Social justice in a time of deficits

Liberal Democrats, and social democrats in the Labour party, share two key priorities. We want to improve social justice, and, to fund that work, we need to strengthen the economy.

We’ve often argued about the best way to do this, both within our parties and between them. But the decisions of the 2010-2015 parliament are behind us, and we need to look forward.

Unfortunately, deficits aren’t in the past. Since 2010, the deficit, when adjusted for the economic cycle, has fallen by about 40%. But it’s still around £65 billion a year. And the existing deficit is only one of our challenges.

Each year, the age profile of the UK gets older. As it does, the pressure on the NHS and other services increases, and the pressure on the government budget grows.

This will probably be made worse by Brexit.

Most analysts expect there to be a cost to the economy. The country may continue to grow, but the uncertainty caused by leaving, the risk of increased trade barriers with our largest trading partners, and the risk of a reduction in foreign investment will probably mean a lower growth rate than we would otherwise have expected.

Lower growth means less tax revenue for the government. And less tax revenue means worse deficits.

Unfortunately, there’s likely to be even worse news to come.

As economist David Blanchflower warned on the Daily Politics:

The reality is a recession is coming. Recessions come every eight to 10 years. I’m not saying I can predict it exactly, but if you are eight of 10 years in, that’s what the business cycle is, and we are eight years in…

In other words, whether we have a soft Brexit or a hard Brexit, we should expect another recession pretty soon.

That may be bad for the Tories, but it could be even worse for social democrats and liberal democrats.

If things turn bad for the economy, we might hope for a chance of a centre-left government. But, for that to happen, we have to answer a very difficult question.

How do we improve social justice at a time of deficits?

The public will expect us to have answers. And if we want a chance of removing the Tories from power, we’ll need to start coming up with answers.

On Saturday evening in York, conference attenders at the Social Democrat Group fringe meeting will be discussing this vital issue with former Liberal Democrat minister, Jo Swinson, and former Labour shadow minster Rachael Maskell.

However, this can’t be answered in a single fringe meeting, or in the comments below this post.

It’s a question we’ll need to keep coming back to again and again. The answers won’t come easy.

If we want there to be a realistic progressive alternative to the Tories, the whole of the centre left should do more than develop these policies in isolation. Of course, we’ll remain competing parties. And at times the competition will be fierce.

But when it comes to generating good ideas to challenge the hard right, we are allies.

* George Kendall is vice-chair of the Social Democrat Group. He writes in a personal capacity.

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4 Comments

  • Peter Martin 17th Mar '17 - 8:24pm

    “How do we improve social justice at a time of deficits?”

    Presumably you mean Government Deficits? We’ve had them for as long as anyone can remember! Even Margaret Thatcher’s government was almost always in deficit. Deficits are quite natural for a net importing country like the UK. If the current account is in deficit then someone in the UK has to do the borrowing to support it. Occasionally it’s the private domestic sector borrowing to excess – and that just occasionally, very occasionally, allows the government to be in surplus. But that excess borrowing by the PDS invariably is a harbinger of a bust to follow.

    So the question simply needs to be “How do we improve social justice ?”

  • Land value tax has to be a key part of the solution.

  • Thank you George for setting up a group to make former Labour Party members like myself feel welcome in the LibDems. And I support any and all efforts to reach out and realign the centre-left.

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