In a major speech in the City of London this morning, Daisy Cooper has announced Liberal Democrat plans to break up the Treasury and move it to Birmingham.
A new Department for Growth would include the Department of Business and Trade’s responsibilities and would have a mandate to boost long term sustainable growth. It would be a single point of contact for business and investment.
A smaller department for public expenditure would control departmental spending
Stronger economic growth would be recognised as the only sustainable solution to the country’s problems. This would come alongside a better relationship with Europe.
This department would align tax policy so that Labour mistakes like the rise in employers’ National Insurance Contributions could never happen again.
Basing it in Birmingham would be a strong signal that we want to rebalance the economy across the whole country and as the only party with MPs spanning the Highlands and Islands to south west, we see the differences in growth between the south east and everywhere else.
She argued that if we could close the productivity gap between Birmingham and London,we could boost tax revenue by $4 billion which could, for example, provide 80,000 teachers
She said that rising inequality and cost of living pressures were grinding people down. The C0nservatives and Labour have failed and the British public who are left wondering if anyone knows how to fix it.
This all comes with a slogan: Get Britain Growing Again.
Farage wants to break things, not fix them. Others want to hoard power in London. Conservatives are chasing Reform saying that moderates are not welcome in their party.
She said our future liberal economic vision are rooted in the values which have guided us for hundreds of years. We champion international trade, fair markets and wealth creation.
Wealth creation and social justice, she argued, are two sides of the same coin. She concluded:
We believe we can give people a sense of hope, end the cost of living crisis and build the UK’s future by all of us for all of us together.
She then took questions from journalists. The BBC’s Nick Eardley asked how she could justify the time and money to be spent on this. Daisy replied that the plan was entirely consistent with existing plans to move civil servants out of London. We would prioritise this particular department. He followed up by asking why Birmingham rather than the north of England, Scotland, Wales? Daisy’s answer: our second city has good combination of manufacturing and financial sectors and if we boost it will help other places around the UK too.
She was asked how many civil servants would this cut? Daisy said there would be no cuts from this move. She said it was not an attack on civil servants who are hard working professionals. This is about restructuring the institutions of Government.
She was also asked about recent events and the forthcoming release of the files relating to Peter Mandelson’s appointment as US Ambassador. She responded that we have all been shaken to the core. The PM’s judgement is in question. Labour needs to decide whether it is going to keep Starmer or not. We need them to be focused on improving the country and not dithering about who is going to be PM for months on end.
There was a question about our proposed Windfall Tax on banks which is not beloved by, you guessed it, the banks. Daisy said that public finances are in a mess. She’s spoken to banks and different organisations and recognises that the idea is not universally popular but it is a necessary, targeted tax on a specific part of their profits. We want to channel some of that into an energy security bank to work with high street lenders to allow people to improve their energy efficiency so there are benefits for the whole country.
How, she was asked do you avoid a growth at all costs mentality? She said that current government pursues growth at all costs – we want sustainable growth and growth to deliver on climate commitments. We need to ramp up climate finance. Our growth needs to be good for people, planet and profit.
Overall I think it is not a bad idea and entirely consistent with decentralising things and moving things out of London. I would have liked to have seen a shift towards wellbeing economics alongside growth. But what in this idea is distinctively us? What couldn’t be done by another party? This is a tool, but it is not an economic vision.
And, purely as an internal party thing, I don’t see why this needed to be done today. Why not bring it to the Conference we have in just over a month? I think it would probably pass easily, maybe with amendments aimed to reducing inequality and promoting wellbeing. This is the second time in a couple of weeks (Ed Davey’s war bonds was the first) that a major policy announcement has been made, seemingly without reference to the party’s policy making bodies. That is to me another example of the creeping and pervasive culture of centralisation and concentration of power in the hands of a very small number of people. It’s not healthy for what should be a member led organisation like ours.
UPDATE: A Lib Dem MP is quoted in the Independent as being a bit less than impressed with this policy:
But one Lib Dem MP said they “despair” at the policy, telling The Independent: “At a time when the government is imploding and people are crying out for serious policies, we announce this.”
