10 Lib Dems call for emergency recovery programme

From today’s Guardian:

We write to express broad support for the Compass Plan B proposals reported in the Observer (30 October). We are Liberal Democrat members who have campaigned hard for decades in national and local elections. We have also engaged in our party’s policymaking. For both reasons, we take seriously the policies on which we fought the last general election, in particular the belief that the Conservatives’ economic proposals would have dire consequences.

In May 2010, our party signed up, through the coalition agreement, to a series of policies against which it had recently campaigned. But out of responsibility to the country, Liberal Democrats must now tell the Conservatives that they will no longer support policies which are not working. That is necessary even if one is only concerned about deficit reduction. As the Compass Plan B states, it already “looks as if the government will miss its deficit target reduction and, as the economy slows, the deficit could increase”.

As an alternative, there must be a series of radical measures including an emergency recovery programme, a fairer tax system and social investment. Plan B proposes these. Liberal Democrats who still believe in the manifesto on which they last fought a general election should support them.
Cllr Ron Beadle 2010 parliamentary candidate for Newcastle North, Ruth Bright 2005 parliamentary candidate for Hampshire East; London borough of Southwark councillor 1994-2002, Prof Richard Grayson2005 & 2010 parliamentary candidate for Hemel Hempstead; vice-chair, Liberal Democrat federal policy committee 2008-10; director of policy, 1999-2004, Prof Stephen Haseler, Simon Hebditch, Dr Jo Ingold, Linda Jack Member, Liberal Democrat federal policy committee; parliamentary candidate 2010 for Bedfordshire Mid and 2005 for Luton North, Cllr Stephen Knight Leader, Liberal Democrat group, London borough of Richmond, No 2 on Liberal Democrat List for 2012 London assembly elections, Margaret Phelps Parliamentary candidate 2010 for Witham and 2005 for Cynon Valley, Nick Rijke 2001 parliamentary candidate for St Albans

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  • Sorry Dave, A set of unadjusted GDP figures does not a summer make. I also think it is unfair to describe the authors of this letter as ‘a bunch of of self-important wannabe-slebs’. I do not wholeheartedly support the Compass rec ipe for turning around the Economy but there is a lot of sense in it. It is generally accepted that we need to rebalance the economy, we need to improve our manufacturing sector and rely less on Financial Services, nothing I have seen from this present Government goes far enough in achieving this. I think we need to improve our Green infrastructure, insulating the Housing stock, investing in green energy improving our Rail network (not just HS2) etc. I also believe we to have fairer Taxation system (hooray for a land value Tax), and it obviously good to put money into the pockets of the less well off. I like the authors believe this was all in our election manifesto, we said the Tory cuts would be disaster.


  • Tony Dawson 1st Nov '11 - 12:43pm

    That is a little on the rude side, Dave. Some might say a ‘touch caustic’.

    There is a clear debate to be had here and, frankly, anyone who boasts any certainty on the optimal rate of deficit reduction and the best way to achieve it is a charlatan or a deity who has dropped into earth ‘under cover’ on His day off. The present economic ‘plan’ is (give or take the odd bit of Tory additional waste such as Academies and elected Polizei Kommissars) not really much dissimilar from Alistair Darling’s ‘skeleton’.

    Now whether it is optimal behaviour for Lib Dems to even contemplate ripping each other to pieces on such an issue, in public, on a web site such as this, I shall leave others to decide.

  • Let’s be clear – there are no easy solutions to this crisis which has been caused by over-borrowing. The banks had their faults through their CDOs etc yet it was the governments and people that gave them the money through lack of regulation and deciding to party `like it’s 1999 forever`.

    Another point of interest is that the `downsides` of the plan B are never spoken about. Labour made it unfashionable to think that there could ever be a `downside` to anything and if there was the best thing was to do was spend your way out of it. Wrong! Would the extra borrowing required be made up from the growth?

