A Fairer Share for All Working Group: The road to a liberal Britain

I joined the Liberal Democrats in November to help to create a more liberal United Kingdom. At a time when protectionism and populism are on the rise, not just in the UK but around the globe, it is crucial that we have liberal answers to the difficult questions.

Despite being 10 years on, we are still hungover from the financial crisis. There has been a major squeeze on incomes, structural changes that have damaged towns and the generational divide has grown.

Because of this, I decided to apply to join the A Fairer Share for All working group. Even though populism is on the rise, and liberalism may have lost some of its coolness, it doesn’t change the fact that liberalism has pulled billions of people out of poverty globally.

In Government we had some great achievements that helped to make Britain a more liberal place. We took millions of people out of Income Tax, we cut Corporation Tax, we introduced the Green Investment Bank and the British Business Bank. We should be proud of the achievements that we made, however, there is more to be done.

The answers from the coalition may not necessarily be the same as the answers for the big questions over the next five years – in part due to Brexit, but also the changing geopolitical landscape.

I come from an area (Middlesbrough) that is going through major structural changes. With the steelworks closing, people are moving towards service sector jobs. The town is seeing a large increase in restaurants and microbreweries for example. I want to use my position on the working group to ensure that we come up with policies that benefit towns, cities as well as rural communities.

The Prime Minister has talked about the British dream and One Nation Conservatism, however, the results have been different. Social divisions are high, violent crime is rising and economic growth has slowed.

I would like to take this opportunity to thank you for accepting my application to the working group, and I promise to work hard over the next 12-18 months to ensure that we have robust liberal policies that will help improve the UK. I look forward to working with my colleagues on the working group.

* Collingwood is a Liberal Democrat member in London who is known to the editorial team.

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38 Comments

  • Peter Martin 23rd Jul '18 - 2:16pm

    @Tom,

    ” A Fairer Share for All”

    Yes I agree. But isn’t this more socialism than liberalism?

    In the USA, socialism and liberalism are closely associated. But I’d suggest this isn’t the correct use of the term in a historical context nor is it a current usage in a European context.

    Many of the supposed liberal parties in Europe (ALDE group) are really quite right wing. Like the German FDP for example. They aren’t liberal in the American sense or even middle of the road.

    https://www.politicalcompass.org/germany2017

  • @Peter Martin Hi Peter – it depends on what we are talking about. For me, a fairer share means opportunity. Opportunity to go to a good school. Opportunity to own a home or capital. Opportunity to progress through your career. Opportunity is at the heart of what I want to do. The American definition of liberal is pointless and has been used to describe so many things which are the opposite of liberal. The alt-right often use liberal as a derogatory term, it is best we ignore them.

  • Peter Martin 24th Jul '18 - 8:22am

    @ Tom,

    “Opportunity to go to a good school. Opportunity to own a home or capital. Opportunity to progress through your career.”

    OK. But this is hardly a statement that any politician would disagree with. Tories might even link the concept of ‘good school’ to a selective or private fee paying school. So are ‘fairer shares’ what the Tories want too? I don’t think so.

    The concept of Liberalism has been perceived as being a ‘left’ force over the last 50 years or so because Liberals worldwide have had a good record in supporting social movements such as anti-Apartheid campaigns and equality of the races, equal rights for women, decriminalisation and equal rights for those of all sexual dispositions etc. But this doesn’t mean that they’ve supported greater equality in the economic sphere. It’s quite possible to support decriminalising Cocaine usage and be very right wing economically.

    This attitude is quite widespread in the supposedly Social Democratic parties of Europe. To such an extent that the traditional social base of these parties, ie the working classes, have deserted them in droves. Ironically they are attracted to parties which as are supposedly of the right but are often quite left wing in their economic policies. In other words the working classes are cottoning on to the new politics. They think their traditional parties have sold them out, and it’s taking them in a direction I think we’d both be concerned about.

    So when politicians talk about greater equality, they do need to be clear what they are saying. It’s not just about equality of opportunity. There’ll never be that in our present society. The luck of the draw at birth is by far the biggest influence on anyone’s life.

