Opinion: is the golden age of government largesse over?

It is true that things were always better at sometime in the past. Or at least, it feels like that, especially as you get older. But perhaps it is. In the period since World War II, government, at national, state and local level, has provided more and more in the way of support to indivdiuals, organisations and communities, mostly for reasons widely supported to be of public good, sometimes for more cynical reasons, occasionally because it can. In a growing economy, such interventions are sustainable.

However, Robert Black, the former Auditor General for Scotland, in a lecture at the David Hume Institute last night, questioned whether or not the current range of free public services can remain so. And, whilst his examples were taken from Scottish government programmes, the point he makes is one that the rest of us need to consider very carefully.

Responding to Scottish Labour leader Johann Lamont’s suggestion that their support for free university tuition, a freeze on council tax and free NHS prescriptions could be in doubt, Black said;

The move being made by the Labour Party in Scotland to at least start asking questions is a good thing.

We need to do more of that but we need to do it as a society. I mean can we really afford all the services that are free at the point of delivery?

Of course, politicians agree with that. Well, mostly in private, but they do. The question is, how do you create a safe space in which politicians engage with the wider society to argue over what, and how?

To take two of his examples, the cost of the concessionary travel scheme in Scotland in expected to reach £500 million in the next decade. Is sacrificing that to maintain free, or subsidised nursing care for the elderly a reasonable exchange? Did increasing police numbers in Scotland from 6,900 in 1949 to 17,000, despite the use of technology, make people safer, or even feel safer? What has changed to justify the increase?

In his lecture, Robert Black went on to argue that, instead of focussing on passing more and more legislation, government should spend more time on budget scrutiny. The notion that Parliament might focus on how things work and what they cost, and how one might make existing structures work better, rather than replacing them with new ones, is not very ‘sexy’, nor does it leave an obvious legacy for the Minister, but it does have the potential advantage of stability and of organic, evolutionary change in the way public services are run.

As Liberal Democrats, we need to be part of that debate too, and whilst it is tempting to take the same stance that Labour have taken in opposition at Westminster – not this cut, not in that way, not now – if we are to protect the vulnerable, create opportunity and encourage freedom, we need to think about our priorities for a decent, inclusive society are and how we pay for them over the long term, and then start making that case in public.

* Mark Valladares worries about balancing the books at his Parish Council in Creeting St Peter, Suffolk. He has a nasty feeling about anything much beyond that.

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32 Comments

  • Caron Lindsay Caron Lindsay 5th Oct '12 - 3:16pm

    I was just about to write a post on this very topic – great minds and all that!

    This has been a big discussion point in Scotland over the past week or so. The SNP have done their usual and are pretending that they can just go on as they are, although they themselves commissioned two reports into the future of public services and universal benefits.

    It seems ridiculous that my husband, just because he’s 60, has a free bus pass, despite the fact that he’s working. We could get Winter Fuel Allowance this year, while a disabled person struggling on benefits can’t. Why, also, shouldn’t people earning the most get free prescriptions. I can think of better ways to spend £40 million.

    There was a debate in Parliament this week where Willie Rennie spoke of the universal benefits that Lib Dems had introduced – free uni tuition and free personal care, free bus passes, and free eye and dental checks to name but a few. He said that there were some universal benefits that it made good sense to support because the gain to society was clear. He mentioned eye tests:

    “On free eye checks, for example, there was a report by the Association of Optometrists—one might say that they would say this anyway, but the report includes some excellent figures—suggesting that the cost of poor-sightedness is around £2 billion a year. Free eye checks costs around £30 million, but the return is in the order of £400 million because there are an extra 300,000 eye tests a year. That is a good thing to have. That is the wider benefit of preventive health; the principle there is about preventive health rather than universalism as the policy helps us to deal with a greater goal.”

    He then spoke about some of the things he wished we were doing in Scotland – extending nursery education from the current 1% of 2 year olds to the 40% that Nick Clegg has ensured down south, as well as the Pupil Premium. We could free up some money to pay for that if we didn’t have 9 years of a Council Tax freeze which benefits the wealthiest most.

    “The big problem that I have is with the council tax freeze. I cannot understand how the universalism in that has been dressed up as equity. “The Government Economic Strategy” mentions sustainability, cohesion and solidarity, which are great principles, but I am not sure how the council tax freeze fits with those. How can Fred Goodwin being given a discount of £3,000 be of benefit to the wider community? I have a big issue with that and I think that we need a debate about that.

