Tag Archives: economy

Who gains from Rishi Sunak’s Summer Economic Statement?

It is easy to criticise Rishi Sunak’s Summer Economic Statement for not doing enough. The Chancellor had a difficult task to assess what size of economic stimulus would be effective.

His main aim was apparently to create jobs for those who had lost them or will be losing them soon. But the Statement.is very disappointing because it doesn’t deal with the realities of the situation for lots of businesses. Social distancing is very likely still to be in place after October, so it just will not be possible for many businesses to provide their services to as many customers as before lockdown.

He should have included a new coronavirus staff retention scheme (turnover based). It should have provided a proportion (say 80%) of the difference between the takings of a business in a month compared to the relevant month in 2019, for businesses that can demonstrate that because of social distancing they can’t deal with the same number of customers.

Rishi Sunak reported that £4.6 billion of consumer debt has been paid off and households have increased their bank deposits by £25.6 billion. This means there is the potential for more than £30 billion (about 1.5% of last year’s GDP) to be spent into the economy when households have confidence restored.

With an economy valued at £2000 billion I believe the maximum economic growth per year with which the UK can normally cope is about £60 billion. Therefore an economic stimulus of £30 billion at this stage is about right.

Instead of allocating up to £9.4 billion for his Job Retention Bonus scheme, I think Rishi Sunak should have used the amount to increase all working-age benefits such as Universal Credit, Family Tax Credit, Jobseekers Allowance and Employment and Support Allowance by £20 a week, the same value as his temporary increase of Universal Credit and Family Tax Credit in March. This would have targeted the money to the poorest in society who are most likely to spend it and to the areas where more of these people live. Giving employers £1000 per worker retained is not going to do much to encourage them to retain the most marginal workers, and will do very little if anything to increase demand in the economy.

A lot of the £5.6 billion for infrastructure projects is not new money and includes maintenance projects. £900 million is for shovel-ready projects in England in 2020-21 and 2021-22. But some of this, maybe the majority, will not be spent until the next financial year. We must hope that most of the £5.6 billion will go into the areas worst affected by job losses.

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Transforming our economy while remedying our environmental crisis – Part 2

In a previous article, I started to highlight policy areas that could advance our fight against the climate emergency and looked at legislation and taxation. This article continues the discussion and looks at additional policy measures to drive change in the way we treat the world we live on.

3. Education – all schools should have climate crises as a part of their social learning – this can be written into the personal, social education time which schools use to address and educate on issues. For adults, continued government promotion on single-use plastics, diets and other life choices is essential, and each individual must take responsibility for their actions. The crisis is unfathomably large but broken down into a single person among 8 billion, and a single footprint to wipe clean, if we all clean up after ourselves, it is possible.

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Transforming our economy while remedying our environmental crisis – Part 1

The fight against climate change is a global one; we understand the issue and science. We also understand the urgency, and in the Paris Agreement, every country committed to reducing emissions to target a significantly lower than a two-degree rise over pre-industrial temperatures. While the complexities are significant, the issue is that globally we continue to put too many greenhouse gases into our atmosphere. The wealthy western countries have been the leaders of this pollution which are making the entire planet suffer, and the poorer countries are suffering more than the wealthiest; we need to lead the recovery.

The good news is that solutions do not have to be complex. For a start, we can put less harmful gases in and take more out. To achieve net-zero means that whatever we put in, we take out, essentially like wiping a footprint in the sand clean, so it looks like you were never there. At net-zero we, as humans, stop making the problem worse. However, we can strive to be better and to take more out than we put in, to allow the planet to get back to its natural cycles of carbon release and absorption.

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Post-C19 UK economic recovery; a new economic orthodoxy beckons?

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Economic crises, and the C19 pandemic certainly is one, have a habit of initiating a major change in economic orthodoxy.

Arguable examples include mercantilism after the collapse of the feudal system, Adam Smith after two long pan-European wars, end of the Gold Standard post-WW1, Keynes after the Great Depression and WW2, ‘market reforms’ after the 1973-5 recession & crash, and the ‘Washington Consensus’ after the collapse of communism 1989-91. Then came the 2008 financial crisis, which was still unresolved when C19 hit. To a great extent, each crisis arose from the ‘flaws’ in each new orthodoxy.

