Jane Dodds writes: No going back to business as usual

Covid-19 has caused the biggest economic shock of modern times. The Government has announced a range of measures to support businesses and the self-employed, in particular through putting in place strong incentives to keep staff on the payroll. Nearly a million people applied for Universal Credit in March – and the Welsh Liberal Democrats have called for the Government to scrap the five-week wait.  We need to get money into people’s pockets now. 

But we need to think beyond the emergency. Economic recovery could be slow and painful, and the most difficult time for families and businesses – especially the small businesses in the economic front line – may be when the lockdown is over and the short-term, time-limited measures announced by the Treasury fall away. Our family businesses are at the heart of our communities, and we need to ensure they bounce back stronger and more resilient than before. These shops and businesses will only recover if their customers have money to spend once the lockdown ends.

But we also know how weak the economy was before the crisis. Since 2008 we have seen real incomes falling, especially for the poorest and most vulnerable; We have this shocking situation now in Wales of people who are in work being poor and attending food banks. There is greater job insecurity, poor working conditions and zero hours contracts. And all too often, when people do get an extra couple of hours’ work, they lose more in tax and benefits than they gain. We have longer working hours and people are still struggling to pay bills. Automation may eliminate many occupations altogether. 

Many people are calling for what is described as a Universal Basic Income as a response to this emergency – regular payments made to individuals to enable them to meet their bills.

I want to trial Universal Basic Income because it is a policy approach for the long-term – and it means transformational reform of the tax and benefits system too in order to tackle that deep-seated crisis of work. This gives an opportunity for carers to stay caring for children and older people. Also, by removing the fear of poverty and unemployment it provides us all with the chance of extending our studying and becoming those entrepreneurs many of us want to be. It could help build a more dynamic and innovative economy in Wales.

But I want to go further.  I want to see Government supporting local businesses and communities; a new deal based on sustainable, thriving communities in our towns and villages. And in Wales, we need to ensure that our Government has the powers and resources to make the difference.

As a society our response to C19 is turning economic debate on its head and making us think again about the role of government and what matters. We are learning to travel less and shop local; that communities matter; and which jobs are most important.  Four decades of economic and social orthodoxy are being overturned in front of our eyes.

Eighty years ago, William Beveridge, one of the giants of the Liberal tradition, crafted a report to address what he called the giant evils: want, disease, ignorance, squalor and idleness. He challenged a generation of economic thinking that had failed, placing work at the centre of his vision of a decent and generous society. We need the courage, the breadth of vision, and the radicalism of Beveridge if we are to build a renewed and decent and just society in the aftermath of C19. 

There can be no going back to business as usual.

* Jane Dodds is Leader of the Welsh Liberal Democrats

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32 Comments

  • Simon McGrath 21st Apr '20 - 12:22pm

    Jane – could you please give us a rough idea at what level you would set this and how much it would cost ?

  • David Evans 21st Apr '20 - 1:13pm

    Although Simon’s question is very pertinent, there is another, much more fundamental problem we face …

    How do we get people to notice us?

    Until we face up to the fact that after the fiasco of the last election absolutely no one except ourselves is listening to us at all, we are going nowhere. Saying we want the UK to trial UBI has about as much impact as Boris Johnson saying he wants China to trial democracy in Hong Kong.

    We have to accept we are now a small party that has almost totally collapsed as a parliamentary force. A trial of Universal Basic Income is a great idea. but we have to accept that any trial would be a Conservative trial not a Lib Dem one (not that it is likely anyway).

    What we desperately need, and the Welsh Lib Dems with zero MPs in the House of Commons particularly so, is a strategy to ensure we get noticed enough in just one Welsh seat so we regain it in 2024. Brecon and Radnorshire is the one we are closest in, and holding Kirstie in 2021 is essentail. That would be something useful to consider.

  • Paul Holmes 21st Apr '20 - 1:40pm

    I agree with David Evans about the need to ‘get noticed’ given the dire straits we are now in as the small 4th Party of UK Politics. ‘Getting noticed’ is not going to happen overnight however.

    I do though also agree with most of what Jane Dodds argues and I think that developing a clear and consistent message on the lines she advocates is part of the long term answer -and would be for me a welcome return by the Party to its twentieth century roots rather than those of nineteenth century Gladstone.