  • Chris Lewcock 24th Jul '18 - 8:44am

    Joseph. Broadly agree with you about the possible benefits of a land based tax – you can’t hide it and you can’t take it with you. However, not clear how that sits with the competitive imbalance between activities requiring land eg town centre shops and those which don’t (or not to the same extent) eg Amazon.

  • We need to take a more holistic approach to our society. Technological advancements can only take us so far. Not every one wants to work in the service sector for a marginal income. We could for instance reduce our reliance on mega-farms and return to a more sustainable and less mechanised farming structure.

  • Peter Martin is correct, the Tories often talk of opportunity, they have been known to talk about equality of opportunity, but years of Conservative governments haven’t made poverty in the UK a thing of the past.

    Tom Purvis, ensuring everyone has a fairer share of our wealth is the road to a Liberal Britain. My understanding is that the main aim of this working group is to ensure that those who feel left behind benefit from the increase in wealth that has happened since 2008 which hasn’t been shared equally.

    Tom, you write that you only see a fairer share though opportunity, does this mean the government intervening in the economy to increase the amount of job opportunities and proving free training to those not working? How would you increase opportunities in the north-east to ensure no one is left behind and everyone has a sufficient income to be equally free?

  • Innocent Bystander 24th Jul '18 - 3:53pm

    “In places like Oldham, Blackpool, West Bromwich, Barrow, Middlesbrough average taxes would be significantly cut,”

    This must mean that taxes elsewhere would be significantly increased. Have we told people that?
    Does this mean that profitable businesses operating in the not OBWBBM (Oldham, Blackpool…. etc) become unprofitable? Do they relocate to the above OBWBBM or could they choose maybe Belgium or Ireland?

  • Katharine Pindar 24th Jul '18 - 6:19pm

    Tom Purvis, it is early days for the new working group, but I also hope as has been raised by two posters above that you will be thinking beyond equality of opportunity, rather a catch-all phrase favoured by centrists. I hope our party will be committing to government intervention to provide more economic development in the regions outside the south-east, with stimulus to business investment and job creation, aiming to make work worthwhile for those who are currently unemployed, on zero-hour contracts or forced to take multiple ill-paid short-term jobs. With people dotting in and out of work and benefits and always hard up, it is no wonder there is increasing child poverty and increasing mental ill-health. We need to propose radical solutions.

  • Innocent Bystander 24th Jul '18 - 9:27pm

    Joe,
    I struggle to reconcile your “significantly less” with “revenue neutral”. Your further explanation shows major wealth redistribution but not who will pay more. Will it be homeowners in the South? And how badly will they be hit? Is this a transfer of tax demand from business to householders? Or the opposite?
    I suspect you underestimate the level of demand for clear answers if this proposal ever moves forward.

  • @Innocent Bystander

    The land tax is a progressive wealth tax so it’s going to be a tax cut for the vast majority of people. I think a lot of people vastly overestimate how much property wealth they own – this is a chart created using ONS data showing the upper bounds of household net property wealth in 2012.

    https://forward-thinking.org.uk/wp-content/uploads/2016/08/Upper-bounds-of-net-property-wealth-600×337.png

  • Peter Martin 25th Jul '18 - 8:24am

    The question “will I pay more or less? ” does demonstrate that a LVT would have to be administered nationally rather than locally. The towns in the poorer regions do need just the same money, and maybe even more, to run their services. So, if the tax was local, they’d have to have a much higher rate of LVT than in the more prosperous areas. If rental values are only half those in the poorer areas then the LVT rate would have to be twice as much to bring in the same revenue.

    So, it does seem very likely that the losers from this will be in the SE and the winners will be in the peripheral regions. Having said that, this is already the case with income tax. Incomes are higher in the SE so people there, pay more income tax than they do in the NW, for instance.