Each of these changes was highly controversial at the time, at first, and even subject to ridicule. But it is easy to forget that the emerging new ideas were aimed at particular problems perceived at the time, where the prevailing orthodoxy no longer had perceived relevance for the problems faced. The new ideas that endured above others did so in that context.

We appear to have reached that point now.  But it’s very messy.

In the UK the post-2008 orthodoxy we are probably leaving behind had already become something of a hybrid. Austerity in public spending aimed at partial debt reduction, was still there, but reductions in regulations had gone. Monetisation/Quantitative Easing had been introduced to purchase bank ‘assets’ (derivative securities). These bank assets had initially been the cause of the 2008 crash, as their value evaporated. However, the asset purchases still continued twelve years later, keeping interest rates artificially low, but leaving international markets awash with cash; evidenced by a rise in international share prices, to two to four times what they used to be, relative to company profits. Culprits’ reward.

Up until Brexit, this was the hybrid orthodoxy.

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Q: Coronavirus state aid.  Who pays the bill?

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A: No one has to pay.

I can imagine the fog in an economist’s head confronted with my question and answer.   This new thinking appears as alchemy to orthodox economists.  Conversely, what they trot out appears to me as an outdated theology, an irrelevant contorting of how many angels can dance on the head of a pin.

Their hand wringing is hollow, “Things cannot go back to how they were.  No More Austerity!” they cry, “The New Sense of Community will not stand for it!”

Chests puffed out quickly deflate as that thread of managerialism runs deep, doesn’t it?  Someone HAS to pay for this Coronavirus aid package that Rishi Sunak has found tucked behind the sofa cushion!   They sweat bullets feverishly calculating the final cost and devising ingenious ways for only the hated bankers and Richard Branson to pay for it, before finally acknowledging that maybe the darkest, quietest voices in the Tory Party have a point….maybe taxes do need to go up, maybe some services do need to be cut.

Any Liberal Democrat who carries on dancing to that Tory tune will lead us to our final death throes.   So let me be clear.

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Return of the Keynesians?

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Since the end of the Second World War British economic policy has largely been an ideological battle between two schools of thought. One embraces the state interventionist ideas of John Maynard Keynes. The other the ideas of free market thinkers such as Friedrich Hayek and Milton Friedman.

But as the financial pressures of the coronavirus hit, and as countries around the world are faced with rising unemployment, a reduction in economic output and the failure of major industries the phrase “We’re all Keynesians now” has never been more apt in our modern history.

The economic and political fallout from the COVID crisis will be huge and bring new challenges to Governments and political leaders around the world. The UK government has already provided a £30 billion stimulus package to help mitigate the financial fallout, followed by a further £330 billion in guaranteed loans to businesses.

With that in mind it the support measures announced so far are time limited. Support for the self-employed and causal workers is focused on mitigating the effects of not being able to work during lockdown. There have been no moves towards permanently readdressing the low pay or inequalities these people routinely face in their day to day lives.

Such short-term changes will be easier to revoke once the crisis is seen to be resolved. It’s also very noticeable that there has been no discussion of pay increases for NHS staff and that in all likelihood a public sector pay freeze will be instituted by the Chancellor in a bid to drawback the costs of the Government response.

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Daily View 2×2: 7 May 2020

2 big stories

Who’d have thought it? The achievement of the testing target on 30 April is already looking deeply shady, with the inclusion of posted tests included in that figure, plus allegations that even those posted weren’t actually usable. And now, subsequent data shows that the numbers are going backwards, not upwards. The solution, a new target. The distraction from failure – some relaxations in terms of going out and about.

Meanwhile, the European Union is predicting that its economy will shrink by 7.4% this year, the worst performance since World War II, with the economies of Southern Europe worst …

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After the virus: an economic future for Wales

Our economy in Wales was already facing difficulties. The Welsh economy’s long-term problems are well-documented; low productivity, a long-term lack of investment, a declining working-age population, significant public health issues. Add to that the likely effects of Brexit – especially a no-deal Brexit, which, on the basis of the OBR’s own figures, would be likely to deliver a severe productivity shock to the UK economy – and the effects of February’s floods, and even before the effects of lockdown are considered, it is clear that Wales was facing serious economic challenges. A recent report by the Centre for Towns and …

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Rennie calls for UBI summit to help those who can’t get government support

Scottish Liberal Democrat leader Willie Rennie has today called for an intergovernmental summit on a universal basic income to take place to ensure that support is urgently made available for those who have fallen through cracks of the current furlough and income support measures.