    However, and this is not always an automatic response when I read his thoughtful comments, I agree with Simon McGrath’s question. Our policies, however radical, must also be credible. So, Jane:
    1. You are talking about Universal Basic Income -every adult over 18?
    2. What level would it be per week/year?
    3. How much therefore would the total annual cost to the Government/taxpayer be?
    4. How would this cost be met?
    5. Would there still be other benefits on top -unemployment, disability, housing, pension, winter fuel etc etc? If so how much would this reduce the much touted ‘administrative savings’ from having a UBI? If not then the UBI would have to be at a high rate to cover all or some of those ‘extra’ needs but the vast majority of recipients wouldn’t actually need that money.

  • Steve Trevethan 21st Apr '20 - 3:36pm

    Might it be the case that the opportunity costs of not introducing U B I are greater than those of introducing it?
    Might it be the case that we might make a better decision by considering costs other than money costs?
    Might we consider the costs/effects on social cohesion, health-mental and physical and so on?
    Might we also consider effects of U B I in the wider terms of an appropriate monetary policy?

    “A U B I can serve the goals both of fiscal policy, providing a vital safety net for citizens in desperate times, and of monetary policy, by stabilizing the money supply.”

    [Ellen Brown whose relevant article is attached]
    https://www.counterpunch.org/2020/04/20/a-universal-basic-income-is-essential-and-will-work/

  • Katharine Pindar 21st Apr '20 - 5:02pm

    Just as Beveridge crafted a plan to deal with the five great evils he saw and had the plan implemented in the post-war government, Jane. so some of us have proposed that our party put forward the idea of a new social contract that should be agreed between government and people to deal with the equivalent evils of today. One of these is the poverty levels in Britain, only liable to worsen in the aftermath of the health crisis, and another most pressing associated problem will be the rise in unemployment. Please see the article posted here on February 6, https://www.libdemvoice.org/a-new-social-contract-putting-flesh-on-the-bones-63391.html, and the discussion following it. Now is indeed the time for our party. as the rightful heirs of Beveridge, to expand the details of this proposal, which is not only much needed by our struggling country, but can give Lib Dems a distinctive voice. The article and its predecessor (which between them had almost 200 comments) have been read by our acting leader Ed Davey, who has encouraged us to progress the proposal, as we very much hope that you also may wish to do, Jane.

  • This is a suggestion about increasing benefits. Why would a universal benefit like this be preferable to a targeted benefit? Would the wealthy receive this benefit too? You talk about people working extra hours only to see much of it disappear in tax, would funding a universal benefit aggravate this problem?

    I’m not suggesting that my questions undermine the concept because there may be good answers that have not yet been put on the table. However, if the answers are not forthcoming then this joins the long list of desirable but not affordable. In other words, someone has to pay for it and without nominating the providers the benefit has to rely on the magic money tree which is currently under enormous pressure.

  • Peter

    Couldn’t agree more regarding targeted benefits versus universal benefits.
    We’ve been there before with families of millionaire footballers receiving child benefit.

    I know the argument would be that the wealthy person’s UBI would be clawed back via the tax system but at best that would be 50%.

    Why not focus on making universal credit work rather than trying to change the system yet again.

  • John Marriott 22nd Apr '20 - 8:48am

    Why is the public being so beastly to the Lib Dems? This appears to be the leitmotif of this particular piece. Let’s come up with something different. How about a new Social Contract, or a Universal Basic Income?

    Both have been tried before, the former in the 1970s here significantly between the government and the Trades Unions, the latter in the form of Social Credit in recession hit Canada before WW2 (indeed the Social Credit Party was still in power in Alberta when I arrived in 1970; but without the ‘funny money’). What those of us who profess to be ‘liberals’ need to wake up to, as I have written many times before in LDV, is that we are in the minority and probably always will be.

    I could live with that if we had a voting system nuanced enough to allow an injection of liberalism into the body politic. As Lord Healey famously said, the Liberal Party existed to provide the ideas for the two big parties to adopt. Some of you may point to the fact that we currently only have one ‘big’ party. Well, let’s see what happens to Labour under Starmer, possibly the acceptable face of socialism. Another ‘breath of fresh air’?