And along with the snappy four word slogan, when I realised that this was DOGE without the E, I couldn’t unsee it. Not, of course that I am comparing our lovely Daisy with the monstrous Musk.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings. You can find her on Bluesky at caronmlindsay.bsky.social
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“Stronger economic growth would be recognised as the only sustainable solution to the country’s problems”
We’ve heard this argument from the main political parties and governments for as long as anyone can remember. The present Labour government is no exception, with Rachel Reeves staking her reputation on producing enough economic growth to ‘pay for’ everything that she would like to pay for. I expect she’ll fail. Many people are also questioning the sustainability of having ever increasing industrial output and if we really need it.
The argument that we need to produce ever increasing amounts also needs to be accompanied by a discussion of the question: How much do we need to produce? How much is ever enough? How should what we produce be shared out?
The GDP per capita of the UK is approx £37k p.a. This includes everyone. New born children, the elderly, the sick as well as everyone who is lucky enough to be fit and well and contributing to the £37k.
I’m not saying we shouldn’t try for £40k but would it solve our problems if we achieved it?
At last a focus on the economy from the party. A long time coming, if it can be sustained.
This is needed to support all of the spending promises, particularly on defence which we need not just for our islands but also to suport our trading partners and friends.
Now we need an associated credible plan to sort out the ever rising welfare budget.
I don’t like GDP as the target as it is a sum of economic actovity that some governments have achieved by increasing the population that has also lead to greater imports from China and unsupported increase in the strain on the country’s infrastructure and health/welfare services. A real increase in wealth creation comes from industry and ‘science’ so that we can get to a state that many of our friends have achieved where most things work and the infrastructure is well maintained.
I’m old enough to have witnessed “this week’s or this month’s trade numbers featuring in news bulletins”. Trade implies making and selling things and trading them for things that we cannot in our latitude or expertise.
Anyway, a good step in the right direction to be continuously refined.
Is there a policy paper or more detail about this proposal available anywhere? I’m struggling to understand for instance how this “would end the tyranny of short-term tax grabs trumping long-term growth” – presumably the Government of the day is always free to tax and spend however it likes (constrained perhaps by the markets)?
Merging with Business and Trade may change the nature and priorities of the advice the Government receives, but that won’t stop a committed Prime Minister and Chancellor doing something stupid if that’s what they are determined to do.
Ah, reviving memories of that sometime Labour Deputy Leader and later member of the SDP, George Brown.
Starmer-Reeves Labour’s pitch was always that only growth would make it possible to fund all the nice-to-haves such as shorter waiting lists and an end to the bedroom tax. This has, of course, morphed into the Labour lament that, since we haven’t achieved growth, we won’t achieve any nice-to-haves either.
Now the Lib Dems come along with “Stronger economic growth would be recognised as the only sustainable solution to the country’s problems.” Doesn’t sound very different, does it?
To be fair, the idea of disembowelling the Treasury does sound more original – until we remember that Harold Wilson and George Brown tried that, and they failed. The Treasury were too powerful, and too many people agreed with Treasury tight-ship economic policies. We now have an independent Bank of England, and an OBR, who will add to the tight-ship lobby.
The link between growth and things like shorter waiting lists has always been a bit tenuous. Shorter waiting lists is only possible if you have either more supply of medical treatment or less demand for medical treatment. So you either have to have more doctors etc. or people living healthier lives, and by itself growth doesn’t give you either: You still have a workforce the same size and people just as inclined to drive everywhere and eat fast food.
What growth does give you is the chance to increase taxes a little bit (in effect, the Government taking a bigger share of the available resources) without people becoming worse off – because the money we lose paying extra taxes is balanced by our extra income from growth. But that only works if the Government is willing to do so (and people are willing to vote for it).
That doesn’t detract from growth being – in principle – a good thing though. I’m glad our strategy is to push for that.
Yes Minister has addressed the question of moving senior personnel out of London.
Their wives would stand for it! It would be too far from Harrods, Wimbledon, Henley etc!
Don’t they speak funny in Birmingham?
It’s not going to happen!
@ Peter Martin You’ve got your finger on the pulse there, Peter………… and a bit nearer home than some ‘Middle Englanders’ would care to admit.