He highlighted the plight of self-employed workers who were not trading for the entirety of the last tax year, PAYE freelancers,  self-employed workers who are paid in dividends, people who work from home and those who have recently changed jobs as examples of people who have experienced a sudden and dramatic loss of income as well as those struggling to access existing anti-poverty measures.

Across the UK, the Institute for Fiscal Studies estimate that roughly 675,000 people will be ineligible for the government’s Self-Employed Income Support Scheme, which mirrors the 80% wage subsidy scheme for the employed.

The IFS says another 1.3 million people with some self-employment income are likely to be ineligible because they received less than half of their income from self-employment last year.

His call comes as the The Poverty Alliance, Scotland’s anti-poverty network, has identified a number of shortcomings in the current crisis responses, including a lack of targeted social security support for families with children at either the UK or Scottish level, limited access to community care grants and gaps in employment protection programmes.

Willie said:

I fully understood and supported the decision to use the existing tax and spend apparatus to help people financially. Time was short and we needed to act fast. Now that those schemes are getting into place we need to take the next steps.

With economic uncertainty destined to loom for the foreseeable future, we need to ensure that everyone can afford to keep a roof over their head and a meal on the table.

We should be adopting the principles of a universal basic income: no one should be left behind. The UK Government has acted swiftly to back businesses and support furloughed workers but too many are slipping through the cracks and there’s a real risk that furloughed staff will lose their jobs when the current scheme ends.

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Daily View 2×2: 30 April 2020

2 big stories

So, will Matt Hancock reach his target of 100,000 tests today? And even if that capacity is reached, will they be carried out? It’s not looking terribly optimistic when even NHS Providers, which represents foundation trusts in England, dismisses the 100,000 target as a “red herring” that distracted from the failures of ministers.

Setting targets and missing them is bad enough, but setting meaningless, and possibly even misdirected ones, and msssing them anyway, seems to be the story of this Government’s handling of the crisis.

It’s a sign of the general uselessness of the British print media that, for …

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Daily View 2×2: 24 April 2020

We’ve almost staggered to the end of another week, and there’s a weekend to look forward to…

2 big stories

The Government, having missed every target for Coronavirus testing that they’ve set, have upped the ante by setting a new, even bigger target – 100,000 tests per day. Of course, the question of how you get to one of the testing centres, especially if you’re ill, hasn’t really been addressed. Keir Starmer slowly, and patiently, shredded Dominic Raab’s attempts to deflect their failure thus far at PMQs on Wednesday – but the news that Matt Hancock is looking to recruit 18,000

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A Modest Proposal

Swift’s famous essay (A Modest Proposal, published in 1729) is, of course, entirely satirical. Its humour merely makes it an even more devastating indictment of a capitalism deracinated from any morality.

We now live in a world where Swift’s capitalism is the norm, now economically transformed through a pandemic. Perhaps it is time for another ‘modest proposal’.

On March 11 the Chancellor delivered his budget. It envisaged 1.1% economic growth this year and allowed £30 billion towards coronavirus. At the time no one seemed to think this unreasonable. It is now just over one month on and the latest economic predictions from the OBR are for a 35% economic decline in the second quarter. Yet the information on the threat of coronavirus, the speed of its spread and the measures necessary to stop it were as known then as they are now. Although it was ‘known’ it wasn’t ‘accepted’.

I thus take all of these forecasts and predictions with a very large pinch of salt. In my own business and those of my colleagues I see far more lasting damage and the necessity of a far longer recovery. It is a dangerous delusion to assume the world will be the same again, nor should we want it to be.

So what can we economically do? The UK budget deficit is already predicted to substantially exceed that of the worst year of the 2008 recession. Our debt levels will balloon well beyond the magical 100% of GDP figure. And we will have all the further unwelcome distortions of quantitative easing, the crowding of credit markets with the governments insatiable demand for money along with all the other consequences of emergency action.

So what is to be done? The British economy in 2018 had a GDP of roughly £2.3 trillion so the scale of this crisis goes way beyond the simple use of tax and spend to both hold the line and rectify the damage. It challenges to other routes such as monetary easing.

