Tag Archives: economy

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.

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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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Why the Liberal Democrats must adopt Universal Basic Income

To be quite blunt, I’ve been spending a lot of time lately thinking about where it’s all gone wrong for the Liberal Democrats. I’ve been a member of the party for seven years now, three-quarters of a decade no less, and in that time we have scarcely polled into the double digits.

Amongst the young, the people who you may think would be the natural supporters of an anti-Brexit, progressive party, the outlook is especially bleak. In the latest Times tracker conducted by YouGov, a mere 4% of 18-24-year-olds plan to vote Liberal Democrat at the next election. The number shoots up to a comparatively lofty 7% of 25-49-year-olds but it’s still nowhere near good enough for a party such as ours.

It’s time to face a stomach-churning truth. The Liberal Democrats are not a party that speaks to modern Britain, and we most certainly do not represent Britain’s future. Not the way things stand, anyway.

As someone who is (just about) inside that 18-24 bracket, I think I’ve got a decent idea about why the party has haemorrhaged youth support so drastically (and no, it’s not just about tuition fees – although that is a huge factor as I wrote for the New Statesman in 2015.)

In my view, it comes down to this. When my generation was growing up, we were all sold a story, the same story our parents were sold. Specifically, the story that if you work hard, apply yourself and ‘get on’, then you’ll do well. Our parents bought into that story because it was broadly true for them. But we aren’t buying into it because it’s a lie for us. Millennials are the first generation set to earn less than our parents, so I think we can be forgiven for thinking that the system has not worked.

And it is this broken system that, to me, explains my generation’s disinterest in the Liberal Democrats and our collective adoration for Jeremy Corbyn. The Liberal Democrats want to make the system fairer. But Corbyn wants to tear the system down. That is his appeal, and it’s why we are falling by the wayside.

But we can beat Jeremy Corbyn at his own game. Liberals can remake the system too, and liberalism can provide a much more empowering and inspiring future than socialism ever can.

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An economic policy for 2022 and beyond.

There are many reasons why our vote collapsed after five years of government but perhaps the most important was our ditching the economic policy of our 2010 manifesto, which included an economic stimulus in the first year of government, a promise to create jobs for those who needed them and implied that we would only reduce the deficit when the economic recovery was secured. What we actually did was reduce government spending straight away and took money out of the economy with a 2.5% increase in VAT. During the Coalition government the news reported that there was a double-dip recession (later upgraded). On our watch unemployment increased from 2.5 million in May 2010 to 2.71 million in November 2011. The highest percentage since November 1995 and the greatest number since August 1994. Even in May 2015 with 1.85 million unemployed we failed to provide a job for everyone who needed one.

The current economic consensus has given up on trying to achieve full employment and sees the NAIRU (non-accelerating inflation rate of unemployment) as the lowest level possible. This is often seen as in the region of 5%. The last Labour government and the Conservative party accept the NAIRU but also want to make it difficult for those unemployed to claim their benefit as a means of saving money. As Liberals we value each and every person equally and don’t think less of a person because they have difficulties in finding work or meeting the bureaucratic conditions required for those wishing to receive out of work benefits. As Liberals we must have an economic policy to achieve full employment. We know from history that economic inequalities reduced the most between 1945 and 1979 when UK governments tried to achieve full employment. No Liberal Democrat should find it acceptable for there to be more than 1 million people unemployed in the UK.

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The Brexit nightmare continues


Embed from Getty Images

This week, we’ve had our biggest warning yet about what the post Brexit world holds for us. We knew already that prices were going up because of the fall in the pound, that EU nationals were swapping our hospitals and surgeries for somewhere they felt more welcome and businesses are growing increasingly worried about the Government’s diplomatic faffing.

This week, we learned courtesy of the OBR that our economy is barely going to grow, that investment growth is scarily low at 0.2% and …

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Autumn Budget – what our Spokespeople say

The Lib Dems have been hot off the mark with what this Autumn Budget doesn’t do.  Here are 7 failures.

And leading Lib Dems have been speaking out about what the budget really means:

Leader of the Lib Dems Vince Cable MP says

Each person in Britain is set to be £687 worse off per year compared to forecasts before the election.

And as living standards are squeezed, the Government is setting aside £3.7bn to cover the cost of a ‘no deal’ Brexit.

The Chancellor found more money in the Budget to plan for Brexit than he did for our struggling NHS, schools and police.

Liberal

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Economic Implications of Autumn Budget

Liberal Democrat Brexit Spokesperson Tom Brake commented:

“Instead of a bright future for Britain, Conservative plans will see a £65bn hit to tax receipts, slashed wages and higher borrowing.

The Government found £3bn to spend on Brexit, but nothing for our police or social care.