    The choice isn’t between something terrible and something great – it’s about terrible tasting jam today or better tasting jam tomorrow.

    Let’s take the points one by one:

    `An immediate halt to cuts, to protect jobs in the public sector` – nice idea – how are you going to pay for it?

    `A new round of quantitative easing to finance a “Green New Deal” to create thousands of new jobs.` Could be doable although the quantitative easing would be difficult for inflation and with the markets.

    `Benefit increases to put money into the pockets of those on lower and middle incomes and give a boost to spending.`

    This is really the social liberal wing of the Party trying to desperately reclaim territory from the centrists. They don’t understand that Labour’s big loss in 2010 was part of a flight from Labour of those who ARE on low and middle incomes but are locked out of the benefit system or are too proud to claim from it. Labour has a huge `£16,000` problem which is the amount of savings you can’t go over to claim benefits if you are a single person. What the `100` seem to be saying is that it’s better to give to those who, for whatever reason, are reliant on the state, rather than go out to work.

    Sums it up for me. Give an SLFer an inch and their instincts are to prioritise those that don’t want to work rather than try and succeed. Now if they’d said increase the tax threshold from 10k to 11k or bring it in earlier they REALLY WOULD be talking. But they don’t because in their heart of hearts I wonder if they believe in it.

    `A financial transaction tax to raise funds from the City to pay for investment in transport, energy and house building.` I’ve heard analysis that this is both doable and from others that this is simply tokenistic or requires a global agreement so that we don’t lose out on our financial services. Now if you’d said cut VAT on building work for new homes I’d be listening.

    The real worry with this prescription is that it doesn’t face up to the change in attitudes required. It’s old-style thinking by `old heads` with old assumptions.

    The choice is clear – either embrace Scandinavian style Social Democracy with all the inherent `downsides` such as higher tax rates, eye-watering benefit reforms, loss of financial civil liberties as well as creating a strong savings culture or push us further than the baby steps we seem to be making as regards adopting a German Social Market economy.

    The SLFers seem to want it both ways – they have to choose!

  • Plan B proposed by Compass doesn’t seem very fair to people working hard on low incomes in the private or not-for-profit sector who don’t receive benefits or aren’t in public sector jobs. I’m pleased that the policy we are implementing – raising the threshold for income tax – will benefit people on low and middle incomes. I am glad that the limited money that we do have available is targeted broadly in this way to help the most people.

  • “I’m pleased that the policy we are implementing – raising the threshold for income tax – will benefit people on low and middle incomes. I am glad that the limited money that we do have available is targeted broadly in this way to help the most people.”

    Or, to put it another way, you are glad that the bulk of the money is going to those on middle incomes, rather than being targeted at the low-paid.

  • That compass thing is garbage – “temporarily reverse all cuts”? Wow way to give councils some stability there, or accept that not all cuts are evil.

    Our 2010 manifesto proposed massive “kickstart” investment projects at the same time as deficit control, which the Conservatives in government are now belatedly adopting. While I have a lot of time for these signatories individually, I can’t really understand the point being made here with such broad brush-strokes.

  • @Maria M I’m sure the Compass plan isn’t fair to people working on low incomes over the last few years it has become increasingly clear that isn’t a priority for Labour.

  • At last, some honourable Lib Dems who are honest enough to admit that the Tory led Coalition has cut too far and too fast. Also, that public sector money and private sector money are not discrete currencies with banknotes issued in different colours. 0.5% is an improvement, but only an estimate and the figures could be revised downwards. But even this small amount of growth will be flushed away by the government’s fiscal policies. Clutch at straws by all means but don’t use the 0.5% growth figures (which actually contain a 0.6% fall in construction output) to discredit the writers of this thread. They will, I am sure, be proved to be absolutely right in the end. Heed their warning.

