Tag Archives: Conservatives

What Lib Dems should be saying on the economy

It has always been the temptation for Lib Dems, especially when in opposition, to ignore the big issues of the day in favour of time-worn favourites; the environment, electoral reform and civil liberties. To a certain extent that has had to change now we’re in government, but the perception remains. Too often it seems to the public that the Tories are running the economy by themselves, while we tinker with whatever scraps they throw us. If we want to become a serious party of government we must change this image and show that we are having a major influence on the government’s economic policy. Now offers the perfect time to do so, with new ideas needed to maintain austerity and yet promote growth at the same time. Lib Dems can provide those ideas and turn ourselves into a party with real economic credibility, but only if we take the right decisions.

Firstly, we must continue to support the government’s deficit reduction target, simply because to do otherwise would be both political and economic suicide. But now the first round of cuts have done their job, with confidence restored in the markets and the foundations for future fiscal discipline in place, the focus must return to trying to force some growth out of the economy. To do so Lib Dems should advocate that between £7-12bn is invested back into key drivers of economic growth; enough that it would provide a real boost to production, but not enough to endanger the deficit reduction programme. However, this money should not be wasted on huge infrastructure projects that have dubious economic gains, cost a great deal of money and rarely benefit anyone but big business. Instead we should aim for more liberal schemes that provide advantages to all and revolve around key growth industries. For instance, a big investment in broadband availability, especially in rural areas, could open up a whole new market to thousands of SMEs, allow consumers to more readily access a whole raft of online companies and generally take the shackles off an industry that shows phenomenal potential for the future. The same goes for renewable energy, which is taking off properly for the first time in many parts of Britain, but still requires large amount of capital and infrastructure investment to succeed, which the government could help to provide. In fact the list of growing sectors that could really benefit from a relatively small amount of government support goes on and on, and besides any of these focused projects would almost certainly drive growth faster than the old-fashioned ideas of building spectacular bridges or motorways. We would be crazy not to push for such simple, but effective idea.

Lib Dems also need to keep pressing for increased lending to businesses, especially SMEs. The current measures, implemented by Project Merlin, are clearly not working well enough and the banks are still reluctant to lend to anything other than a totally safe bet. The time seems to have come, therefore, for the government to provide loans direct to companies. There are a number of ways this could be achieved, but the two most likely would be the Bank of England using a complicated technique to increase lending to businesses instead of quantitative easing, or through the founding of some form of government bank or agency to dispense loans. Either method would undoubtedly give a great boast to ambitious start-ups and growing companies who want to expand their business, and in so doing drive some growth into the economy. Over the long-term it would even help reduce the deficit, as the initial outlay would be more than payed back through interest repayments. All in all it would a very sensible, business-friendly way to grow the economy, and one that Lib Dems should support.

As a party we must also enure that the financial crisis is dealt with in concert by countries around the world, in the best Lib Dem traditions of internationalism. In particular we must ensure that Britain does not draw away from the negotiations on the future of the Eurozone. We may not be part of the Euro, but that doesn’t mean we won’t be affected if it collapses, and we should make sure that we do all we can to support our European neighbours and guide them down the correct path. Similarly, we should make absolutely sure that the eurosceptic Conservatives do not weaken our relationship with the EU. Now, more than any other time we should value and protect the billions of pounds generated by our trade with Europe that would not be possible, or at least, not as profitable, without the benefits of the European Union. Lib Dems in government should also work to sign more trade deals with countries around the world to create as much overseas business as possible for British companies, not less as many Tories might want. And finally, we must ensure that populist protectionism does not, as seen over issues such as Bombardier, does not damage the principles of free trade that add so much to the British economy, both at home and abroad. In short, these are all traditional Lib Dem aims and ideas, but also ones that will help the economy in these desperate times, and so we must fight to protect them.

In the same light, Lib Dems must attempt to reverse the government’s policies on immigration that are doing a great deal of damage to Britain’s chances of experiencing economic growth in the near future.It is now widely accepted that the long term economic advantages from migration more than outweigh the short term social costs from increased use of health and education services. When the economy is struggling to grow at all it  seems crazy therefore for the government to carry on its draconian cap on skilled migrants from outside the EU, especially when companies are complaining that there is a shortage of just these kinds of professionals.Furthermore, we need to show that migrations can be an economic success to convince a sceptical public  that our social policies are correct. Once again, Lib Dems must champion something that Tories fear to for the greater economic good of the country.