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Ed Davey asks for more help for self-employed people during Coronavirus pandemic

The Chancellor has announced unprecedented levels of support for British business in the last few days. However, one group of people are not getting what they need to survive.

Self-employed people have been told that they can claim for Universal Credit at the rate of SSP, which would give them a derisory £94 per week.

Today Ed Davey called on Rishi Sunak to do much more to give our self-employed friends and neighbours, the people who clean our homes, cut our hair, walk our dogs and do so much to make our lives easier.

An article on the Lib Dem website sets out the practical help we want to see:

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17 December 2019 – today’s press releases

We’re back, or at least, the Press Team are back, and thus this feature returns…

  • Reckless Johnson risking sending the UK straight off the no-deal cliff
  • Brexit jeopardises pigs in blankets
  • New figures show 2.3 million EU citizens without Settled Status
  • Boris Johnson set to crash UK economy
  • Lib Dems: Whirlpool’s stained reputation on the line

Reckless Johnson risking sending the UK straight off the no-deal cliff

Responding to reports the Government is to add a new clause to the Withdrawal Agreement to make it illegal for Parliament to extend the transition period beyond December 2020, interim leader of the Liberal Democrats Ed Davey said:

This Tory Government’s

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In Full: Ed Davey’s speech on the economy

Today, Ed Davey made a keynote speech on the economy.

He talked about his plans here:

Here is his speech in full:

For too long, Britain has not had the economy it deserves.

Under this Conservative Government, too many people can’t live a secure, happy and fulfilling life. Too many businesses face crippling uncertainty over their future. And too many of us feel vulnerable in the face of technological change.

The fact is, the Conservatives have made our economy weaker – much weaker.
People might be in work, but more and more struggle to make ends meet.
Businesses have been hit, with investment down significantly since the 2016 referendum.

Productivity has been grimly weak – with no growth at all in the last 12 months.
The Office of National Statistics confirmed only this week, that Britain’s economic growth in the last year has been the lowest for a decade.

And this Government has ignored all our long-term economic problems. We have alarming skill shortages. A persistent trade deficit. And inequality that’s both socially and economically damaging.

Yet so far, the debate in this election on our economy – on our future – has been a debate between fantasies.

Fantasies born of nostalgia for a British Imperial past. Competing with fantasies from a failed 1970s ideology.

Fantasies competing to bankrupt Britain.

Boris Johnson has snuck into Jeremy Corbyn’s allotment and stolen his magic money tree.

The British people deserve better than fantasy economics.

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Ed Davey: Lib Dems to spend £100bn to tackle climate emergency

In a keynote speech in Leeds tomorrow, Ed Davey will announce that the Lib Dems will be putting our money where our mouth is about the climate emergency. We’ll spend £100 billion on measures to tackle it:

A Liberal Democrat Government will jump-start an economy-wide programme to tackle the climate emergency: I can announce today that across a 5 year Parliament, Liberal Democrats would spend and invest an extra £100 billion of public finance on climate action and environmental preservation.

“This includes a new £10 billion Renewable Power Fund to leverage in over £100 billion of extra private climate investment. This will fast-track deployment of clean energy, to make Britain not just the world leader in offshore wind, but also the global number one in tidal power too.  And we will invest £15 billion more to make every building in the country greener, with an emergency ten-year programme to save energy, end fuel poverty and cut heating bills.

But we’ll have that £50 billion Remain bonus:

Brexit is already costing the economy £1 billion a week. And the future cost to Britain in lower economic growth could be even higher, if Brexit were actually to happen.

That’s why the election debate on the economy and public spending has Brexit at its heart. For the plain fact is, no party’s economic plan is remotely credible unless it starts with stopping Brexit.  With stopping Brexit as our number one economic policy, Liberal Democrats won’t just grow the economy faster, but we’ll generate a £50 billion Remain Bonus – to pay for our huge extra investment in schools and our policies to tackle inequality.

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8 October 2019 – today’s press releases

  • Davey: Brexit would mortgage our children’s future
  • Jane Dodds Calls for Pledge to Maintain Last-in-Town Banks
  • Blame for the Brexit mess sits with the Tory Govt

Davey: Brexit would mortgage our children’s future

Following reports from the IFS that a no-deal Brexit will push UK debt to the highest levels since the 1960s, Lib Dem Shadow Chancellor Ed Davey said:

This new analysis is a body blow to Boris Johnson’s election spending plans – as it shows the cost of Brexit is much higher than thought.

