Tim’s talking about the economy. And it’s great.
With George Osborne building an economy to benefit big business and Mr Corbyn swerving Labour towards “big state” nationalisations, there’s a clear big gap for the Liberal Democrats to be the Party of Britain’s creative talents, home-grown entrepreneurs and innovators, the self-employed and small business owners.
But we need to go further.
It’s increasingly urgent that Lib Dems present a distinctive economic agenda to underpin our social and liberal plans.
So the Party needs a new (possibly unofficial) Liberal Democrat group to raise awareness and to promote what the Liberal Economy means.
(That is a group about the Liberal Economy to be quite distinct from “Economic Liberals”, or for that matter Social Liberals, accepting input from either side or neither.)
If we don’t talk about the economy, we will get pinned to a false centre between “left” and “right”, easily depicted as neither one thing nor the other. (We didn’t help ourselves with our General Election messaging there, but that’s water under the bridge.)
It’s easy to draw a picture of what a Tory capitalist economy would look like; there is a general if vague idea of a Left Wing State Socialist Utopia; there’s even an idea that a Green Economy would look like something out of TV’s “The Good Life”, all cardigans and manure.
But Liberalism is about doing things and the ways we do them, rather than getting to some imaginary “end”. So we are almost automatically less clear on what our vision would be. Too often it ends up as: “Like this but more so, only with regulations.”
There is also a danger, particularly for the more laisez-faire liberals, to say: “We should not be interfering in the economy at all”. That’s self-defeating in two ways.
Firstly, that means accepting the status quo. That’s completely against our nature as a Party. If we are anything, we exist to challenge and overturn the status quo. And it’s rubbish politics. Who will rally to the cry of: “What do we want? Things as they are now!”
And secondly, the shape of the economy is already being interfered with by our opponents. Who can doubt that in the face of the Chancellor’s rapid abandonment of key liberal investment in green technologies and education, and his handing over of large parts of our infrastructure to big business and China?
So where then to go from here?
The good news is that Tim’s first leader’s speech in Bournemouth this year showed that someone was thinking along similar lines. And in his latest speech to the IPPR, he goes further, with plans to support small businesses and to build houses and all the roads and schools and stuff that need to go with them.
That’s good, practical policy.
But how to build up that idea of a “Liberal Economy”? Not so much the policies we campaign on, but having the answers to hand when we get tricky questions on how we would pay for the things we really want. How do we deliver what voters need and how do we get them thinking about what liberals running the economy would do for them?
In the first consultative session at Conference, I said, and Gareth (Epps) was kind enough to agree, that the Party needed to be putting across its “big picture” of the economy.
The suggestion made at that session was that the Party might consider standing panels on key policy areas, including the economy.
That would be something I wholeheartedly endorse. We used to rely on the wisdom of Dr Vince Cable; we want to get a group of people who can develop that kind of reputation for plain speaking, common sense and getting it right.
What we need is to have is:
- Short-term policy on sensible small steps that we would intend to implement immediately – tax simplification and raising the NI threshold as we have already done to Income Tax, for example; or re-investment in those Green Energy projects, which the Tory government have so quickly and foolishly abandoned, that could turn the threat of climate change into opportunity.
- Medium-term ideas that we would expect to bring in over a Parliament (or two) – which might include consideration of how companies operate better in the interests of the employee as partner or, dreaded term, stakeholder – what I tend to call the “John Lewis”-isation of the economy. Or could mean the diversification of the banking sector – we don’t want to overthrow the existing banks, as some on the left appear to want, but we do need to reintroduce smaller, more local banks, that can cater to the diverse needs of communities in ways that the massive banks can’t and don’t.
- Long-term vision of an economy that shares opportunity, rewards people for putting in work, but doesn’t penalise people who make other choices, e.g. to be carers or homebuilders – personally I favour looking again at the Basic or Citizens’ Income idea, even though the Greens made such a mess of selling it at the last election.
But most importantly, we need people, starting inside the Party, to have the same kind of instinctive feel for a Liberal economy as they do for a Tory or Labour one.
I hope that this will be a positive contribution to the Liberal Democrats’ new agenda (#LibDemFightback!).