The Chancellor has completely failed to show the ambition needed to tackle the housing crisis, build the infrastructure the country needs or fix Universal Credit.”

And here is the breakdown of the economic costs:

1. £65bn hit to tax receipts: Tax receipts have been downgraded by £65.4 billion over the five-year period compare to …

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In full: Jo Swinson’s response to the Budget – with a cheeky intervention from Tom Brake

It was Jo Swinson who led the Lib Dem speeches in the Commons today in response to Philip Hammond’s insipid budget. Here is her speech in full. Note the cheeky intervention from Tom Brake, reminding of us of some words on the side of a bus.

The British economy today faces three key challenges. First, we have low productivity, with the associated wage stagnation that comes with it, and of course the reduced tax receipts. Secondly, we have high public sector debt. We must recognise the constraints that that places on what is possible economically, and be honest about some of the hard choices that need to be made. Thirdly, there is Brexit, which has already been described as the elephant in the room. We see the uncertainty it is creating for businesses and investment in the country, its impact on our economy, and the opportunity cost of all the energy and money being spent on preparing for it that could otherwise be directed elsewhere.

The Chancellor is a serious man. We had significant differences in coalition but in recent months he has appeared to be one of the few voices of reason in the Cabinet on Brexit. He had an unenviable task coming to the House today, given the picture of higher inflation, lower growth, lower productivity and high levels of debt. It really is bleak. The economy will be £45 billion smaller in 2021 than had been projected just in March this year, so his attempts to paint a cheerful vision of the future were rather less successful than his jokes. The truth is, as the Chancellor knows, that this Budget, the next one, the Budget after that and all future Budgets are made all the more difficult because of Brexit and the extreme approach to it that this Government are pursuing. Making it clear that an exit from the single market and the customs union is a red line for the Government—this is aided and abetted by the Labour Front-Bench team—imperils the future of the UK economy, and the Chancellor knows it.

The right hon. Member for Loughborough (Nicky Morgan) rightly said that there is no pot of gold at the end of the Brexit rainbow, although the more appropriate metaphor is that of a thunderstorm. We learned today that the cost of Brexit preparations is not just the £700 million already allocated but a further £3 billion, which is more than the extra money that could be found for the NHS, and that tells its own story. We need to add to that the exit bill, and who knows what that will be—£20 billion, £30 billion, £40 billion? In addition, there is the overall hit to the economy, which the OECD has suggested could be £40 billion. It is no surprise that these figures were not stuck on the side of a bus in the referendum campaign.

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ICYMI: Vince’s pre-budget speech

A couple of weeks ago, Vince got his retaliation in first by delivering a statesmanlike Budget speech.

Two weeks ahead of the Budget, tomorrow Vince gets his retaliation in first. Of course, as a former business secretary and the man who predicted the financial crash, he has a whole load of economic credibility. In comparison, when the Chancellor delivers his speech on 22 November, he’s going to look pretty amateurish compared to Vince.

He will outline the major challenges facing Phillip Hammond in light of the expected downgrades in Britain’s projected future growth, the threat posed by Brexit to any attempt to fix our economy, and what needs to be done in the budget to begin to solve these problems. He will include the Liberal Democrat long-term vision for the economy. And I’ll be very surprised if the Paradise Papers didn’t get a mention.

He will emphasise the need for a Government with economic competence and how important it is to have a fair deal for young people.

I’m kind of hoping that the main speech is slightly less heavy than the extracts released tonight. It will definitely be a credible, authoritative speech and not a wild oration, though.

Below is the whole thing. I’d be lying if I said it was sparkling, but it was full of detail and substance and you can judge it against Philip Hammond’s effort. .

As Leader of the Liberal Democrats, it is one of my responsibilities to give a serious Lib Dem analysis of the economics around the Budget, and to present an alternative.

I have recently been returned to Parliament from exile.

One of my regrets, however, is that the previous competition between the parties on economic competence no longer exists.

The likes of Gordon Brown, George Osborne, Ed Balls and Oliver Letwin were all serious players and thinkers even if I often disagreed with them.

Now, the economy – pivotal still to people’s lives – has been relegated to the margins of political debate.

The June election produced minimal discussion of economic policy.

The Conservatives didn’t produce any economic numbers in their manifesto.

Labour did, but as the IFS caustically pointed out at the time, there was a strong element of fantasy.

My Party did much better than our rivals at the hands of the IFS and serious commentators at the FT and The Economist but few noticed. And, now, economic debate is drowned out by the politics of Brexit and an unstable government.

Yet this is an unusually important and difficult budget.

The Chancellor has foresworn the use of a second budget, traditionally used to correct the mistakes in the first.

And the potential for a massive, if unquantifiable, economic shock from an unsatisfactory deal – or, even, ‘no deal’ is palpable.

Brexit hangs over the forecasts.