Brexit would mortgage our children’s future, plunging Britain into the red and threatening years of new austerity.

There is simply no

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LIB DEMS: by default, the only party for Business and sound economic management

The “new normal” was coined as a new lexicon by Mohamed El-Erian, the then head of the global financial firm PIMCO to describe the post-script of global finance following the financial crisis of 2007-08. 

With the torrent of news and scandal, it feels as though we are all becoming immune of not sensitised to an almost daily feed of political shocks and ever-more worsening language in the current political maelstrom. The new normal.

One aspect of the current pre-election phase – but also a reflection of a structural shift – is the position on public finances for the two parties. As Lib Dems should be able to capitalise on as the ONLY sensible party for economic stewardshipmost sensible centrists and business will recognise that the Tories have lost this mantle.

I wrote earlier about PM Johnson’s rapidly escalating fiscal promises that are clearly a pre-election gambit – a well-worn political strategy of governing parties over generations. I also highlighted the risks that the fiscal costs of a de facto government “bail out” by the Treasury in the event of a No Deal could easily get into figures and a scale that would test the UK’s reputation for economic management at the least, and the worst, risk a full-blown economic-financial crisis.  

A further extension into 2020 (June most likely) is now the baseline scenario. I’ll outline why separately.

A quick review therefore of the fiscal issues is apt but without going into policies specifically, or even the legality for some of Labour’s positions eg on sequestration of private school assets. 

These are my 3 main conclusions for the current new normal for economic management in the UK:

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Learn to code: the Technological Revolution

Can I shock you? The North doesn’t end at Manchester and Leeds. For all the bluff and bluster of a ‘northern powerhouse’ we heard when the Tories at least pretended to care, the investment mainly fell around those two main cities. It is true, they are seeing growth, prosperity and attracting young professionals and graduates to the city as businesses prosper and companies choose to open up northern hubs. However, the more rural areas in the North West (particularly West Cumbria) and the North East are seeing their regions stagnate and more alarmingly an exodus of young people who see no future in the area.

According to a recent BBC News study it is estimated that the under 30s population of these regions will significantly reduce over the next 20 years. 3 of the top 5 likely to be worst affected are from West Cumbria, with Copeland anticipated to see a 14% reduction in people under the age of 30. The North East doesn’t fair much better with 4 of the top 10 also from that region, the main county of Northumberland is expected to see the biggest drop of 11%. 

When you look at the common factor in all these regions it is no surprise that former industrial heartlands such as Redcar, Hartlepool and Copeland/Allerdale have a higher rate of youth and adult unemployment resulting in many young people to move away for university and never return. What is most concerning about all this is that there is no real long-term strategy in place to tackle the impending youth deficit, at least not from the two main parties. A reduction in people of working age of this size would also have a significant impact on the local economies of these areas a whole.

As always, the Lib Dems do things differently, and do it better. So why stop now? I propose we look to focus on inspiring investment and increased training for the digital economy, not just by public spending investment but encouraging local and national businesses to increase the number of training schemes and digital apprenticeships in rural areas, particularly those with poorer transport links. If we follow the excellent example set by Recode UK, a free coding training scheme in Bolton which is a joint supported venture by the local JCP and Telecom UK. By championing the private and public sector to educate young people in the tools for the future economy in these regions and help increase social mobility the long term impact will see the wider economy and businesses prosper as well.

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18 July 2019 – yesterday’s press releases

There was a bit of a glitch yesterday, as the press releases ended up in my spam folder for some reason. Things seem to be back to normal, so the usual service resumes here…

  • Welsh Lib Dems – time to embrace zero-carbon housing
  • Lib Dems: EU resolution a vital step in UK’s duty to stand up for people of Hong Kong
  • Davey demands urgent action as knife crime epidemic continues to spread
  • Umunna: OBR report shows No Deal Brexit would be unforgivable
  • Lib Dems: Johnson’s ‘fishy tales’ have no plaice in Number Ten
  • Lib Dems: Milestone victory to block no-deal
  • Gauke talks the talk but can’t walk

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2 July 2019 – today’s press releases

Umunna: Johnson Brexit policy will result in £90bn hit to the public purse

The Chancellor has today confirmed that the Government is already having to hold back £26-27 billion of fiscal headroom to deal with the disastrous impact of a No Deal exit from the European Union, and that even more than that will be needed. Furthermore, the Government’s own analysis shows that a disruptive No Deal Brexit will hit the public purse by £90 billion as a minimum.

