Tag Archives: EU

The truth about Lib Dems and an EU referendum

Since it was announced that there will be a debate in the House of Commons on whether to have an in/out referendum on the EU on 27th October many commentators have been suggesting that such a poll was a Lib Dem manifesto commitment. As our MPs are likely to vote against a referendum, they say, this will mean once again we’ve lied to the electorate, broken our pledges and so on. There is only one slight problem with this; it’s completely untrue.

The Lib Dem manifesto states clearly that;

“The European Union has evolved signifi cantly since the last public vote
on membership over thirty years ago. Liberal Democrats therefore remain
committed to an in/out referendum the next time a British government signs
up for fundamental change in the relationship between the UK and the EU.”

In other words, the commitment is only to hold a referendum if, and when, a new treaty is signed by Britain in relation to the European Union that makes a significant change to the powers and responsibilities that it has. And far from breaking this pledge, we’ve enshrined it in law. The European Union Bill, currently progressing through parliament, will ensure that any shift of power from the British government to the EU will first have to be be mandated by a popular referendum.

But not only does this episode show how badly the Lib Dem’s position on Europe have been portrayed by the media, but it also points a wider problem that we face as a party. People, even those actively involved in politics or the media do not understand our manifesto or what we stand for, not just on the EU, but on a whole spread of issues. Understandably, this makes accusations of breaking manifesto pledges and forgetting the electorate all the easier for our political opponents to make, and for the public to believe. To change it we need to build up once again the sense of what Lib Dems stand for and believe in. We’ve made a good start by putting more distance between us and the Tories ideologically, but we must continue, or we’ll simply run into these kind of obstacles again and again.


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.