Lib Dems must also push for reform of the tax system. In particular, we should call on the government to accelerate plans to increase the income tax threshold, and to bring it up to the level of £12,500, the amount earned by someone working full-time on the minimum wage.  This would not only be fairer, but drive consumer spending (and therefore growth) organically, from the bottom up, as opposed to through the unsustainable expenditure of the wealthy. The big question of course is how to pay for it. In truth there are a number of ways. Lib Dems have been pushing for some time for a Mansion Tax, or something similar, to be introduced, which would more than cover the cost, as would some form of the Financial Transactions Tax (variously known as an FTT, Tobin Tax or Robin Hood Tax) proposed by the European Commission this week, as long as it was implemented across all of the major economies, including America. At the same time we must keep the pressure on George Osborne to keep the 50p tax rate. Not only does such a stance play well politically, but it is also the right thing to do morally and economically. However, the boldest reform that we should lobby for is the abolition of the personal allowance. Why, you might ask? Because, to take one example, because of the personal allowance in absolute terms the Lib Dem policy on raising the income tax threshold (and thereby the personal allowance) would benefit people on the highest rate substantially more than those on the lowest. It would be far more progressive, and simpler, to reduce tax rates, but make people pay tax on all of their income. With these initiatives we could make a big difference to the economy, through relatively minor changes to the tax system.

Finally, we need to make sure that the banking system is truly reformed and not just tweaked, as no doubt George Osborne would prefer. The Vicker’s reforms are a start and we must make sure that they are implemented as soon as possible, especially with British banks’ exposure to Greek and European debt, but we also need to go further, particularly on increasing the number of banks and the competition between them. Until that happens we will always have banks that are “too big to fail” and have to be bailed out by taxpayers. Personally, I would also favour a full split between investment and retail banking, but many think that Vickers goes far enough in proposing a firewall between the two. Whichever way, with the Tories reluctant we must make sure that these reforms are passed into law, to ensure the safety of our financial system in the years to come.

Not all of these ideas would become law due to Conservative opposition, but if the Lib Dems were to take these ideas, promote them, build them into a kind of mid-term economic manifesto and get at least some of them passed into law we can be sure of two things. Firstly, that they would help put some growth in the economy and probably set us on the road to a full recovery, and secondly that our economic credibility as a party would be, if not quite complete, then certainly a lot more secure. If we decided not to, on the other hand, we would probably be doomed electorally as puppets of the Tories and growth would be damaged, if it existed at all. With such rewards on offer, and such risks to avoid, it would be foolish not take the chance.


Did Norfolk County Council break its constitution?

If you’re wondering what I’m referring to, you can read the full story of what happened yesterday on my last blog. Basically, the Lib Dems walked out of full council at County Hall because of the disgraceful conduct of the meeting, and the way they were not allowed to reply to a closure motion on their own motion or ask points of order. However, Norfolk County Council appears to believe that this was all constitutional and that nothing was wrong with the meeting. Having looked through the constitution I have to disagree. As far as I can see yesterday’s meeting was a serious breach of the constitution. I lay out why below.

  • In yesterday’s meeting the Chair refused to take points of order from Labour, Lib Dem and Green councillors. However, Appendix 9 12.12 of the NCC constitution states;

“A member may raise a point of order at any time. The chairman will hear them immediately.”

  • Paul Morse, the Lib Dem group leader and proposer of the original motion was only allowed to get a few sentences into his introduction before he was interrupted by the closure motion, but Appendix 9 12.4 is clear that;

“Speeches must be directed to the question under discussion or to a personal explanation or point of order. No speech may exceed 5 minutes without the consent of the chairman”

  • Furthermore, the closure motion was introduced before Cllr. Morse had finished his speech, despite the fact that Appendix 9 12.11 a) says that;

“A member may move, without comment, the following motions at the end of a speech of another member”

  • Once the closure motion was put Cllr. Morse was not even allowed a right of reply, even though Appendix 9 12.11 b) states that;

“If a motion to proceed to next business is seconded and the chairman thinks the item has been sufficiently discussed, he or she will give the mover of the original motion a right of reply and then put the procedural motion to the vote.”

That’s four points where I believe that the Norfolk County Council constitution was breached. How can the decisions the council took be legitimate when they were so profoundly against the constitution? They can’t and that’s why I hope as many people as possible will make formal objections to NCC, asking for the decision to be struck down and the motion heard again.  This is no way to run a county, and the people of Norfolk must hold their representatives to account.

Why are Lib Dems in government?

This may seem like a question that’s been posed, and answered many times before, but unfortunately it still hasn’t got through to the vast majority of the British public. Too many people hold the view espoused by Kerry McCarthy, the Labour MP for Bristol East, who tweeted this morning;

“Petulant response from Lib Dems to my criticism of Toynbee article just proves how much they’re in denial about their role as enablers.”

In other words, the whole Lib Dem party are weak, getting nothing done and propping up the Torie. This is, of course, largely nonsense, even if we have at times been too quiet in promoting what we believe in. At the moment Labour’s constant attacks, such as this one, are having a massive effect on voter’s attitudes, so the whole party needs to be spreading the word about why we are government in and what we are achieving.