Commenting on the Chancellor Phillip Hammond’s remarks, Liberal Democrat spokesperson for Treasury and Business, Chuka Umunna MP, said:

Boris Johnson plans to give

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On austerity: Some questions and comments

“The person who proves me wrong is my friend”.

Austerity seems to involve a set of theories and practices whereby the financial and economic matters which resulted in the “crisis” of 2008 are addressed. This seems to involve reducing governmental expenditure on infrastructures so that such expenditure matches or approaches the taxation income. Any difference between infrastructure expenditure and tax revenue seems to be met by governmental borrowing. This facet of Economics seems to be based upon the premises and assumptions of current Economics theory and practice.

The precipitating factors in the crisis are to be found in the USA with its housing boom and the growth in Collateralised Debt obligations and Credit Default Swaps . The three biggest rating agencies gave erroneously optimistic assessments and lots of them. Some financial corporations went bankrupt, some were taken over by the government and some were bailed out. The global financial system became paralysed. Layoffs and foreclosures continued with unemployment rising to 10%. During this financial bubble, the financiers frittered money on the high life and when it burst the personal fortunes of the financial bosses remained intact.

We were affected by this because of our close connections with the USA and our similar circumstances of inappropriate financial regulation, banks being excessively concerned with prioritising profit and income above national economic welfare, weak corporate media analysis, and general public ignorance of economics made worse by the “misinformation spread by the economics profession”. We too have had a “leverage bubble that drove asset prices skyward whilst starving British industry of development capital. We do also have an excessive Private Debt to GDP ratio which is a foundation of the crisis – 70% in 1939: c.160%  in 2017. 

 Alas, Austerity has a net negative effect on the economy and underperformed in deficit reduction. In 2010 it was stated that the deficit would be eliminated by 2015. In 2017/18 the deficit was £40.7 billion, wages had the biggest collapse on record and the mega-rich have doubled their wealth. Might this affect the demand for support infrastructures and reduce tax returns?

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6 March 2019 – yesterday’s press releases

  • PM fails to stand up for rural communities over bank closures
  • Cable: Catastrophic no-deal would push economy into recession
  • Davey: Britain must be far more ambitious on offshore wind
  • Lib Dems: Yet another embarrassing rejection of May’s Brexit

PM fails to stand up for rural communities over bank closures

Liberal Democrat MP Tim Farron today used Prime Minister’s Questions to urge the Prime Minister to properly compensate communities that have been abandoned by the banks and forced to use online banking instead.

According to the consumer group Which? around 3,000 bank branches have closed over the past three years.

Meanwhile over the same time period, innocent customers have lost an extra £2billion in online and financial fraud.

Speaking during Prime Ministers Questions, Tim Farron asked:

Will she agree that the banks have taken without giving for too long?

Will she meet with me to force the banks to compensate victims of fraud, to compensate the communities they have abandoned and to prevent banks closing the last branch in town?

In response, the Prime Minister refused to help abandoned communities and victims of financial fraud, instead saying that banks are “commercial organisations and those are decisions that they take.”

Following the exchange, Liberal Democrat MP Tim Farron said:

It’s absolutely staggering and hugely disappointing that the Prime Minister has decided to turn her back on communities like Grange in my constituency that have been abandoned by the banks.

People who have been victims of financial fraud and those who have been let down by the banks deserve better than the Prime Minister shrugging her shoulders.

Cable: Catastrophic no-deal would push economy into recession

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5 February 2019 – today’s press releases (part 1)

It’s been a busy day today, so we’ll break today’s releases up into two pieces, starting with…

  • Govt must take action on projected rise of car emissions
  • Cable: Brexit causing the economy to stagnate
  • EU citizens in Holyhead face 224 mile round trip to register for settled status
  • Davey questions Justice Minister on potential Brexit bribes

Govt must take action on projected rise of car emissions

Today a report from Friends of the Earth, and the think-tank Transport for Quality of Life highlights that a rise in emissions from the roads could have a hugely detrimental effect on climate change and public health.