    Universalism itself is not the principle; the big issue is what benefit we get from the investment that we make.”

    I do get the feeling, though, that it needs to be more than politicians who contribute to this debate. Where are the people’s voices? This debate has to be a national and inclusive one. In Scotland we have the added advantage of new fiscal powers in the Scotland Act. We have to show how these could be used to create the best fit between the money we bring in and the things we want to spend it on. If we want to spend more on things like free personal care, which has tripled in cost since its introduction, we need to be honest about how it’ll be funded. If that means we have less of a gold plated inspection regime for example, or we, dare I say this, raise taxes, then we need to work out the implications of it all.

    It’s all about money so far – but we also need to be explicit about our values when we as Liberal Democrats are talking about our ideas. For Johann Lamont, it’s all about energising her core vote by launching some fairly ferocious attacks on free personal care and free university tuition. There are bound to be winners and losers in this. What’s slightly concerning is that Labour are scapegoating the so called sequeezed middle as much as Cameron has a go at people on benefits. It’s not very edifying.

    It’s up to the Lib Dems to inject values, sense and realism to the debate.

  • David Allen 5th Oct '12 - 5:27pm

    There is a lot of sense in what has been said about things like concessionary travel and winter fuel payments to the rich, where there is scope for savings. However, we should also look at the wider picture.

    A while back, David Dimbleby wrapped up a session on Question Time in some bewilderment, because all three party representatives appeared to be in complete agreement with each other. The agreement was that we should have reducing social inequality. And yet of course, what we have had over the past thirty years has been increasing social inequality. Have all of those politicians somehow achieved the opposite of their declared aims? Are they incompetent, or are they fighting forces they cannot control, or are they just fibbing, or what? And if we conclude that mendacity is the order of the day, how have they all got away with it?

    We know that Labour politicians have declared themselves intensely relaxed about the rich getting richer. We know that our favourite think tanks have been bankrolled by the hedge funds, as was the Orange Book. We know that Lord Ashcroft would not stand in the way of the march of the plutocrats. But nevertheless, the Labour and Lib Dem parties are full of poor saps who genuinely believe that they are there to fight such trends and overcome poverty. How come they seem to be losing so heavily?

    Well, what has happened to taxes is one half of the story. The rich have lectured the rest of us that progressive taxation is no longer acceptable, because globalisation means financial anarchy, and the rich have clever lawyers who will find ways of not paying. So, the argument runs, we would do best not to even try to make them pay.

    The attack on the State is the other half of the story. Of course, if the rich do not pay, there is not enough money for the State. The rich do not want to lose the police, or the army, or the prisons, because these are things they would prefer not to buy privately. It follows that the State must retreat from other areas, like healthcare, which it suits the rich down to the ground to purchase on an individual basis. It follows that the State must be denigrated as inefficient and immoral. A generalised statement that we cannot afford free public services, and that they are wasteful and act to feather-bed the feckless, plays into the hands of the rich in this respect.

    Well, I hear you say, if it was really as blatant as you make out, far more ordinary people would refuse to stand for it. The fact that most people believe benefits are too high, and that marketisation is just a question of how things should best be run efficiently, proves that you are grossly overstating things, David.

    About benefits being too high. It’s a well known historical fact that when times are hard, people seek out scapegoats, like gypsies or Jews or scroungers, who can be blamed for the hard times. Osborne has tapped into that sentiment. OK, I hear many of you say, I’m with you there.

    About marketisation as being a mechanism of large scale redistribution from poor to rich? Hmm, not so sure about that one, I hear you say. OK, Sid made a few bob out of his British Gas privatisation shares, but, not a big deal in redistributive terms, surely? And as for tuition fees, what’s so terribly regressive about them?

    Well actually, there is a tremendous amount that is regressive about shifting whole categories of expenditure, such as tuition, from the State budget to personal budgets. To put it simply, if Dives and Lazarus must each buy a widget, they must each pay the same, even though Lazarus is a poor beggar. If the State buys Dives and Lazarus each a widget, then the State will ultimately get most of the money from Dives, who can afford to pay tax.