  • Peter Martin 22nd Apr '20 - 8:50am

    Jane Dodds says:

    “We have longer working hours and people are still struggling to pay bills. Automation may eliminate many occupations altogether. ……..”

    True enough. So why don’t we use automation to reduce working hours for everyone? Why reduce them to zero just for some, who will then be expected to go away and live on a pittance of a UBI?

    There is a general myopia surrounding the discussion of a UBI. The entire focus is on how the proceeds of our economy are shared out. There is no consideration of how the necessary tasks to create those products and services should be allocated.

  • Hilton Marlton 22nd Apr '20 - 9:12am

    Responding to David Evans and Paul Holmes comments above, the Welsh Liberal Democrats are polling at 4% at the moment (on a par with the Welsh Brexit Party). The Welsh Parliament, along with the Scottish and London Assembly electoral systems, give us our best chance to get liberals elected to government and yet the leading voice on Welsh polling, Professor Roger Scully is projecting that the Welsh Liberal Democrats could have no representation in the next Assembly. To implement policies like UBI, you need to be in power, you also need to gain the trust and respect of the electorate. Right now, the Welsh Liberal Democrats is a failing organisation. No business would survive the waves of defeat that the party has suffered in the past decade. As the party of ‘small business’ perhaps, more than ever, the WLDs should be focussing on an ambitious local party growth strategy with credible leadership, to rebuild the party. There are some fine liberals in Wales trying to do just that. In 1918 every Welsh MP was a Liberal. Right now we have none. Something clearly isn’t working! Talking about UBI is putting the cart before the horse when you don’t even have a horse.

  • @David Evans (and @Paul Homes, Katharine Pindar etc etc) “Although Simon’s question is very pertinent, there is another, much more fundamental problem we face …

    How do we get people to notice us?”

    We get people to notice us by answering Simon’s question in such a way that we can present a striking proposal.

    Simply going on and on that “austerity/the Tories/Nick Clegg/the coalition/neoliberalism is/are EVIL!” without actually coming up with a credible way to address problems isn’t going to cut it.

  • Peter Martin 22nd Apr '20 - 9:43am

    “There can be no going back to business as usual”!

    Excuse me, if I sound cynical but that’s what most people want and that’s what the Govt will be trying to achieve. Whether this is going to be possible remains to be seen. There are several big problems.

    1) The virus itself. That’s going to be around for a while. A vaccine may or may not be found or be as effective as hoped. There is a general sense of optimism that we have “reached the peak”. But peaks don’t always look like the Matterhorn. This one could be more Table mountain or even the Rocky Mountains. One peak after another.

    2) The UK economy. The general assumption is that we’ll have a recession and the Govt will need to run large deficits to keep it going. That’s possible but if the productive capacity of the economy collapses, we could have severe inflation problems when lock-down ends or is eased. Many stay-at-homes are actually doing well financially. This group would include anyone on a reasonable salary who’s working from home, already wealthy retirees, rich footballers etc. Their problem is not that they don’t have any money but that there is nothing much to spend it on right now. So their spending power is accumulating. If they decide to catch up on their spending all at once when production is well below normal then we all know what will happen!

    It’s usually others warning me about the dangers of hyperinflation when I say that Govt budgets don’t have to be exactly balanced! 🙂

    2) The EU/ Eurozone economy. They’ll have the same problem too of course. They also have the problem that Germany seems to be doing better than anyone else in controlling the virus. Even before the crisis there was always a net flow of funds, albeit in the form of unrepayable loans, moving from the wealthier North to the peripheral regions. Since the crisis started we’re seeing even more unrepayable loans. The Germans and Dutch are already wanting to put silly conditions on them just as they did after the 2008 GFC. These will make the peripheral economies even less capable than they were before of even servicing the loans.

    Something will have to give and it could well be the whole structure of the eurozone which could take down the EU with it. This is going to cause us severe problems even after we’ve completely left the EU.

    Maybe “business as usual” won’t seem so bad after all!

  • @ Hilton Marton “In 1918 every Welsh MP was a Liberal. ”

    …. split between Asquithians and LLG’s followers. M A D, mutually assured destruction.

  • Katharine Pindar 22nd Apr '20 - 11:08am

    John Marriott. Your hope for the advancement of our party seems to be voting reform, which we do all desire, rather than any radical ideas such as UBI or a new Social Contract. You accept that we still remain a small party, but do you accept that we remain at 4 or 5 per cent in the polls? surely not, it feels like a path to destruction.