* Richard Flowers has been a Party member for 30 years. He’s campaigned in many an election, stood as a local councillor, Greater London Assembly member and Parliamentary candidate. He has been Chair of Tower Hamlets Liberal Democrats (twice), and from 2020 to 2025 he was English Party Treasurer. Thanks to Liberal Democrats in government, he is married to his husband Alex Wilcock. He also helps Millennium Elephant to write his Very Fluffy Diary.
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14 Comments
Good piece Richard, and very much to the point. Corbyn has opened up a vast space on economic policy, preaching nationalisation, price controls and printing money, but unless we articulate our position strongly we won’t be able to make the most of the opportunity.
Just to nitpick for a moment, where regulation is the status quo, opposing that regulation is not supporting the status quo. There’s a good case for example that the planning system is dysfunctional, and that something simpler might achieve enough of the benefits while significantly boosting housebuilding. However, I agree, for the reasons you give, this sort of argument shouldn’t be the focus by which we define the liberal economy.
Issuing planning permission is not the same as building, it may be a necessary step, but it is not sufficient.
Unused permission should expire.
Nationalisation is not such a bad idea in some cases. There is no justification for foreign states to be running our railways for example, if the British state cannot. The party should commit to full nationalisation of the railways, but permit private Open Access Operators to encourage genuine competition, which I feel is the best of both worlds, rather than subsidising foreign networks with taxpayer money.
Similarly we should not be backing the parasitical outsourcing companies such as G4S, Serco, Capita and so on, which contribute nothing of value, but leech from the state.
These are both “socialist” policies which have wide appeal, and maybe would win back Labour voters who support some of what Corbyn says but are uneasy with him, whilst not being fans of Blairite outsourcing.
Aside from the obvious cases of nationalisation, I agree though it is not a sensible policy for the bulk of things at all. I actually like some of Tim’s ideas, but I wonder if supporting small business or British business over big multinationals can be permitted under competition laws or the TTIP / TISA. Entrepreneurs must be treated as backbone of Britain, I’d agree. But will trade treaties stop us from backing our own self made men and women?
Really glad we’re looking again at our economic policy in such an open-minded way. One thing I’d pick up on from the article is the claim that “we don’t want to overthrow the existing banks, as some on the left appear to want”. Not overthrow, maybe, but they amount to a monumental concentration of power (ie, wealth) so I think we could look at how we break that up. Competition and challenging monopolies would be a good starting point.
Joe Orton – I do think you are making a grave mistake in your continued sneering of Corbyn. He is not advocating a Socialist Utopia nor vast programmes of nationalisation. You may feel comforted by deluding yourself in this way. Perhaps you feel the need to do this so as to avoid ignoring the doubling of the membership of the Labour Party since he was elected leader and asking yourself why are the public responding in this way?
Corbyn does support limited public ownership such as the railways which, as Richard Easter points put makes real sense and has widespread popular support. The price controls you refer to presumably relate to caps on increases in rent. The purpose of such caps is to stop the escalation of welfare costs driven by the ever increasing cost of housing benefit which rent rises cause. It is a sensible way of capping the welfare bill without punishing those who are dependent upon it. As for QE, yes, Corbyn supports this for investment in infrastructure and there are many economists, who are not card carrying members of the Labour Party, who say this makes perfect sense.
I welcome Farron’s break from the restrictions of the austerity obsessed Coalition. I’m not sure whether you were a pro austerity LibDem and have had a latter day conversion or if you were among many who had grave reservations as to such policies. In any event, assuming you support all of the expenditure plans that Farron now stands for, and given that you rule out QE or rent caps to limit housing benefit, could you specify just how the LibDem programme will be funded?
My starting point is that the national economy is an economic SYSTEM. And this system has merely evolved out of the actions of powerful historical merchant adventurers. As such, it has not been DESIGNED as a viable and stable self regulating system. The economic system is therefore not fit for purpose.
Even David Cameron realised this when he was campaigning to be General Secretary of the TUC; well he seemed to be from his soundbite utterances about “Responsible Capitalism” and that “tax avoidance is immoral”.
I see the economy as an “economic operating system”. All the unfairness and injustices that arise from the operation of the current system, e.g. homelessness, low wages, drug taking, payday loan companies that charge 1000+% interest APR, poverty, food banks, billionaires, tax avoiders, unaffordable homes, an expensive bureaucratic benefit system; all these social problems are an inexorable, i.e. cannot be avoided, outputs of the current economic operating system.