I’m sad to have to point it out, but the breakup of one of the key central departments of government, replacing what it does with a cats cradle of new units, will just lead to absolute chaos across the whole of the entire civil service for the entire five year period of any government and cost an absolute fortune.
A great idea and objective to be worked towards, but just as the Lansley reorganisation of the NHS in 2012 made a complete mess of things with manifold unexpected consequences, this really is a “courageous proposal” to quote Sir Humphrey.
Looks like some of our MPs aren’t too happy
https://www.independent.co.uk/news/uk/politics/treasury-liberal-democrats-growth-daisy-cooper-b2918080.html
First of all, I am glad the party is finally talking about growth. The simple fact is that the British economy is smaller and weaker than it should be. We have immense potential, and incredible assets in finance, tech, services, research and education etc yet we have sat as a middling g7 country in a field full of laughably stagnant and self-sabotaging economies such as Germany.
I am not suprised to see the comments here sceptical about the idea of pursuing growth, after all our party did champion the original de-growth movement. However, yes, if Britain’s economy was larger, things would, on-balance, be better. We love to discuss revaitalising the high-street, improving healthcare provisions, making higher education more affordable and funding our state education system yet rarely do we ever agknowledge where that money will come from (aside from a group of tax policies which frankly, would harm investment and job growth).
Britain’s private sector must grow if we want to build a Liberal and Social Democratic society, which the last time I checked was still our parties aim. Compare us to Denmark, at the dawn of the 20th century Britain was only a thousand pounds behind Denmark in GDP per capita, however as of today Britain’s GDP sits equal with Denmark’s come the mid 00s. Quite simply, the British economy has not grown enough to build the liberal, fair, and prosperous society we want and need.
Creating “The Department For Growth” definitely sounds like a proposal straight out of Yes Minister, Or maybe something Donald Trump would come up with if the US went into recession. It’s a shame, because I think it has turned a nuanced policy that’s worth considering into little more than a joke headline.
Daisy says: ‘our second city has good combination of manufacturing and financial sectors’ and ‘we need to ramp up climate finance.’
This is sound sense.
Thomas Jordan compares the UK with Denmark. I have visited the second happiest country in the world every year since 1961 to meet family and friends including top Novo Nordisk and International Refugee Council staff. I summarise their success as high quality technical education, leading climate manufacture and a brilliant health service. I think Daisy these could extend her excellent aims.
“If something cannot go on for ever, it will stop”
Production of things requires raw materials, like copper, iron ore, fossil fuels…. Which are finite.
What does the FPC think about this? I agree with Caron that it is odd to be putting this out ahead of conference. However, it is good to see us talking about the economy again (at last) and right to tackle the ‘treasury problem’. Almost every serious book I have read in recent years on how to create a sustainable and successful economy in the UK decries the dead hand of the treasury.
Might this related article be of interest/relevance?
https://www.taxresearch.org.uk/Blog/2026/02/12/the-neoliberal-democrats/
Didn’t Harold Wilson try this back in the 60s?
Those advocating a policy of growth as a cure-all for our economic problems might want to acquaint themselves with the “Baumol effect.”
Politicians like Daisy Cooper and Rachel Reeves give the impression that if the economy grows and tax revenues rise then we can use the extra revenue to employ more nurses, doctors, teachers etc on a pound for pound basis.
Of course Daisy is claiming the Lib Dems want good-for-the-planet-and-people growth whereas Rachel is happy with any old growth. Are we convinced? RR said the same thing herself when she was in opposition.
Whatever the type of growth it won’t do what is being claimed. As the economy grows everyone becomes more expensive to employ.
This is not to suggest we shouldn’t have growth but we do need to be aware of its limitations.
https://en.wikipedia.org/wiki/Baumol_effect
Have we taken into account the cost of moving all the Treasury staff to Birmingham? And what about those who don’t want to move for personal, family reasons?
All of this reorganisation into DOG and moving it to Birmingham is never going to happen. I see it as Ed falling off a surfing board to get on the new agenda (and fill the comments sections of reports).
However, the idea that budgets should balance with the economy producing as much as/more than we want to spend is essential housekeeping that should be central to the offering of any political party.
@ Ellyot,
“However, the idea that budgets should balance……..”