    The requirement for a single rate LVT doesn’t fit in well with the move to devolution. But to be fair to Joe this isn’t peculiar to LVT. Any tax is going to bring in more in a prosperous area. So if we are going to have effective fiscal equalisation, in the pound sterling area, we need a strong central government which is democratically accountable to all voters. The problem in Scotland and Wales, now, after devolution is that this isn’t the case. Voters are fobbed off with the excuse that any problems in the health service or education, or whatever, are the responsibility of the devolved government.

  • Peter Martin 25th Jul '18 - 8:37am

    @ Zak,

    “The land tax is a progressive wealth tax so it’s going to be a tax cut for the vast majority of people.”

    The problem with this statement is that it assumes the reason for taxation is to raise money for the government to spend. It isn’t. It is to tax the potential spenders in the economy, and so curtail demand, to prevent inflation when the government does its own spending. In other words if we make and grow just so much of everything then the price level will be dependent on total demand. We aren’t going to be any better off unless an LVT leads to an increase in production – which I’m sure Joe would argue was the case but I’m not convinced it would make much difference.

    So the net result will be that, on average, we’ll be no better off. But the potential losers will be more likely to be fiercer in their opposition than the potential winners.

  • Innocent Bystander 25th Jul '18 - 8:56am

    A few points strike me. This tax will quickly become known as the “South East England” tax because it looks like it will be the only area paying it. The one advantage of income tax is that it automatically depends upon having the income to pay it. This new tax will drive thousands in the south east from their homes.
    A further effect will be that your tax will increase if the state “improves” your locality. The key question to ask any candidate for local office will be “Are you prepared to fight, tooth and nail, to run this area down and obstruct any form of improvement?”
    It’s no good claiming that the householder should welcome the increase in rental value.
    Unless they actually left their home and rented it.
    This will be seen (as some have said) as a means of taking away from the south east it’s accumulated wealth and handing it out. We will have to see if that has electoral carry.
    My regret is that if only the same intellect could be devoted to wealth creation that goes into new methods of wealth redistribution we would have something to bequeath our grandchildren.
    All we ever read is the hopelessly pathetic “invest in skills and infrastructure” or “”develop an industrial strategy” (as if these haven’t been tried a thousand times before).

  • Innocent Bystander 25th Jul '18 - 9:06am

    Joe,
    I suggest a little less obscurantism. If this is exposed to the public’s consciousness then they will fill in the blanks for you and with some hostility.
    “Hiigh value Land in areas of high demand such as central London and other areas of the South-East may see increased assessments” is disingenuous.
    Replace the words “may see” with “will inevitably see jaw dropping increases”.
    Best to be clear and open.

  • @Peter Martin

    ..Taxes do raise money for the government to spend? There can only be a finite supply of money in the economy so taxes are used to recapture that, otherwise we’d be subjected to hyperinflation if the government decided to create new currency just for itself to spend. The land tax isn’t a tax on production so it carries no economic loss. All other taxes (apart from the poll tax but that’s flat and unfair) hurt overall output as they are taxes on production, so replacing other taxes with something like a land tax would increase economic output.

  • Innocent Bystander 25th Jul '18 - 10:20pm

    184 quid doesn’t seem bad. Roman Abramovich should be able to afford that. Are your numbers right? Vince’s famous Mansion Tax was more than that.

  • Innocent Bystander,

    The figures quoted for council tax reform are from the Joseph Rowntree Foundation research report referenced above. This is the most comprehensive research that has been conducted on Council tax reform involving the compilation of a database of 7 million properties across the country.

    Vince’s Mansion tax was a supplementary wealth tax on very high value properties not a reform of the council tax system.

    Alter will be holding a fringe at Brighton in which the presenters of the motion for business rate reform will be explaining the detail of the financial modelling conducted.

  • Tom,

    in your comment above you say “The alt-right often use liberal as a derogatory term, it is best we ignore them.”

    This Guardian article gives a stark account of extreme poverty in America https://www.theguardian.com/us-news/2018/jun/01/us-inequality-donald-trump-cruel-measures-un.