That has to start with explaining the position of the three parties immediately after the election. A coalition with Labour would never have worked, quite simply because neither they nor the Lib Dems had enough seats, and a rainbow coalition would have always been a disaster. Lib Dems were left with two choices then; to carry on pottering away in opposition, allowing a a minority Tory government to push through their right-wing agenda, or to grab the chance, enter government and prove to the British public that they can make a difference in public office. It is also worth remembering that Britain was experiencing a period of instability, both political and financial. A tottering minority government could have only made this worse, while the coalition provided a strong majority in the Commons and reassured markets and analysts.

While there was no real question as to whether the Lib Dems should enter into coalition with the Conservatives, it has become rather popular among Labour supporters to criticise government policy, saying it is Tory dominated, and that the Lib Dems have had no impact. Once again, such statements are wildly incorrect. I’m not going to go through everything we’ve achieved in government, but William Summer’s excellent site http://www.whatthehellhavethelibdemsdone.com/ does if you’re interested. You only have to look at the Pupil Premium, the raising of the income tax threshold and the moves to an elected House of Lords to see what impact we are making.

Of course, it’s not all been as good as this. Lib Dems have had to support policies that we don’t agree with (most obviously tuition fee rises) and compromised on some we do. But even here we are making government policy more liberal. We ensured that the earnings threshold for student loans was raised along with tuition fees. When we became concerned about the Health and Social Care Bill, it was modified so it was at least more acceptable. The list of occasions were we have taken a Conservative policy we don’t agree with, compromised, worked together and made it better goes on and on. One only has to look at the ranks of Tories chewing at the bit to scrap the 50p tax rate, or Cameron’s desired response to the riots to see why the Lib Dems are doing such a good job reining in the right-wing tendencies of Conservative cabinet ministers and backbenchers.

And it’s not just Lib Dems saying so. For once I was forced to agree with Nadine Dorries when she said at Prime Minister’s Questions last week,

“Mr Speaker, the Liberal Democrats make up 8.7% of this parliament, and yet they seem to be influencing our free school policy, health, many issues, immigration and abortion. Does the Prime Minister think it’s about time he told the Deputy Prime Minister who is the boss”

Which is exactly why the Liberal Democrats must be in government and must continue to influence government policy. It won’t all be rosy, but we have an unprecedented chance to change the future of this country and change people’s lives for the better. That is why we should not be ashamed about being in power, but go and explain to the electorate the why we are and what we are doing. We should admit that we haven’t done everything right, but we should also say what our reasons are, and how we are going to make up for them. If we don’t do that we will be heading for certain defeat in 2015. We should be proud of what we’ve done, and not be disconcerted by what we have not.

Banking reforms must go ahead

Yesterday marked the publication of the final report and recommendations from the Independent Commission on Banking led by Sir John Vickers. Buried within it are some eminently sensible ideas. Banks would be required to ring-fence their retail divisions to protect them from shocks to investment markets for instance, and hold greater quantities of capital as a reserve.  Some new ideas have also been put forward to encourage competition in the financial services, and so reduce Britain’s reliance on a few, large banks that are “too large to fail”. Despite perhaps being too conservative in places, such as dragging the reforms out to 2019 and not completely splitting up retail and investment banks, overall the ideas are sound and properly thought through.

It was something of a surprise then to see people lining up to take chunks out of the proposals. It was obvious that the banks themselves would be opposed, simply because their short-term profit may be damaged, but to see so many Conservative MPs falling over themselves to destroy them was quite a shock. Their excuse? That such reforms would reduce the banks’ profits and damage the economic recovery and growth. To a certain extent this is true. Of course any changes will cost the organisations that have to implement them, including banks, and that may to a small degree harm growth. However, to delay, or even stop altogether, these reforms would be a grave mistake. We can not sacrifice long-term security for short-term profits. There will be another banking crisis at some point in the future, and when it comes we must be better prepared than we were in 2007/8. The idea that we can afford to wait until this recession is over because we will not face another financial crash for a while is also deeply mistaken. You only have to look at the last few weeks and months to see that threats abound for our economy, particularly from American and European debt, to which our banks are heavily exposed.

Which is why the Vicker’s reforms must be implemented as soon as practicable. But that will not happen if it is left to the Tories to decide, and their backbenchers to ruin. This is one of the best chances for the Lib Dems  in government to make a lasting difference to Britain, and one that would surely be recognised by voters. In particular, Vince Cable must continue to apply both private and public pressure on the Chancellor to see out these changes. However, Labour too has a part to play. Yesterday Ed Balls admitted that his government had not done enough to regulate the banks. This is his chance to put that failure right and compensate for the other mistakes of the Brown administration. This is too important an issue to be turned into a political football; instead all parties must work together to make sure that the next generation of banks are less prone to failure and that the economy is better protected, unless we want to suffer another catastrophic banking collapse.