Commenting former Liberal Democrat …

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Can Lib Dems meet the Labour challenge?

Editor note – this article has been corrected to reflect our opposition to the proposed cut in corporation tax rates…

“Labour is offering a radical plan to rebuild and transform Britain”, Jeremy Corbyn declared at the recent Labour Conference. He said people knew the old way of running things wasn’t working any more, and boldly claimed that Labour had defined “the new common sense”.

Liberal Democrats had already agreed at our Conference, “The current British economy is simply not working for enough people today.” Passing the motion F27 on Jobs and Business, we had resolved “to work towards creating a new economy that really works for everyone.” This followed the declaration in our 2017 Manifesto that “We need a radical programme of investment to boost growth and develop new infrastructure.”

So how do the two programmes compare? The Labour plan described by McDonnell and Corbyn certainly offers radical transformative measures. They demand nationalisation of water, energy, railways and telecommunications. Companies of more than 250 employees are apparently to be obliged to grant 10% of their shares to their workers, to admit worker representatives on their boards and to allow every employee union rights. These and other overtly Socialist plans predictably have been viewed as a threat to capitalism.

We meantime had resolved, in passing motion F27, “Reforming the labour market to give control and choice back to workers, with additional rights for those in the gig economy, and a powerful new Worker Protection Enforcement Authority to protect those in precarious work.” We want a new Companies Act for the 21st Century to oblige large companies fully to reflect the interests of all stakeholders, serve the common good and be accountable for their actions, and for there to be mandatory reporting of pay ratios with “corrective action plans”. On share ownership, we are to seek a big boost to employee ownership by extending the Liberal Democrat ownership trust scheme. 

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North Devon Council passes motion calling for Brexit symposium

There is increasing worry about the impact of Brexit on our local economies and the recognition that it is important to make plans for all eventualities.

Last night, the Lib Dems in Opposition on North Devon (District) Council put forward a motion to examine exactly that:

The impact of Brexit (hard or soft) will affect all North Devon residents. This Council believes that with Brexit fast approaching, it is both sensible and realistic that the potential risks and impact of Brexit on North Devon – good and bad, short term and long term – are fully understood as far as is possible and aired in public together with detailed discussion on how these impacts can be mitigated. To achieve this, this Council undertakes to organize and co-ordinate a public conference/symposium before Christmas in which North Devon’s experts and leaders in business, farming, tourism, education, health and social services and other areas are invited to participate, together with elected representatives at all levels. This council is uniquely placed to lead this initiative by immediately setting up a Cross Party Working Group. The findings and conclusions of the symposium would be presented as a report to full Council and other authorities. Furthermore we request that consideration be given to how this Council can assist businesses etc. before and during the transition period.

I am pleased to say that the motion passed, with support from some Conservatives and Independents who recognised the need for such a symposium.

Cllr David Worden, Leader of the Liberal Democrats on North Devon Council, spoke passionately for the motion:

Whenever we turn on the news or read the newspapers it appears that the headlines are all about Brexit. I don’t want to go into the pros and cons of whether we should or should not leave the EU but I am extremely concerned about the impact of Brexit on the economy of North Devon. We live in one of the most deprived areas of the South West. There are hardly any services which have not been hit by austerity cuts. We simply cannot sit back and let the disastrous No Deal scenario, which seems ever likely, to be upon us, unprepared.

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The social market – a big Lib Dem idea

What people often struggle with when it comes to Lib Dem economics is not the detail of our specific policies – which voters frequently don’t have the time to dig into, in any case – but our economic vision. Labour has a Big Idea, nationalisation, which dominates its economic agenda. The focus on Corbyn’s renationalisation plans was out of proportion to their potential impact, because it fits with how people see Labour’s economics, putting more of the economy under state control in the hope that permanently benevolent governments will somehow manage to run it all for the public good. The Tories likewise have their Big Idea in privatisation, moving more and more of the economy toward shareholder-driven corporations, deregulation, and the profit motive, in the apparent belief that this will placate the magic efficiency fairies. What’s our Big Idea?

