was rising and unemployment and borrowing were falling.

All this has now changed. Britain has the lowest growth of any European country except Portugal.

One in 5 young people are out of work and women’s unemployment is at its highest for 23 years. With lower tax revenues and higher benefit bills, Government borrowing is rising, pushing the deficit in the wrong direction.

The Conservatives refuse to admit their economic policy isn’t working. But criticising the Government isn’t enough on its own. People want to know – what would Labour do instead?

First, Labour would provide strong leadership on the world economy. It is in Britain’s national interest to get European countries to sort out their problems as more than half our exports are to the EU, so what happens in these economies affects us too.

Second, Labour would take the tough action necessary to reduce the deficit at the right pace and in the right way.

Whereas the Tories want to remove the entire deficit in four years, Labour would halve it. But we need to be clear this would mean cuts – for example, Labour would have cut the police budget by 12 per cent instead of 20 per cent under the Conservatives.

Labour would also make changes to the benefits system, so there are stronger incentives to work. But for welfare to really work, there needs to be jobs. So the third thing Labour would do differently is have a proper plan for growth.

We need a tax on bankers’ bonuses to get young people and the long-term unemployed back to work, including by boosting skills which is a real issue in Leicester.

We need to champion small and medium-sized businesses, who will drive future growth.

This means tougher action on bank lending, which remains a serious problem for many businesses in my constituency.

Economic credibility is vital for any party that wants to earn the public’s trust.

That is the real task for Labour this week and in the months to come.