The environment of radical uncertainty is already spooking business investment and depressing growth, including the growth in government revenue.

I want, then, to set out some analysis of where we are and some ideas for where the Liberal Democrats think Britain could and should go.

Our focus is on freeing up capital spending to build the homes and infrastructure the country needs, on reviving the NHS with a targeted injection of cash, and on giving a leg up to young people with a learning account as they begin their working lives.

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Vince: Only Lib Dems offer strategy for growth and prosperity

Earlier, we brought you a flavour of Vince’s big pre-Budget speech.  Here is the speech in full:

As Leader of the Liberal Democrats, it is one of my responsibilities to give a serious Lib Dem analysis of the economics around the Budget, and to present an alternative.

I have recently been returned to Parliament from exile.

One of my regrets, however, is that the previous competition between the parties on economic competence no longer exists.

The likes of Gordon Brown, George Osborne, Ed Balls and Oliver Letwin were all serious players and thinkers even if I often disagreed with them.

Now, the economy – pivotal still to people’s lives – has been relegated to the margins of political debate.

The June election produced minimal discussion of economic policy.

The Conservatives didn’t produce any economic numbers in their manifesto.

Labour did, but as the IFS caustically pointed out at the time, there was a strong element of fantasy.

My Party did much better than our rivals at the hands of the IFS and serious commentators at the FT and The Economist but few noticed. And, now, economic debate is drowned out by the politics of Brexit and an unstable government.

Yet this is an unusually important and difficult budget.

The Chancellor has foresworn the use of a second budget, traditionally used to correct the mistakes in the first.

And the potential for a massive, if unquantifiable, economic shock from an unsatisfactory deal – or, even, ‘no deal’ is palpable.

Brexit hangs over the forecasts.

The environment of radical uncertainty is already spooking business investment and depressing growth, including the growth in government revenue.

I want, then, to set out some analysis of where we are and some ideas for where the Liberal Democrats think Britain could and should go.

Our focus is on freeing up capital spending to build the homes and infrastructure the country needs, on reviving the NHS with a targeted injection of cash, and on giving a leg up to young people with a learning account as they begin their working lives.

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Vince: Lib Dems want a fair deal for young people

Two weeks ahead of the Budget, tomorrow Vince gets his retaliation in first. Of course, as a former business secretary and the man who predicted the financial crash, he has a whole load of economic credibility. In comparison, when the Chancellor delivers his speech on 22 November, he’s going to look pretty amateurish compared to Vince.

He will outline the major challenges facing Phillip Hammond in  light of the expected downgrades in Britain’s projected future growth, the threat posed by Brexit to any attempt to fix our economy, and what needs to be done in the budget to begin to solve these problems. He will include the Liberal Democrat long-term vision for the economy. And I’ll be very surprised if the Paradise Papers didn’t get a mention.

He will emphasise the need for a Government with economic competence and how important it is to have a fair deal for young people.

I’m kind of hoping that the main speech is slightly less heavy than the extracts released tonight.  It will definitely be a credible, authoritative speech and not a wild oration, though.

 

The Liberal Democrat focus is on freeing up capital spending to build the homes and infrastructure the country needs; on reviving the NHS with a targeted injection of cash; and on giving a leg up to young people with an endowment in the form of a learning account as they begin their working lives.

To do all this, we need a Government which prioritises economic competence over political dogma.

A ‘no deal’ Brexit hangs over forecasts. An environment of radical uncertainty is already spooking business investment and depressing growth in government revenue.

Neither the ‘no deal’ Brexit extremism of the Conservative Party nor the ‘socialism in one country’ dreamed of by Labour will deliver a successful economy.

He will look at solving the inequality facing young people in more detail:

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Lessons from Finland on Universal Basic Income

Piles of money. Photo credit: czbalazs - http://www.sxc.hu/photo/1236662Aditya Chakrabortty, a Guardian Columnist, recently travelled to Finland to interview a man who’s been part of a Universal Basic Income trial. The scheme gives 2,000 randomly chosen people, who were already receiving unemployment benefits, £493 a month unconditionally. The scheme will finish properly at the end of 2018 and no official results will be published until then, but there is anecdotal evidence from a number of interviews conducted with people chosen to take part.

One such person is Juha Jarvinen. When asked by …

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Why Basic Income Should Be Lib Dem Policy

Over the last 70 years, an inexorable long-term structural change has taken place in the economy.

Source: ONS, defining ‘labour income’= wages + self-employed earnings

 

It’s very clear that aggregate ‘labour income’ (=wages + self-employed earnings) has declined compared to consumer expenditure, with a turning point in 1995, such that

  1. From 1948 to 1995, labour income exceeded consumer expenditure.
  2. From 1995 to 2016, consumer expenditure now increasingly exceeds labour income.