The answer, in my view, is the social market, the core of which is that businesses should be owned and run by and for people across society, as independent bodies working to do good things in their own way. Taken to its conclusions it’s a truly radical vision, requiring the transformation of how we hold and invest capital to make cooperative, mutual, and social businesses the new normal. Even taken over the short course of a parliament, it’s a vision that can provide deliverable goals, improving working conditions and pay as we democratise workplaces and help new social businesses enter the market.

The social market is far from the misconception of Lib Dem economics as blandly toeing the middle line between the two other parties. It’s what happens when we logically put our principles into practice, decentralising economic power directly to people in a way that’s sustainable, democratic, and socially just. So how do we get there?

Firstly, we have to make it clear what we’re leaving behind, and secondly, we have to put policies in place that make it clear that what are now considered ‘alternative’ business styles should be standard norms in a liberal future, and ones that we’re prepared to act to help people build and grow. That’s why at Brighton Conference I’m bringing forward Amendment One to F28, the motion on business policy.

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Brighton debate: Good Jobs, Better Businesses, Stronger Communities

Roll up, roll up – take your seats.  Monday afternoon of conference week in Brighton brings a debate on proposals for creating a new economy, one that really works for everyone in Britain.  As the party “demands better”, this forward-looking plan shows how we can tackle the root causes of our current dysfunctional economy and to provide real content to our campaigning on that central political issue of “the economy, stupid” (as Bill Clinton’s campaign strategist inelegantly put it).

The debate on Motion F28 – Good Jobs, Better Businesses, Stronger Communities – is your chance to accept, reject, amend or better still improve upon the ideas contained in the FPC’s paper of the same name, available to download here.  Do have a good read in advance, there’s a lot of great content to digest.  

On this site, Katharine Pindar has already helpfully examined it  through the lens of how Labour voters might see us, as an alternative to Corbynomics.

Developed over two years through our deliberative policy-making process, the package of proposals had a longer gestation period even than an African bush elephant: the working group (which I co-chaired with Julia Goldsworthy until she was appointed to a politically restricted job) took evidence and consulted widely, and then had to pause for Theresa May’s ill-fated snap general election. 

Our original consultation paper back in 2017 set out the challenges we had identified in creating a more prosperous and sustainable economic future for Britain in the 21st century – low productivity, new technologies, changing demographics, the folly of Brexit, resource depletion, rising inequalities, a trends towards ever bigger companies and reduced competition, and much more.  Despite this depressing back-drop, we said Liberal Democrats are inherently optimistic and should embrace the potential of change and of the big economic shifts that we saw coming.  We should not retreat, we argued, either to the little Britain ‘drawbridge economy’ envisaged by post-Brexit Conservatives or to Labour’s ‘big government knows best’ 1970s style siege economy.

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Financialization, Manufacturing and Public Services

To most of us who are not economists or in government, it is regarded as common sense that we need manufacturing and other producing businesses to pay for public services.

The financial sector, which includes insurance, pensions, accountancy and retail banking is a valuable part of the UK economy.

However, there are serious concerns that the casino banking sector is extracting rather than producing wealth, and that it is harming rather than benefiting the economy.

One of the concerns relates to the huge level of merger and acquisition (M&A) activity, which means that UK companies can easily be taken over by foreign companies. There is a theory that it does not matter who owns UK companies, only how they are run. This is wrong. Inevitably, and this may take decades, manufacturing is moved abroad.

The other, just as serious, the problem with the open market in UK companies is that the continual threat of hostile takeovers deters long-term investment.

Posted in News and Op-eds | 14 Comments

Inequality – it’s getting worse

The Office for National Statistics published data yesterday on economic well being. One of the main points from the ONS report was on household property wealth. This data shows that we now have even more inequality between generations. The report reads

The gap in net household property wealth between those aged 30 to 32 and 60 to 62 years has widened in the last 10 years; the net household property wealth of those aged 60 to 62 years was six times that of those aged 30 to 32 years during July 2006 to June 2008, however, this difference increased to 17 times by July 2014 to June 2016.

Also, research showed that consumers’ perceptions of their own financial situation has worsened for three consecutive quarters.

In Quarter 4 2017, the average aggregate balance was negative 1.6 – a decrease from positive 0.7 recorded in Quarter 4 2016. The chart shows a steady drop over the last two years.

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