    Why is there no outcry about all this? Well, because things like tuition fees come with a veneer of “progressiveness” to impress the credulous. When Labour first brought them in, they made a huge song and dance about the bursaries they would set up to help more poor kids go to Uni. Result, of course, fewer poor kids going. Now, we have signed up to a scheme which turns progressive at the margins, by allowing a small minority of the very poorest graduates not to pay off the debt. It’s another case of smoke and mirrors. For the great majority, fees are hugely regressive. And while Clegg gets it in the neck for the wretched pledge, Cameron escapes censure for his money grab.

    Mr Robert Black comes over as a prudent accountant and public servant whose thoughtful comments on priorities demand respect. But for the kleptocrats who run our country, people like him are just useful idiots, the perfect smokescreen for banditry.

  • David Allen. You’re clearly an articulate chap. A graduate possibly. In a “graduate” job? Possibly a well-paid graduate job. How do you define rich? Possibly, like Harry Enfield, as people “considerably richer than yow”. And yet … I would wager, were all the above to be true, you might appear like “the rich” to others.

    No matter.

    It would seem, though, that you’ve identified a gap in the market (although you may not appreciate the phraseology). You’ve clearly spotted things that others haven’t. They should be told. By a new party with a new leader?

  • David Allen 5th Oct '12 - 6:08pm

    Tabman,

    My working assumption, for some long while now, is that you and I have never met and that I don’t know who you really are. After all, I can think of people I know who don’t like me, but I can’t think of anyone who hates me quite that much. … But I do have to wonder sometimes, was it your girlfriend whose dress I spilled my pint down, years back in the past, and have forgotten all about? Do enlighten me if that’s the case, please!

  • paul barker 5th Oct '12 - 6:28pm

    Can I just say that the older I get the more ghastly the past appears, except for the bits with my daughter in them.

  • Davis Allen. You just don’t seem very happy about things, permanent downer on the party; I get the sense hiya feel you could/would do things much better. I’m fascinated as to your rationale for sticking around. Call it an interest in human nature if you will.

  • David Allen 5th Oct '12 - 7:11pm

    Tabman,

    One part of my reason for sticking around is emotional – I have spent years working to build up our local strength, and I retain a huge respect for the people (Jenkins, Williams, Steel, etc) and the ideas which brought me into politics in the first place. The other part is practical. This party is the swing party that can decide who rules the country, and it has temporarily been captured by the Clegg Coup for the wrong side. That we need to change, and we will change. Good enough reason to stick around.

  • Simon Titley 5th Oct '12 - 8:06pm

    What’s new? There is nothing revelatory about Robert Black’s lecture. Politics has always been a moral argument about priorities.

  • Jenkins is long dead; Williams and Steel support the elected leader. No coup about it.

  • David Pollard 5th Oct '12 - 8:36pm

    The core argument is about what % of GDP should Government take and spend on our behalf. I think the argument that Government should borrow to pay for good services was demolished by the Brown and Balls experiment. In some other European countries Government take is over 50%. So what do LibDems think?

  • Douglas harper 5th Oct '12 - 11:34pm

    The debate raised by Robert black is clearly valid but if has any effect it will be in years time in the meantime the cuts affecting the poor,disabled ect are going ahead now. The incompetence of ministers and senior civil servants is here today. If you don’t agree read the reports of the public accounts committee for the last five years, the debacles of pfi,fire control centres,tax evasion etc etc go on and on and now we have the rail debacle. Lib deems now have ministers and there are two actions that they, yes lib deb ministers, could take today ie insist that all contracts and contract appraisal in their domain are fully and publicly transparent and that the public accounts committee are allowed to publicly comment before contracts are awarded. Ken Clarke says ministers should not scrutinise contracts, if he his right then give the the job to Margaret hodge, she and the committee could save billions. Lib dem member and procurement background

  • Very good article, and the beginnings of a turning point in thinking.
    “In a growing economy, such interventions are sustainable.”
    Year on year the children have expected bigger and better presents from Santa. And the growing economy has allowed Santa to do, just that. Now the economy is not growing and not expected to grow by much, if anything for many years. How do we manage the expectations of the children downwards and still expect them to love us?
    Nick Clegg found out the hard way, not to promise Christmas presents that the bank balance couldn’t meet.
    On making informed decisions on what society can really afford, you write:
    “The question is, how do you create a safe space in which politicians engage with the wider society to argue over what, and how?”
    A damn good question. The ‘all in it together’ concept has been tried, but failed spectacularly. And I suppose, Ed Milliband is having a decent stab at it, with his ‘One Nation’ bandwagon.
    But I fear society is too fragmented, tired and disillusioned by politics to search for an answer to your excellent question. And that is a worry, because this is a time ripe for charlatans. Whilst we look for that safe space to discuss the fairness and practicalities available to society in the new economic reality, let’s also be vigilant for dangerous pretenders that tell the children that Christmas can be, as it ever was.

