Ed Miliband has invited Lib Dems to make suggestions for his 2015 manifesto. In doing so, he is treading a well-worn path: from Tony Blair, who borrowed Alan Beith’s proposal for an independent Bank of England and a chunk of our policy on constitutional reform, to David Cameron, who borrowed a lot of our policy on civil liberties.
Imitation is a form of flattery, but it isn’t always sincere. I believe Ed Miliband spoke from the heart in his campaign for the Labour leadership, when he said that he would like to make us extinct. I’ve no doubt he would like cooperation on policy to become a halfway house to defection, but that doesn’t mean we should refuse to offer him public advice.
Labour may be intending to steal our votes and create schisms within the party, but it’s no different from David Cameron’s invitation to Lib Dems to “lend their vote to the Conservatives” a couple of years ago.
If they do borrow Lib Dem policies in the way Tony Blair did, a future Labour may still end up just as illiberal as they did before, but their borrowing our policies would still be a good thing. It would increase our influence on the political consensus, it would strengthen our negotiating position within the coalition, and it would make a Lib Dem/Labour coalition more feasible after the 2015 election.
So, despite being a supporter of Nick Clegg and of the coalition, I’m going to suggest a few ideas:
Economy and deficit
By leaving a huge deficit to their successors, Labour have seriously damaged their reputation for economic competence. Their first priority should be to try to restore it.
Labour should change from its strategy of saying nothing and scapegoating the coalition for the pain caused by Labour overspending. They should offer to form a cross-party committee to explore areas of consensus for deficit reduction. For this to work, there must be a strong ethos of confidentiality in the discussions, so he should choose representatives who have a track record of avoiding tribalism. It should be low-key, so that it isn’t wrecked by political opportunism. The objective would be to find policies that, without consensus, would be politically impossible.
Making the Bank of England independent has been a success, but it didn’t prevent a huge structural deficit. The reason for this overspending is nothing knew. To a lesser extent, something similar happened in the recession of the nineties, when the temporary windfall of tax revenue caused by a housing bubble disappeared.
Any government, faced with large temporary tax revenues, finds it extremely hard to resist the temptation to spend it, even though that will bequeath the country with a large structural deficit. They will do so because the overspending isn’t immediately obvious, and so, politically, they can get away with it.
So the next government should instruct the Office for Budget Responsibility (OBR) to produce regular estimates of the underlying structural deficit, by estimating what part of government revenue is caused by a bubble, and so is temporary. The OBR should also highlight other liabilities which do not normally fall under public debt, such as PFI and public sector pension liabilities.
One of the most regressive taxes in the UK is the council tax. This has risen dramatically over the last decade.
In one sense, reducing government grants and increasing local taxes is a good idea, because it frees local councils from central government control. But a progressive council will be very reluctant to increase such a regressive tax.
So the government should undertake a major reworking of council tax, introducing more bands at the higher level, and changing the burden of tax, so that the poor pay a smaller proportion.
I’ll be suggesting a few other ideas in a second article tomorrow morning. But, until then, over to you guys for your policy suggestions.