  • @Dave Page

    Nah, if it was a party political broadcast I’d have advocated at the very least a cut in VAT. Surely you’d agree with that? It was after all the Lib Dems who were warning everyone about the Tories “VAT Bombshell” at the last general election. (Now doesn’t that seem a long time ago)

  • Stuart Mitchell 1st Nov '11 - 6:55pm

    “After good news from higher-than-expected growth figures today”

    So George Osborne says, but most economists I’ve read today have made it clear that Q3’s 05% growth was fully expected for the sole reason that the Q2 figures were so dire. For the government to claim credit for today’s figures is a bit like a violent husband offering his wife a consoling arm after a beating. There is zero optimism in economic circles about Q4 and 2012, and our growth figures over the past year have been abysmal compared with many of our competitors.

    Maria: Government investment need not just be in the public sector (see Nick Clegg’s announcement of yesterday). Also remember that it is of no benefit whatsoever to private sector workers if great swathes of the population are no longer able to buy their goods or services because they’ve lost their jobs. The private and public sectors complement each other – don’t be taken in by the Tories’ usual divide-and-rule garbage.

  • @Stuart Mitchell My comment applauded a move that would reward people in both public and private sectors (ie anyone who pays income tax).

  • paul barker 1st Nov '11 - 7:15pm

    I am unclear what course the 10 suggest we take. If they believe we can persuade our Conservative partners to adopt The Compass Plan then publishing a letter in The Guardian seems a really stupid way to do it. Otherwise its simply going along with The current Labour strategy of trying to get The Coalition partners fighting each other.

    On the importance of The 10, only 4 seem to be 2010 PPCs, out of 626 nationally.

  • Daniel Henry 1st Nov '11 - 7:15pm

    I think that a lot of the comments here have been are unfair. Compass doesn’t echo Labour policy, it tries to change Labour policy and its membership is currently open to both Lib Dems and Greens. I’ve always considered Compass to have a bit more in common with us than Labour, especially on issues like PR.

    In regard to this “Plan B”, it did seem to echo a lot from our manifesto. For example, we were planning to invest heavily in the first year to secure growth and recovery and then cut where we could, adjusting our plan based on the health of the economy. After all, reduced tax receipts and increased benefit claimants is hardly the best method of deficit reduction.

    Not sure I agree with the plan in it’s entirety (some of it seemed a little unrealistic) but I consider it to be closer to our ideal that Osbourne’s current approach.

  • As has been mentioned, the 0.5% growth isn’t much to write home about, particularly when the purchasing managers’ index dropped to an alarming 48 and when people like the chief economist at Deutsche Bank is predicting that the UK will indeed be back in recession before very long.

    I don’t know if the Plan B really is the best way ahead, but I’m pretty sure that Osborne’s Plan A is certainly not, and that our much prized AAA rating will go west once the government sees spending outstripping the tax take, and more importantly, once the markets have seen it and start to react in a fairly predictable manner.

    We’re on a knife edge, and simply carrying on with the current strategy, now it’s been proven to deliver low or minimal growth, seems completely illogical to me.

  • Tony Dawson 1st Nov '11 - 9:26pm

    Well, there has been a .smidgeon rudeness, has there not, boys and girls. All I would say is that the economy is of full of third order differential equations where the constants are not known. The sheer variability of confidence alone is enough to cripple any plan A,B or Z.

    The problem, as I see it, with the growth obsessives, is that they generally appear to treat the UK economy as though it is in isolation. All the growth in the world does you no good if you continue to live off the back of other nations’ efforts. At some point, someone realises that they have to pull the plug on the ever-expanding line of credit they’ve given you on the vain hope that you’d start producing something worth buying off you. Think Greek. Then start multiplying.

  • Daniel Henry 1st Nov '11 - 11:25pm

    @ George
    The letter’s wording was as follows: ” We write to express broad support for the Compass Plan B proposalsreported in the Observer
     (30 October).”

    Doesn’t the Observer article also cite Compass as the source of the report?

  • “Liberal Democrats who still believe in the manifesto on which they last fought a general election should support them.”