  • Matthew Huntbach 6th Oct '12 - 9:42pm

    jedibeeftrix

    “The core argument is about what % of GDP I acquiesce to Government taking to spend on our behalf”

    Well, you keep saying this, but you have not answered my point – why? With a little bit of trickery we can up or down the amount the government takes. As I’ve argued, if there were no NHS but a system which guaranteed health care to those who truly could not otherwise afford it, the amount of money taken by the government from the GDP would be much less. But why do you hold this to be such a big thing? I can’t see that this other way of running health care would make me any more free than I am now.

    One could devise elaborate ways in which the services one gets from government are balanced out directly with the taxes one pays, so that it no longer counts as going through government hands. Something like this used to be Liberal Democrat policy – stop making welfare payments to one hand and taking taxes from the other. The tuition fees system just introduced shows another piece of trickery – label a graduate tax “repayment of loan”, and it no longer counts as government share of GDP. Well, do students feel so much more free under this system? I’ve not noticed huge numbers of grateful students showering the LibDems with praise for making them oh-so-much more free in this way.

  • Tony Dawson 7th Oct '12 - 8:37am

    What I find rather depressing is that comments on this thread which have not got anything to do with the subject at hand, but are sheer personal invective, have not been moderated out.

    Some people, it seems, will do whatever they can, it seems, to provide further ammunition for our political enemies by constantly provoking further public arguments (including here) about the competence or otherwise of the party’s leadership.

  • I tend to agree that constantly remodeling whole departments rather than improve existing ones is counter productive. But I think sooner or later reality kicks in. As far as I can see we are running things in the interest of tiny minority of the population,. Trying to keep income tax low, trying to cut the size of government and such as like. but we have an aging population, Which means increased health problems, decreased mobility. This isthe result of biology not fiscal policy, but we are trying to reduce spending, as if nature will just go away,at the same time as imposing policies that have an inflationary effect. Would for instance free bus passes and winter fuel payments be necessary if we cut fuel duty and controlled the energy markets better.. On the TV licence. there’s a very easy solution. We abolition licence fees altogether. Are Doctor who and Strictly Come Dancing really so vital to the Nations cultural well being that they need compulsory funding and. legal protection to ensure they’re existence. Or at the very least reduce it to a nominal fee for a non-competitive business.

    Or perhaps we could tell people straight, that they are going to get older and poorer unless we increase National Insurance, tax the rich properly and face reality. Private pension schemes have a poor record. and for the ordinary person provide nowhere near enough to live on and are often an excuse for very poor investment..

  • For what it’s worth I agree with David Allen, with whom I am proud to share my political affiliation, and I do regret the apparent passing of our leaders’ commitment to universal benefits. But I am also a pragmatist and I recognise that our leaders need to tackle the general but economically irrational public antipathy to “wasting” welfare benefits on the rich and on “scroungers”. And I find myself paradoxically agreeing with both jedibeeftrix’s concern about how we present the overall “tax take” and Matthew Huntbach’s appeal to look behind the figures at the actual impact on citizens.

    So while I would prefer a more liberal and modular citizens income approach in which we provide benefits entirely according to need and fund these through a much simpler and more proportionate and less avoidable taxation system based on ability to pay , I am prepared to support a more complicated system which has the same effect but will attract more public support by netting off taxes and benefits. For example an integrated tax and benefits system in which there is limited means-testing of benefits up to a higher “tax threshold” at a proportionate rate (ie significantly less than 50% of marginal extra income) which ideally would be no more than the tax rates that apply above the threshold. This is more or less what I hope the Government is trying to do, albeit very imperfectly, with the universal credit and higher tax thresholds.

