Economic success could be social failure unless it raises earnings and living standards for ordinary people, says Alan Milburn

Former Labour Cabinet minister says Sir John Major is right to be shocked that 'elitism' is so entrenched today

The economic recovery will be a “failure” unless it raises earnings and living standards for ordinary people, the Government’s adviser on child poverty and social mobility warned today.

Alan Milburn said Labour’s pledge to freeze energy prices and the Coalition’s proposal to create more competition in the industry would not solve the fundamental problem in the economy – that wages have stagnated. “The cost of living crisis is as much a problem of falling earnings as it is of rising prices,” he said.

The former Labour Cabinet minister told the Resolution Foundation think tank: “The problem is that the answers the political parties are reaching for – whether caps on gas bills or more competition in the energy market – can, at best, provide only short-term respite. What is lacking – across the political spectrum - is a long-term answer about how the gap between earnings and prices can be closed.”

Mr Milburn added: “The old assumption of a tide of economic growth causing all boats to rise may no longer hold. Economic growth has become decoupled from earnings growth. That has profound consequences for our prospects of Britain becoming more mobile and more fair. A recovery that sees national wealth rise might be an economic success but if earnings fall it will be a social failure.”

He said Sir John Major, the former Prime Minister, was right to be shocked that “elitism” is so entrenched today and that the “upper echelons of Britain are dominated by a social elite.” But Mr Milburn argued that Sir John was wrong to blame this on the previous Labour Government because “deep-rooted inequality and flatlining mobility have been decades in the making.”

Mr Milburn concluded: “A far bigger national effort will be needed if progress is to be made on reducing poverty and improving mobility. Economic recovery is not enough. Britain needs a social recovery too. That will require leadership at every level. Government cannot do it alone. But it does have a special role to play in setting the framework for policy and mobilising the country to action. Despite the tough climate for doing so I believe that progress can – and must – be made. If Britain is to avoid being a country where all too often birth determines fate we have to do far more to create a level playing field of opportunity. That has to become core business for our nation.”