By 2016, labour income only funded 86% of consumer expenditure. 14% of consumer expenditure was funded by unearned income. This trend is structural, …

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The Love of Learning

What are we doing to our young people? Testing them until the joy is out of learning and school is just one tick box after another. The head of Ofsted, Amanda Spielman, said

The regular taking of test papers does little to increase a child’s ability to comprehend.

We have completely the wrong approach to learning. We need holistic education for our young people, encompassing the widest range of subjects, building character and instilling the love of learning.

This includes the arts. When I was 11, we moved to Missouri. I started at a new junior high school (years 6-7 in the English system) which had a school band. Up to that stage I had played a bit of piano and sung in the church choir. The music teacher asked if I’d like to learn the clarinet as he needed more players in his band. Within three months I was sitting 2nd chair in the clarinet section. I would never have learned an instrument if it hadn’t been for the opportunity at this state school. I remember my parents, who were on a tight budget, scraping money together for some private lessons later that year, costing $4 a lesson.

Years later, I’m a professional musician, wondering where the next generation of musicians is coming from. We need music, and all the arts, as an integral part of our schools. The economic argument is obvious – the creative industries contribute £87.4 billion per year to the economy. We would be denuded as a society without the undergirding of the arts which permeate and enrich our lives.

But I wish to make the moral argument, bringing me back to the opening point of school being too much about testing. Having an arts-inclusive curriculum builds a well-rounded intellect. The brain, when it has to marry the left and right halves in analysing and performing a piece of music, develops physiologically. Attention spans are lengthened when one learns to concentrate on playing your part in a band. Aesthetic awareness is broadened, that life is not about ticking boxes but about beauty, relationships and creativity. Learning to sing together builds community and teaches young people to work together. We learn that coming together produces something more wonderful than striving alone.

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Homeowners as Currency Counterfeiters: a Parable

In the UK, gains on domestic property values are virtually untaxed. This put renters at a huge disadvantage. But far worse is the damage this does to our competitiveness. Failing to tax gains in property value means that our economy in effect hosts a currency counterfeiting operation with a £50bn turnover. This can be illustrated with a very short story.

Once upon a time a newly crowned king wished to prove his military prowess, and decided to raise a navy to conquer lands overseas. His councillors protested that the royal coffers were empty, but he hit on a brilliant idea. He would licence his councillors to print banknotes, in exchange for them providing sailors and ships. The councillors readily agreed. He ordered royal printing presses to be built, and handed them over to the councillors each with a licence to print money. The councillors set their presses in motion and provided the necessary sailors and ships. The king went to war and returned victorious.

Fortunately the king had wisely limited the speed of the printing presses so the currency would not collapse. Merchants and labourers still worked and traded, but were poorer because the newly printed banknotes meant their money were worth less than before. But the same banknotes made the printing press owners richer.

As time went by a market developed for the printing presses. Some of the king’s councillors had a great fondness for expensive claret, or lost money at cards, so had to sell their presses to repay debts. Successful merchants found the purchase of a printing press was an excellent and safe investment. Unfortunately skilled labourers found they could earn more abroad and started to emigrate. After the king had ruled for many years, there were few skilled shipwrights left in the kingdom and the navy fell into disrepair. Sensing their chance, the neighbouring kingdoms sent an invasion fleet, sank the king’s ships and the kingdom fell.

Posted in Op-eds | 48 Comments

What you see and what you don’t see. Time to ditch GDP and measure our progress differently

The yardstick for the success of an economy is the measure of its Gross Domestic Product or GDP. It is essentially the sum of all goods and services that a country produces, corrected for seasonal fluctuations and inflation.

The modern concept of GDP was developed by Simon Kuznets for a U.S congress report in 1934. President Herbert Hoover had the challenge of tackling the Great Depression with only a mixed bag of numbers that were extremely ineffectual when trying to answer the question, “how is the economy doing?”

Over the next 80 years the GDP not only became the way in which politicians, journalists and the public measure the economy, it actually defined what the modern economy is.

So what’s the problem?

The problem with the GDP is that it pretty good at measuring the things that you can see but is terrible at measuring things that you can’t see. Therefore things that are easily measured like manufacturing and monetary transactions push the number up whilst advancement of knowledge, community service, clean air, are all pretty much ignored. Even worse, the social damage caused by an activity is not factored in negatively, in fact the transactions that relate to poor health, depression, pollution, societal breakdown like divorce lawyers etc. actually push the GDP up.

In his book Utopia For Realists, Rutger Bregman highlights this point humourously but with a large dose of dark truth.

“If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday.”

The fact that a huge chunk of government policy is formed on the drive for growth at all costs based on a measure that rewards things like carbon polluting manufacturing, deforestation, over-fishing etc. goes a long way to explaining why we live in such an unequal society.

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