I presume you mean Govt Budgets.
There’s what is known as the principle of the twin deficits which states that a deficit in the Governments budget account is almost always accompanied by a deficit in the current or trade account. So we see countries like Germany and Denmark with strong trade surpluses not usually being in significant budget deficit whereas countries like the UK and USA which usually do have significant trade deficits also have significant govt budget deficits.
Any attempt by government to cut its deficit by raising taxation and cutting spending won’t work unless the question of the trade deficit is also addressed. All this will cause is a contraction of the economy and an increase in unemployment. The only way to do anything about both deficits is to do what Denmark does and hold down the value of our currency, the pound, to below is full market value.
That’s not likely to be a popular move with the electorate.
https://en.wikipedia.org/wiki/Twin_deficits_hypothesis
@Peter Martin
I have stated in my first comment that we need to grow our industry and have things to trade. That is how we are going to grow our economy to balance the accounts and not live on non existent future money. And paying interest to those who already have on this borrowed ‘money’. Making things gives the working population better purpose than being deliverers of other people’s goods.
After sorting our infrastructure, we need spare cash to support emergencies such as defence, health pandemics, droughts etc.
@ Ellyott,
” Making things gives the working population better purpose than being deliverers of other people’s goods.”
You could be right. But we both know that buyers in the UK aren’t particularly concerned about where their purchases are made. They’ll usually buy something from overseas if its of equivalent quality but cheaper than a UK made version.
The reason we lost much of our manufacturing industry was because a high pound made UK products uncompetitive. Whereas others keep their exchange rate low to help their domestic industries we have a ‘higher the better’ attitude when it comes to the pounds.
A lower pound would tilt the table back in favour of UK products.
Did you follow argument in the wiki link about the twin deficits?
.
Recollections may differ.
I recall the demise of our industries as a cumulation of multiple factors including: lack of investment in updating factories after WWII (a read of John Harvey Jones ‘Making it happen’ is interesting), poor designs relative to German and Japanese competition, awful quality, stroppy unions (possibly as a response to poor pay and conditions) and restrictive working practices, desperation for cash resulting in giving away IP, government decision to give up and go for financial services…etc.
I’m not convinced by exchange rate argument. I recall the DM, Yen and Swiss Franc being high as were various Kroners and yet they all motored ahead, amongst others. We made poor unreliable products and we didn’t have the ability to sell (possibly as left over from being a superpower with an empire where selling skills were not required for the leadership out of Eton Harrow etc).
It’s a complex topic that I can’t do justice in a comment.
I will add that now our emerging industries are being let down by the lack of risk taking investment. The ultra rich and money shuflers or spreadsheet manipulators of the City are so far from their counterparts in the US and our government has no money.
@ Ellyott,
“I’m not convinced by exchange rate argument”
It’s not one that is widely suggested in the mainstream.
However, show me an example of a large net exporter that doesn’t in one way or another intervene in the forex markets to keep its currency to a value below what it could be.
There are several possible mechanisms.
1) Use someone else currency. Germany could have a higher valued currency if it didn’t use the euro.
2) Peg your Currency at an artificially low value. China pegs to the US dollar. Denmark pegs to the euro.
3) Accumulate large amounts of foreign currency assets. Like Switzerland and Sweden do for example.
4) Export large amounts of accumulated foreign currency via a Sovereign Wealth Fund. Like Norway, and Singapore.
Some use a mixture of several. Germany, Netherlands and Denmark have ended up owning substantial assets in the UK.
I think we have Leo different timescales. The bull of UK industry was long gone, for the reasons that I have indicated before the Euro was created.
If it was all about the exchange rate then our exports would be booming as the pound is rather low relative to history. GBP was high when we had industry in the 60s. https://www.fxexplained.co.uk/forex-education/fundamental-and-macroeconomic-analysis/the-history-of-the-pound/
It seems very strange that Daisy is announcing new economic policy while she is on the Party’s ‘A Thriving Economy Working Group’. On the Friday of Conference there will be a consultation session run by this Working Group.