    We have to do as Hilton suggests, have an ambitious local party growth policy, which I suppose means the hard work to get local councillors elected again, which you and Paul Holmes have done so much to achieve in the past.

    But I think that is still not enough. We need a central message for voters, a message about what the Liberal Democrats are about. I believe we have to adopt the strong message that we will combat present evils just as William Beveridge proposed during the Second World War. And these evils are poverty, unemployment, inadequate health and social care provision, insufficient decent housing and failures in education and training,. These evils, in the new context of also combatting the evils of climate change, must be addressed in a new social contract between government and people. There is no more fitting time than this one to be fleshing out this proposal as a central message for us..

  • @Katherine Pindar what duties and responsibilities do you place on the citizen in your proposed Social Contract?

    Beveridge was very clear on this: “The State should offer security for service and contribution. The State in organising security should not stifle incentive, opportunity, responsibility;”

  • @ Katharine ” these evils are poverty, unemployment, inadequate health and social care provision, insufficient decent housing and failures in education and training,.”

    I’d be more optimistic if Liberal Democrat M.P.’s had shown the least bit of interest or commitment in any of those areas, Katharine, and I don’t just mean between 2010-15. You know who I mean.

    “How do we get people to notice us?” asks an anonymous poster. Believe me, they’ve noticed alright……… which also answers John’s point about the press.

  • Peter Martin 22nd Apr '20 - 1:15pm

    To quote Jane Dodds:

    “William Beveridge, one of the giants of the Liberal tradition, crafted a report to address what he called the giant evils: want, disease, ignorance, squalor and idleness. He challenged a generation of economic thinking that had failed, placing work at the centre of his vision of a decent and generous society”

    And yet in a typical Lib Dem discussion there is no mention of “work” at all. The idea is that the U in U.B.I. should stand for Unconditional as well as Universal. There’s some woolly idea that all those in receipt of a UBI will suddenly develop a sense of social responsibility. As John Knox (not the more famous historical one !) put it on another thread:

    “After a while they would I think become bored (with their £2500 UBI -PM) and start new businesses or become artists or sportsmen or go volunteering and so add to society in that way”

    B*ll*cks!

  • Paul Holmes 22nd Apr '20 - 4:33pm

    @Joseph Bourke. The two reports you refer to do indeed make an effort to actually cost up their proposals -unlike so many articles which just proclaim that an uncosted UBI scheme is ‘the answer’.

    The New Economic Foundation proposals are for a UBI of £48 a week (£2,500 a year) paid for by scrapping personal tax allowances and dropping the threshold for paying higher rate tax from £50,000 to £37,500. The net effect would be that anyone currently (Spring 2019 figures) earning over £25,000 a year would be worse off, anyone earning below £25,000 p.a. would lose £2,500 tax free allowance but be given it back in UBI -so no worse or better off for them. People on benefits would get £48 a week extra. Not strictly UBI as those earning over £125,000 p.a would not receive the £48 a week!

    In essence it is a proposal to raise taxes for all earning over £25,000 in order to pay an extra £48 a week to anyone entitled to benefits.

    The other proposal, published last year by Compass, was not a UBI scheme as such:

    1. Abolish the tax free allowance and raise taxes by 3p in the pound. “Return social security spending back to the levels of a decade ago to help cover the costs of UBI”…whatever that throwaway line means.
    2. Use that money to:
    a) Replace Child Benefit with a flat £40 per week per under 18 year old.
    b) Replace the current State Pension with £175 per week per over 65.
    c) Pay all other adults a flat £60 a week.

    Now given that the UK’s benefits system is one of the lowest of our equivalent western economies (as are our overall tax take/state spending as a % of GDP) I personally have always advocated increasing taxes to pay for better public services in various respects. But I think people should put forward costed plans not wishful thinking and should recognise that more spending, whether on benefits, NHS or anything else means that the money has to first to be found somewhere.

    For example, if as a Party we want to boast that raising the tax threshold to £12,500 was ‘our idea’ and makes the Coalition worthwhile despite everything else that ensued, then we also need to indicate where the extra money derives from to increase spending on other things that we think are a ‘good thing’.