    In deciding which benefits to means-test (or in reality tax) and what value to put on them, we need to avoid a purely accountancy-based viewpoint: such as the excellent example of free eye tests given by Willie Rennie. And also not equating say the cost of free bus passes to the lost revenue from each of the recipients buying these services at the full commercial rate, when we know that many elderly people would not otherwise buy a bus pass, do not (or hardly ever) use public transport even though they have a bus pass, and the marginal cost of giving them a bus pass is minimal. Similar points apply to TV licences, child care and university tuition.

    When looking at old age benefits it is also worth remembering that the loss of faculties associated with old age that triggers the need for benefits does not suddenly happen at age 65 or 75 and is not uniform between individuals or groups of individuals across the country. So that while I am a fan of the citizens pension and other benefits for the elderly I think we need to ensure that there is a proper continuum between these and the benefits which are available at younger ages including disability benefits. My own preference would be to treat age as conclusive evidence of eligibility for benefits available to those with disabilities at younger ages based on medical evidence or to those who at younger ages are required to provide evidence of willingness to work; and for other benefits which are needed by the whole population to be genuinely universal.

    If we can adopt this approach more rigorously we can be far less intrusive, more proportionate, avoid many of the anomalies which bedevil our current welfare system, reduce the scope for gaming and fraud, and be genuinely more liberal. I appreciate that this would not deal with all the issues – including concerns about existing entitlements and expectations at the transition, and public prejudices about tax/benefits for pariah groups such as criminals and migrants (in and out) – but at least it would give us a simpler and more straightforward system in which the issues are more transparent and concerns can be tackled directly.

  • 1. Please can “tabman” stop his personal abuse using a fictional name. If anything, from your comments, it reads like you are a Tory or at least have Tory sympathies.
    2.We are obviously individuals but we are also part of communities in various ways, often with shared interests.
    3. The Liberal Democrats exist to build a society “……in which no-one shall be enslaved by poverty, ignorance or conformity” (Preamble to the Party Constitution). Maybe we shouldnt have decided to get rid of the membership card for existing members, with this statement on, as a cost cutting measure!!

  • Jedi.
    I think you miss the point that societies can shift ideologically and that the low tax model is relatively recent and only benefits a small proportion of the population.. If the money runs out you will have bigger problems than the Labour Party to deal with. Historically, social crisis hits those in power harder than those in opposition, anyway.

    And this idea that Britain is a nation of rugged individualists is far from true. We actually have a high propensity for censorship. more monitoring than you can shake a stick at and whenever the slightest incident occurs our first collective instinct is to call for some sort of ban or government action. . I would argue that Britain is contractanarian and that this is what the Economic Right exploit by talking about “fairness”. The contract could just as easily be re-written another way. Plus we are not a low tax economy really. We have a high rate of indirect Taxation, nuch higher than the US or most of Europe. Every year we have an elaborate ritual called The Budget to set the price of beer! Actually. the more I think about it Britain is more like a fifedom, with peasants and Barons than it is a 21st Century democracy.

  • Rob Heale – where have I abused someone personally? It wasn’t me who.implied that people who support govt policy on tuition fees are “credulous” or “useful idiots”, and therefore that I am far cleverer than they to have spotted it.

    Furthermore you accuse me of personal abuse then call me a Tory. I rest my case.

  • Stuart Mitchell 7th Oct '12 - 8:03pm

    Jedi: “One question that has the potential to sink labour and return the lib-dems: what is the purpose of Labour one the money has run out?”

    When was the last time the Lib Dems stood on a manifesto that promised less tax and spend than Labour? Whatever reasons you may have for gravitating toward the Lib Dems, low tax burdens certainly can’t be one of them.

  • Jedi.
    It depends who the Tax is aimed at and the state of the country. I think you could raise national insurance contribution ans a lot of people would hate it but I think their would be very little actual protesting. I also think you could cushion the move to higher direct taxation with reductions in fuel duty and things of that nature and people would get used to it. I also think inheritance tax set at the right level would work. What I believe in is an economy that benefits the majority over special interests.
    The point is that the Nordic models work very well and whilst similar policies would be initially unpopular. Once people got used to them they would seem natural. At the moment I think that people are being guided by Economic principles which keep too many of them on low incomes and that this will hit crisis levels with an aging population. I think the “We’re all in this together ” idea would work if UK citizens saw the positives, rather than just the negatives. I would also like to reduce the importance of yearly budgets, because I think they are a bit of a short sighted anachronism . Though its unpopular in liberal circles , I’ve begun to suspect that part of resolving Britain’s structural problems may involve a much smaller role in Europe.