Ellyott,
Thank you for the link to the interesting graph on the value of the pound in relation to the dollar. It is often said that the pound is overvalued. It seems that the pound was valued at about $1.15 in 1985. I wonder what would have happened to exports if the UK had decided to intervene after 1985 and keep the pound valued at around $1.55.
@ Ellyot,
The exchange rate of the pound isn’t the only factor, in the loss of our manufacturing industry, but it is a very much underrated factor. It’s the real value rather that the notional value which matters of course. It’s this which defines the relative competitiveness of UK products in comparison with overseas products.
The big economies tilt the table to have a lower exchange rate than they could have if they choose. We don’t. They spend their accumulate extra pounds, which they don’t want to spend on what we make, to buy up our capital assets.
For example, we’ve decided to privatise our railways but they are in many cases still government owned but not by the UK govt.
Foreign ownership of UK railways is substantial, with many passenger train operating companies owned by state-run companies from Germany, France, Italy, the Netherlands, and Hong Kong. These run franchises, like Avanti West Coast, to generate profits for their home nations.
@ Michael BG
A weaker pound means our imports get more expensive = inflation. By 2985 we had already decimated our local supply chains, so whilst it is impossible to look back and prove anything related to ‘what if’, the kids of industrial capabilities was well progressed.
My argument is that it is a very complex equation of which the exchange rate is a small part and we need to take the wide angle view and develop a strategy. Once capabilities are lost then it is very difficult to get them back.
Oopse, apologies for the obvious predictive text typos in my last post. Challenges of typing on a phone in a hurry. I think you will have got the point.
It just crossed my mind that the proposed new Department for Growth sounds quite similar to the Department of Economic Affairs that was created by Harold Wilson’s Labour Government in 1964, with quite similar aims. That department lasted 5 years before being wound up in 1969 – I believe having been considered not a success. I’m not sure how precise the similarities are with the new plans, or what lessons might apply.
@Peter Martin – your example in point one is wrong. Germany is not an example of “use someone else’s currency. The Euro is Germany’s currency – and that of another twenty European countries plus another half dozen microstates / territories (including the British bases in Cyprus). It isn’t someone else’s currency – it is (all of) theirs.
Nor indeed is it a valid comment since one could equally argue that a London Pound would be a higher valued currency than, let’s say, a Welsh Pound but that doesn’t mean that London is intervening “in the forex markets to keep its currency to a value below what it could be”.
Admirable and all that the policy is, it rather ignores the reality that Brexit has effectively attached a massive economic ball and chain to the British economy. And no matter how hard you strive an economic ball and chain is always going to hold the U.K. back – and that would apply even if the U.K. had been an economic “Usain Bolt” to start with, which wasn’t the case.
@ Paul R,
The defence used by the German govt over US charges of currency manipulation to ensure a large current account deficit surplus Is essentially “It’s not our own currency. We used to use our own currency, but no longer, and that was called the Deutsch Mark. ”
So the euro is a shared currency, rather than its own, but it’s not as strong as it would be if Germany had solely its own currency. This is the problem with the euro. It’s too strong for countries like Greece, Italy, Spain and Portugal but too weak for Germany and the Netherlands.
It the EU had just one government taxes could be net collected in Germany and net spent in Greece. Just as they are net collected in London and the SE and net spent in Wales.
You are quite right that the UK doesn’t intervene to keep its currency down. We have a “higher the better” mentality which is the point of previous comments.
There’s only one currency issuer in the UK. The UK govt has fiscal responsibility for all the UK. So by ‘country’ we can’t just mean some entity which has its own football team.
Ellyott,
I stated from the graph that the pound was worth $1.15 in 1985. So having a value of $1.55 would not cause the price of imports to increase and so cause inflation. However, it would be after 1993 that the pound would be valued at less than $1.55. The graph shows four or five periods when the pound was valued at less than $1.55.
It was interesting to discover that while manufacturing output as a percentage of GDP has fallen the amount of output is higher than it was in 1970 (https://www.economicshelp.org/wp-content/uploads/2013/06/industrial-production-1970-2012-500×369.png). ‘In 2008, the UK was still the 6th largest manufacturer by the output (source: UN Council for Trade and Development)’ (https://www.economicshelp.org/blog/7617/economics/economic-growth-during-great-moderation/).