The policies that governments and political parties dream up to provide solutions to these problems are no more than “bug fixes” and “patches” to try and mend the existing economic (operating) system.
This makes the government a ramshackle, Heath-Robinson contraption that creates evermore bureaucratic red “gaffer” tape to hold the whole system together. As government ministers have found out, their departments of state “are not fit for purpose”.
What is needed is new economic operating system to be created in law that people will freely choose to use. The purpose of the new system should be, I think, one that creates healthy, wealthy and well educated citizens as the design output of the system. It will be up to the citizens themselves to decide for themselves what they want from the system.
@Richard Underhill – “Unused permission should expire.”
It does after 5 years. However, what you will see (which is what happened around here after the 2007~8 crash is that new sites get some infrastructure put in if there is a risk that they won’t be developed before expiry of planning permission to confirm that this land is now ‘built’ on and hence future applications are merely applications to build on pre-existing ‘plots’. Without the minimal infrastructure the site reverts back to it’s original status of brownfield/greenfield without planning permission.
@Robert Wooton
I have evolved rather than being designed. I resent the implication that I am therefore not fit for purpose.
I think one thing any idea of a liberal economy needs to stress is that the economy is a means to an end, not an end in itself. Too often, people (especially ‘economic liberals’) give the impression that people exist to serve the economy, not the other way round. The questions we ask and the policies we adopt on the economy should be about how can the economy help build a more liberal society.
I am very glad to see this, Richard. I shall prod Mat and Alisdair towards it.
Richard – Absolutely! Actually, I think it’s always been urgent to present a distinctive economic agenda; not having one has long been a black hole at the heart of the Lib Dems. The difference is perhaps that more people are noticing the need.
As for “standing panels on key policy areas.” what precisely do you have in mind? A “panel” sounds like a small group of eminent experts but that would surely be a mistake. One of the most astonishing features of the Global Financial Crisis is how virtually non of the world’s most eminent economists saw it coming although many disregarded ‘crank’ economists did. That alone tells us something important – that there is a powerful groupthink operating in mutually sustaining embrace, as many believe, with the powers that be. Not good!
So, I think “panels” should be open to all so that outworn and failed orthodoxies can be challenged: we need fresh thinking on a heroic scale. That used not to be technically feasible (hence “panels”) but now, via the Internet, it is with a blog or something very like it. That coincidentally, would solve another long-standing problem, how to involve more people in policy-making including the many sympathetic experts who are ‘out there’ but not involved.
I have set out more detailed thinking on this and more in my submission to the governance and policy-making consultation which I’m sure you could get hold of. Alternative, get my email from Caron (hereby authorised for release to Richard if requested), drop me a line and I will forward you a copy.
Thank you Richard for raising this and I agree with Gordan’s comments too. The problem is that trying to control the economy is like trying to control a very large dog. It sets off very enthusiastically dragging you behind it in a direction you don’t want to go in and then sits down on its haunches and refuses to budge. Unless you understand how to make the dog do what you want you will never succeed.
This understanding of how the economy works has for the last thirty or so years been under the sway of monetarism and the make ends meet school so while I agree with Tim’s proposals they do need to be backed by economic theory if we are to persuade people that they are right. So yes, let’s have a panel to discuss economic theory which the wider party can then become involved in. I’ m no economist but I think Thomas Picketty has some interesting ideas, although he has been advising Jeremy Corbyn, but maybe we can establish common ground as Keynes did with the Labour Party.
Excellent article.
I think one of our biggest problems for a long time has been an inability to describe, even to ourselves, what our economic vision for the country is. It has both left us without ammunition in facing Labour and the Tories, and it leads us into the trap of focusing on small policies that are good but not sufficient, and don’t help the electorate get what we’re about.
I think it’s right that we have a long term plan too. 10-20 years or so, that would be able to survive day to day changes in the economy. i.e. one that isn’t vulnerable to a single power station closing, for example because it’s about a bigger, longer term picture.
Just a reminder that Keynes was perhaps the ultimate Economic Liberal or should that be Liberal Economist?
He’s largely fallen out of favour but we do need to get back on message re Keynes. If we ( I don’t just mean the Lib Dems) did that, we would be in a better position to understand under what circumstances a reduction in the government’s deficit was appropriate, and why it isn’t appropriate now.