    Our manifesto set out nothing even close to the Compass Plan B which says reverse all the cuts (and the government is cutting £81bn when I think Labour proposed cutting £82bn), and magically create several billion pounds for a spending programme.

    The latter is so bonkers that I am compelled to agree with Tom Papworth!

    It also proposes cancelling all the PFI debt. Fine – but then what happens the next time you want a private company to undertake government work. Will there price include a hefty markup against the risk that a future Government randomly decides to chuck the entirity of contract law out the window. I bet it will.

  • Andrew Suffield 2nd Nov '11 - 6:31am

    Ah yes, this was the “100 leading economists” story. When this first surfaced, somebody very rapidly pointed out that it was more like “100 rich people call for the government to change policy in a way that would make them all quite a lot richer without really doing anything for people on low incomes”.

    I found that to be pretty convincing.

  • Liberal Neil 2nd Nov '11 - 10:13am

    @Tom (the first one, not Tom Papworth) I actually agree with the gist of your post up until the point it becomes a rant against ‘SLFers’. The letter was signed by ten individuals, not the SLF. I am a supporter of the SLF and count myself as being on ‘the social liberal wing’ of the party, but I strongly disagree with this ‘Plan B’ as I indicated above.

    I particularly agree with you that the idea of increasing benefits to people on middle incomes is wrong.

    And by the way, the policy of increasing the income tax threshold has been consistently supported by social liberal members of the Federal Policy Committee, including during the period when the party leadership were against it, before then coming round to the idea in the run up to writing the manifesto last time round.

  • Perhaps Simon Shaw’s unanimity defines a group of economic liberals. Certainly George Osborne and Danny will be grateful for your loyalty. I’m with the ‘wannabe-slebs’

  • I’ll reserve judgement about Compass’s Plan B but it is surely crystal-clear that Plan A is not working and the government is thrashing madly about trying to find groups to blame for that- it’s the unions, it’s the EU, it’s planners, and (most frequently) it’s the last government.

    I think the Liberal Democrats who signed this letter deserve credit for wishing to have a debate about economic strategy, rather than peddling the TINA line, and I’m surprised that some members of this forum wish to close down the discussion – doesn’t sound very “liberal” to me.

  • we don’t really know whether ‘Plan A’ is working or not, because we don’t know what position we would be in if the Government had taken a different course.

    If we follow that line of reasoning then can the government ever be wrong? We know the plan A isn’t working because it had a set of goals on unemployment, growth and borrowing all of which have been missed by a mile. The balance of probabilities is surely that those who called for a slower, more responsible and equitable programme of cuts last year (incl the lib dems up till May) were right. Even the IMF are calling on countries with a stable debt position to consider moderating their austerity packages. We need to steer a course between the Scylla of a cuts induced death spiral and the Charybdis of loss of market confidence in our ability to service our debt. At the moment we seem perilously close to death spiral and when the storms from Europe start to hit things can only get worse. Just shouting down anyone who disagrees with Osborne may have worked last year but it’s time to start seriously considering alternatives.

  • I know we are a broad church, but I am really struggling with the mindset of people who think the best way to get changes to government and or Lib Dem policy is to write letters to the Observer in support of what is basically Labour party policy. Sometimes people’s egos appear to be rather too large. Even if I thought they were right, this would not be a good way to behave. As it is, I was not a supporter of Osborne’s Plan A, but am now partially converted, on the grounds that our economy does appear to be in slightly better shape than some of our neighbours. I would not put myself on the right wing of the party, and I spend my days fighting the Tories locally. I am thoroughly pee’d off by all this nonsense.

  • David Allen 3rd Nov '11 - 1:48pm

    “a bunch of self-important party wannabe-slebs”, “absurd”, “clearly bonkers”, “people’s egos appear to be rather too large”, “as for your ludicrous comment”, etc etc

    Theresa May, your prayers are answered. The Tories are no longer leading in the Be The Nasty Party contest!

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