The 'Independent' manifesto for national recovery: How to get the country back to work

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BRITAIN cannot wait until the Chancellor's Autumn Statement of 12 November for the action that the Independent suggests is urgently needed for recovery.

For two years Labour has argued that the recession is far deeper and our long-term industrial capacity at far greater risk than ministers have admitted. And we have urged that we seek to build a consensus around a national recovery programme to lift the economy out of recession.

The challenge is not only to bring the economy out of recession, but also to achieve long-term growth that will bring new employment opportunities. To do that, the Government needs a clear long-term strategy with an industrial policy that attacks the trade deficit accompanied by a policy for management of the exchange rate and long-term curbing of inflation.

Britain needs an interest rate cut. Industry as well as home owners will benefit. But interest-rate cuts in themselves, as the US experience has shown, may be insufficient to ensure the recovery of confidence that the economy needs. The revival of consumer and business confidence depends upon the acceptance by the Government of its responsibilities to reduce unemployment, to encourage investment and to lift the housing market. That is why Labour's national recovery programme has always insisted on employment, industry, infrastructure and construction measures. And while the Government has undermined efforts at European co-operation - preferring to blame others than work for co-operation - Labour has insisted that greater international co-ordination is essential.

Employment measures cannot be delayed any longer if the fear of unemployment, which has become the biggest barrier to the return of confidence, is to be reduced. Some 200,000 jobs are at risk by Christmas. This will push unemployment towards three million. Male unemployment is running at a higher rate than at any time since the Thirties. According to The Henley Centre for Forecasting, six million are not spending because they are afraid of unemployment. It is the fear of unemployment - and insecurity about debt - that is threatening to paralyse the entire economy. An employment programme is therefore not just in the interests of the unemployed, but also in the interests of the economy as a whole.

This must be supported by immediate measures to get the housing market moving again. Labour has proposed the phased release of the capital receipts held by local authorities from council house sales. We have also proposed, as the Independent suggests, that building societies and housing authorities and associations should work together to lease or buy unsold properties - and rent them.

The export-led recovery that Britain is seeking demands a new industrial policy for Britain. It is the Government's failure to introduce an industry policy - even after Mr Heseltine's promises - that is a major dividing line between Labour and the Tories. Now manufacturers, exporters, small business and regional trade associations are demanding industrial policy measures. Incentives for investment are essential. Small business needs special help. A massive reform of export services is required.

Unless these measures are implemented, any recovery will suck in imports and Britain will face a dramatically worsening balance of payments deficit.

Finally, with Britain in the presidency of the EC, it is becoming clear that there can be no sustainable recovery without a co-ordinated expansion across Europe. Britain must take the initiative with employment, industry and investment proposals for the European summit on 10 December.

The crisis over devaluation destroyed the Government's credibility for economic management. The crisis over the coal industry destroyed its pretension that Britain does not need a policy for energy or industry. There is now widespread public acceptance of the need for change. Those worst placed to implement it are those who have consistently rejected it. The Independent's initiative has made it clear that the paralysing combination of drift and dogma that is the Conservative Party now must be confronted by the force of informed public opinion.

The author is shadow Chancellor.