    The Nobel prize-winning economist Joseph Stiglitz told the Guardian it was profoundly important that international observers were speaking out about Trump’s impact. “This administration inherited a bad situation with inequality in the US and is now fanning the flames and worsening the situation. What is so disturbing is that Trump, rather than taking measures to ameliorate the problem, is taking measures to aggravate it.”

    Top of the list of those measures was the $1.5tn tax cuts enacted by the Republicans last December that slashed corporate tax rates. “Can you believe a country where the life expectancy is already in decline, particularly among those whose income is limited, giving tax breaks to billionaires and corporations while leaving millions of Americans without health insurance?” Stiglitz said.

    He went on to say “It’s clear that this administration is totally out of step with the rest of the advanced world that is looking at the US more askance on so many levels. For Americans who are fighting against the abnormality of the Trump administration it is heartening and reinforcing to know that the rest of the world is becoming more resolved in how it deals with the post-Trump US.”

  • Peter Martin 26th Jul '18 - 7:19am

    @ Zak @ JoeB

    “There can only be a finite supply of money in the economy so taxes are used to recapture that, otherwise we’d be subjected to hyperinflation if the government decided to create new currency just for itself to spend. ”

    It’s true there can never be be an *infinite* (symbol: ∞) supply of anything. ∞ is just a philosophical concept. Money works rather like tickets for a football match. The club creates what are essentially its own IOUs (a promise of admission to the ground) and tears them up on receipt. The parallel is Govt spending its IOUs into the economy (a promise to accept them, ie ££ as tax receipts) . Followed by the destruction of its own IOUs when taxes are collected.

    That’s just the way it is and it is more than just an academic point. Anyone who is interested in politics, whatever their position in the political spectrum, needs to understand some macroeconomics and know that the Govt, like the football club, can’t get more IOUs back than it has created and is going to be, usually, in deficit and always in debt in terms of its own currency.

    It’s a little bit different in the eurozone because 19 countries are trying to share the same currency which is a pretty stupid idea! This, below, is the problem the German government is creating for itself. Germany is sucking in so many euros, which are more needed elsewhere in the eurozone, but it can’t spend them because the German Govt, as always, is worried about inflation!

    https://www.wsj.com/articles/germanys-coffers-are-overflowing-but-no-one-is-talking-about-tax-cuts-1518868801

  • Peter Martin 26th Jul '18 - 7:38am

    @ Zac @ JoeB,

    “so replacing other taxes with something like a land tax would increase economic output.”

    All other taxes? There’s really no evidence of that. Let’s get back to the title of the thread which is about a ‘liberal’ Britain. Presumably a successful liberal ‘Britain’? We can only have this if the capitalist economy is working reasonably well with an good heap of social justice thrown in to smooth off the rough edges. I’d call that a mixed economy.

    A sensible LVT can be apart of that but to go the whole way and talk about it as ‘single tax’ is really just a non-starter politically. It’s too much of a change to offer the voters. They’ll never go for it. But they will go for a mixed economy which is well regulated by the state in the interests of all.

    So, yes, there should be discussion of how you are going to make the economy function properly. Just like with anything else, you need to know how it works now before you start proposing big changes. Especially such big changes that you’ll be asking voters to take a massive leap into the dark.

    In other words – stop harping on about a LVT!

  • Peter Martin,

    with all due respect, I would think that most people with a good understanding of macroeconomics appreciate the role of taxation in stabilization—implemented through tax policy, government expenditure policy, monetary policy, and debt management—with the objective of maintaining high employment and price stability.

    I would say that most leading economists and treasury officials responsible for policy making have a good appreciation of the economic impacts of deficit financing and both public and private debt in the economy. This includes an understanding that in a world of mobile capital, governments operate in a environment where international investors have multiple choices with respect to location of investments and currency devaluations have a direct impact on living standards.

    There are countries with what amount to single tax systems based on income generated from natural resource rents among the oil producing states, but they are the exception.