  • It strikes me that the historic ‘tax and spend’ model of addressing inequality and opportunity is outdated and political debate is struggling to keep up.

    The basic idea that public services cannot be designed as ‘free’ rather than ‘free at the point of delivery’ needs to be reemphasised. No service (or indeed lunch) is free, so the relevant question should be ‘who pays, how, and how much?’

    Despite the angry exchanges there does seem to be massive and inordinate levels of agreement between the different perspectives represented above, and it seems to me that the frustrated difference of opinion derives from the fact that these questions are as yet unresolved.

    However I still hold out the belief that principles such as universalism and redistribution can be reconciled by following the line of reasoning promoted by Caron here that government is more active and accurate in assessing the economic balance of the effects of policies. Mark’s point that better budget scrutiny will satisfy this end by sidestepping ideological demands for services is spot on, but also needs to be augmented by a fuller understanding of how society recognises value in the economy.

    Land value is the standard response provided by many liberals, but while this may correspond with some recently overlooked discussions on ‘pre-distribution’ I think this is at most a partial answer, and it is unlikely to gain traction unless we are able to draw up a list of parallel values currently ignored – for example with regard to the tuition fees debate ‘education value’, or regarding free TV licenses and bus passes ‘communication value’.

    Society has come to accept that taxation is justified for spending on the invisible social costs calculated according to the ‘value-added’ nature of benefit accrued (eg universal standards of public health and education, better public information, greater accountabilty for public figures etc), so efficient taxation could provide more effective spending were we able to identify the full range of values in the social economy.

  • Dane Clouston: “Tabman was certainly unpleasantly dismissive of David Allen’s excellent thoughts.”

    David Allen was “unpleasantly dismissive” (your phrase) of people who agreed with government policy on tuition fees, calling them “credulous” and “useful idiots”, and implying that he was far cleverer than they as he had spotted what he believes to be spot government sleight of hand when they hadn’t. Why is pointing this out “unpleasant”? I would have thought the opposite is the case; surely any true liberal would put their trust in people, when presented with the facts, to make their own minds up about issues. To argue that the only reason these things are supported is because people are too stupid to understand them is the sort of attitude that we normally associate with other parties.

  • Matthew Huntbach 8th Oct '12 - 4:07pm

    jedibeeftrix

    We simply do not have a society that exhibits the same sense of collectives, as perhaps found in the Nordic countries, that would justify a high tax regime. Britain, a nation of individuals that in large part resented the imposition of the state, and resents taxation as the tool of that imposition.

    And your evidence for this is?

    It was not long ago that the opposite was said, political commentary often went on about how the British people had a natural collective mentality.

    I think what is happening here is the dominance of the right-wing press which has kept on and on writing the above sort of thing in the hope that if you say it, it will eventually come true. If it really were true, however, British people would not have such an affection for the NHS, and university tuition fees would not have been the big issue they are.

    The confusion in Britain is shown the “The Mail on Sunday” which I happened to see this week. On its front page, a big anti-tax article. Inside, a big article moaning about cuts to NHS spending. The Mail in particular seems to be full of this – it never seems to add all the calls for more government spending it is in effect making, with all the moans about taxation it is always making. So, essentially I see the Mail as a paper which whines “Why, of why …” and yet is not willing the accept the answer is usually “Because you would moan like hell at the tax rises that would be needed to pay for it”.

    I don’t see any deep real wish amongst ordinary British people for the sort of low-tax low-spending economy people like you are always going on about. It remains very much an elite obsession. I find most Conservative voters vote that way more through social conservatism than through keenness for right-wing economics. However, we have a press which encourages stupidity on these things by refusing to cover properly the most basic political issue – that if you want it, you have to pay for it. Instead it always encourages the attitude there’s something over there (vague hand-waving) that could pay for it – some “bureaucracy” that could be cut, etc. Mostly it’s bicycle shed stuff (i.e. the classic example of the committee which waves through spending of millions, then argues for hours about a few thousand spent on a bicycle shed). E.g. if you ask many people will say “Cut MPs pay, that will pay for it”. Er, no, do the maths, it won’t.

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