  • John Littler 22nd Apr '20 - 6:04pm

    I am pleased to see Jane Dodds arguing for UBI. It seems to be forgotten that it was a policy under the SDP/Liberal Alliance for a “Basic Citizen’s Income”, a policy dropped partly because of the public reacting aggressively towards press and Tory exaggerations of benefits cheats. It’s time had not come, but it has now.

    Never before in history has an economic revolution happened so rapidly and disruptively or to be so potentially comprehensive. Previously, the Industrial revolution galloped pace over decades. This one will peak it’s changes potentially in just 5-10 years on the back of Corona and Brexit fall outs. Previously machines took physical tasks, liberating people to work in brain related tasks and creating new jobs

    This Information Revolution takes both white collar work, such as lawyers, medical consultants and even learning creative tasks, while robots and automation take manual jobs such as driving, farming jobs, warehousing, retail and deliveries. The technology will create more jobs, but this time it will be able to do many of those also.

    A Citizens Income could be great for many people, in liberating them from the daily grind of 9-5, while allowing them to become entrepreneurs in their chosen field, to work helping people, to pursue hobbies, develop skills and artistry. Of course some will not like what is likely to be a lower overall income, but the alternative cannot be sustained much longer.

    The net is replacing much of the high street and out of town stores and Corona will accelerate it. Driving and warehousing will be cheaper and eventually safer done by machines, while advanced learning algorithms can already identify cancers better than experienced consultants. So what will people do?

    People will need money from somewhere and it is likely that the free market alone will not supply enough. So it has to come from government but not in form of benefits administered by huge expensive bureaucracy, banning you from working and cajoling you into applying for hundreds of jobs that don’t really exist. The money comes as a minimum underpin, allowing you to earn on top. It could have a taper to cut it off to higher earners, although there could be a political pressure as a result to reduce it.

  • John Littler 22nd Apr '20 - 6:06pm

    2.
    The tories do not like universal citizens income but were forced by Corona circumstances into something quite similar at very short notice, yet they wasted 10,000 civil servants into having to organised a qualified scheme with hoops to jump through and delays that cannot support the whole economy. The LibDems need to grasp these issues and own them or it will be eclipsed by a big Labour offer, or the Tories being forced to do it anyway.

    Hiding behind Neo-liberal principles supporting an increasing gig economy would see the LibDems becoming irrelevant and wiped out

  • John Littler 22nd Apr '20 - 6:11pm

    The present changes in the economy, Green issues coming to the fore, robotics, universal incomes, Trans issues, the information society and much more were predicted and examined in extraordinary detail with their huge impact on society in a book written in the 1970’s, Alvin Toffler’s “The Third Wave”.

  • Jane Dodds,

    Eighty years ago, William Beveridge, one of the giants of the Liberal tradition, crafted a report to address what he called the giant evils: want, disease, ignorance, squalor and idleness. He challenged a generation of economic thinking that had failed, placing work at the centre of his vision of a decent and generous society. We need the courage, the breadth of vision, and the radicalism of Beveridge if we are to build a renewed and decent and just society in the aftermath of C19.

    Would you support a new Beveridge type social contract to deal with poverty, health issues, and the housing crisis and to provide a job for everyone who wants one and free education and training so everyone can fulfil their full potential?

    I hope you will respond to this comment and all the others in this thread which seek a response from you.

    Joe Bourke,

    According to the Resolution Foundation the value of the cuts in benefit are about £34 billion a year and this money needs to be restored to those on benefits not given across the whole population with those people who currently don’t work and whose household income doesn’t entitle them to benefits benefiting the most.

  • Katharine Pindar 23rd Apr '20 - 1:39am

    Gwyn Williams. Thank you very much for posting about the Welsh Liberal Conference motion of 2018 which endorsed the idea of updating the Beveridge report on the five great evils, in the context of a fair, free and open Wales. It is a bit daunting to think that so excellent a motion did not help sustain the Welsh Liberal Party in 2019. However, you helpfully advance the debate on the possible new social contract by pointing out the Welsh Lib Dems’ version of the five evils that we must combat. It is exactly this debate that is needed to put more ‘flesh on the bones’ than Michael BG and I managed in our own article.