    Efficient and equitable systems of taxation, combing direct and indirect taxes on Land, Labour, returns on capital and consumption are part and parcel of delivering a productive economy and fairer share for all. Tom Purvis in his article says ” it is crucial that we have liberal answers to the difficult questions.”

    Land Value Tax as promoted in the current proposal for reform of the increasingly burdensome business rates regime is an integral part of the liberal answers to these questions.

  • Innocent Bystander – the problem is Britain’s imbalanced consumption-based, debt-fuelled economic model, which has always been the case since Thatcher era. An export-led economic model should be adopted to tackle this problem, to rebalance the economy.

    “Industrial strategy” has been talked about many times, but parties including Libdem never delivered a clear proposal of how such thing must be carried out, and no actual figures were mentioned. The word “how” is crucial, just look at the British Leyland case to see the disastrous consequences of Labour’s wrong approach.

    Infrastructure investments cannot be avoided, but again, how. IMO, ditching the white elephant Hinkey which is also a potential threat to national security and use that money to repair/upgrade existing infrastructures with a focus on regions outside the South East will deliver quicker returns, since many of such works will be shovel-ready. Linking back to industrial strategy, improvements in energy efficiency can efffectively match the projected output of Hinkey with much lower costs. Besides, investments/subsidies in energy efficiency (as well as automation) can be carried out on a grand scale without being bogged down to cherry-picking, arbitrary pick-winner policy. Various studies showed that Britain lagged behind in both energy efficiency and automation, and investments in these areas will quickly deliver productivity gain.

    Politically, just talking more about these issues, especially the trade deficit and debt-driven economy will gain us much more attention. Just look at how 45 gained massive support by bragging about American trade deficit. Why? A whooping number of voters always think that trade deficit is toxic no matter the context.

  • Peter Martin 27th Jul '18 - 3:30pm

    Thomas,

    An export-led economic model should be adopted to tackle this problem, to rebalance the economy.

    We can’t all have export led models! We get along just fine. We import BMWs, hand over our IOUs (££), the Germans then put them through their banking system, the Bundesbank and ECB between them convert them to euros, by just creating them if necessary to avoid putting too much downward pressure on the pound. In other words we get our BMWs and the Germans get their bits of paper or digits in a computer.

    What’s the problem? We and the Americans are doing the big net exporters a big favour 🙂 They couldn’t manage without us!

  • Peter Martin – the current imbalance must be dealt with. What I look for is to cut down our trade deficit at the expense of exporters’ surplus.

    The Chinese has been using IOU of importers to buy up the latter’s properties and companies, which then allows them to shift the newly acquired intellectual property and technology back to China. They also plan to use their dollar reserves for their latest Eurasia project/modern silkroad, which will be their vehicle to increase their economic influence and compete for hegemony.

    Japan has been using foreign reserves to provide ODA to LDCs, which allows them to gain lucrative orders for their firms and simultaneously suppress potential local competitors. This is how a shrewd country embraces “international aid”.

    Also, you can use foreign reserves to hoard natural resources such as oil. This is what Japan, a resource-poor country, has been doing.

    Most economic studies also support the notion that involving in export business improves a company’s productivity.

  • Peter Martin – the trade deficit in the UK also reflects two problems: low household savings and over-comsumption, gutted manufacturing capabilities, as well as low productivity. The US case is different, because of its unique position: the dollar is the world reserve currency. I am particularly concerned with the second problem: British manufacturing. Continuing trade deficit in the long run will put pressure on interest rate, and also cheap imports can damage manufacturers’ capabilities and expertise. The manufacturing jobs will disappear and be shipped abroad.

    Low household savings leads to over-consumption, higher debt and less capital to invest, which props up trade deficit via increased import and increased demand for foreign capital to finance investment.

    Finally, the current debt-fuelled consumption-based economic model is unsustainable. Spain and Ireland, which had the same model before 2011, had paid dearly during the Eurozone debt crisis. Contrary to Greece, Spain and Ireland’s problems were caused by the fact that their deficits were financed by foreign capital inflows, which then flew into the property sector and caused massive bubbles. Next time, this may happen to the UK.

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