    It is interesting for example that the Welsh party decided there was a sixth modern evil, loneliness, whilst I in my latest comment above said that the five evils must now be considered in the context of the need to combat the evils of climate change. It would be good if more members could think about the dimensions of the subject, so that we can advance to submitting a motion about the new Beveridge-type social contract to our national September Conference. It is a powerful idea that needs to be powerfully presented, to be able to show it to the public as a defining Liberal Democrat theme.

    TCO, it is still Katharine with an ‘a’ in the middle, and I will refer you back to the answers I gave you to your same question in the previous thread.

  • @Katharin Pindar “I will refer you back to the answers I gave you to your same question in the previous thread.”

    Indeed. The answer you gave on the previous thread to the question “What duties and responsibilities would your Social Contract place on the citizen?” was, effectively, “None.”

    So I will refer you back to the point I made above. Which is that a contract always has at least two parties, both of which have to perform their obligations under the contract. A point Keynes understood very well, as my quote illustrates. And a point many leftist Liberal Democrats such as you and the OP continually fail to grasp, despite a declared admiration for Keynes.

    You will never sell a revised Social Contract to the majority of the public unless and until you tackle this point, rather than avoid it.

  • Katharine Pindar 23rd Apr '20 - 10:15am

    TCO. That the British public well understand their own necessary contribution to a successful Social Contract without its being spelled out is amply illustrated by the compliance shown to the necessities of social distancing and and only leaving home for essential purposes in the present crisis. It is government that needs to be shown it must abandon the preservation of power by its own class and associates to serve all of the people, as Liberal Democrats (unlike the Labour party despite its fine words) fundamentally believe, and should now enunciate clearly and demand.

  • @Katharine Pindar “That the British public well understand their own necessary contribution to a successful Social Contract without its being spelled out is amply illustrated by the compliance shown to the necessities of social distancing and and only leaving home for essential purposes in the present crisis.”

    The present crisis demonstrates nothing of the sort. Asking people to stay at home to prevent either themselves or people close to them from catching a life-threatening disease during an international emergency is a unique event. It also taps heavily into a vein of “enlightened self-interest” (which is the basis of modern capitalism).

    Drafting a comprehensive contract between the rights and obligations of citizens towards the state, and the state towards them, to cover multiple areas of interaction, is highly complex and contentious.

    Any serious party of government needs to give thought to both sides of the equation, not just come up with a wish list of pet spending projects.

    The fact that you are unable to “spell it out” indicates either that you’ve not given it any thought, or that you have, and don’t believe it’s saleable.

  • Dear Ms Dodds

    You seem to be extrapolating the Welsh situation to the whole of the UK. You are, I believe, also a Federalist. Perhaps devolution of more power to the Welsh Assembly would offer at least a partial solution?

    The increase of the lowest tax threshold during the coalition was a very successful policy – why not build on that? Agreed, we still have to do something for local businesses, who do pay corporation tax, from globalised ones, who do not.

    Finally, automation is work. Software automation is increasing, and some companies are relocating to Belfast to take advantage of lower costs to do it (and online as well). More companies, and govt departments, would relocate to Wales if there were more highly educated/trained people. For example, the ONS has done this and has suffered slightly because it cannot find or attract people.

    In some ways the C-19 crisis has shown some more limitations of our capitalist way of living, notably for CBD’s and Just-in-time-delivery. If, as seems likely, there is a shift to more online work then can Wales benefit?

    The Welsh have a proud history in innovation (https://en.wikipedia.org/wiki/List_of_Welsh_inventors) !

  • Steve Comer 27th Apr '20 - 9:20am

    We need policies that are clear and easy to explain in a couple of minutes on doorsteps or in an e-mail.
    UBI is one of those, but I was concerned about how the figures stack up, but the links helpfully provided by Joseph Bourke help to answer that one.

    The last time I can remember the Liberal Democrats having a manifesto I had confidence in was 15 years ago. Perhaps as a start some of the ideas in ‘The Real Alternative’ should be re-visited and updated:
    http://ucrel.lancs.ac.uk/wmatrix/tutorial/libdem%20manifesto%202005.pdf

  • For income and wage inequality, manifested over decades of Tory & Labour rule , see
    https://www.equalitytrust.org.uk/how-has-inequality-changed

    Thatcher was boom time for the top 10%. The bottom 10% have been driven into the ground, which is probably very acute in Wales.

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