The Labour Party appears now to be following a Tory-light policy. Keir Starmer has ditched the £28 bn pledge to follow Green policies, regardless of the needs of young people to be able to consider their many years to come of living with climate change with some hope. And of their immediate extreme needs, for decent and affordable housing, it is the Young Liberals who strengthened the Lib Dem housing policy passed at Bournemouth last September (F31, ‘Tackling the housing crisis’) with a demand for thousands more social dwellings to be built.
On taxation, the two main parties seem to be converging, despite the Tories’ greater inclination (not fulfilled) to cut taxes. Rachel Reeves, the Shadow Chancellor, will keep to modest projected spending, obeying the same fiscal rules as the Government. The Tories have stolen the Labour proposed taxing of Non-Doms policy to help find funds for the NHS, and the Labour response is only to close the policy’s loopholes, such as not allowing a half-year pause before taxation begins. What other measures can Ms Reeves take? She plans to tackle tax avoidance, apparently, by greatly adding to the numbers of HMRC staff to investigate it. Since 56% of the tax avoidance is supposed to be from small businesses, the owners of such businesses must fear where her demands will light. Her aim is to cut the tax gap by £5bn by the end of the next parliament by that means. She has no policies for major gains from taxation despite the vast needs of our country today.
The one major objective to which both parties are adhering, to avoid adding to the National Debt through extra borrowing and increased taxation, is a questionable one. The required growth of GDP, set back by the limitations of Brexit, can only come from major investment, with government backing for example businesses utilising new technology, and greater promotion of industries increasing wind, tidal and solar power.
It is our party which is up to the job. In our councils up and down the country, Liberal Democrats are grappling with the problems caused by the deficiencies of funding for the hospitals, local government services, the pay of carers and of teachers, and for house building. The policies passed at our conferences demand better provision to meet the many national needs of our run-down country, and we are not afraid to demand the taxes necessary to pay for them.
It was the Lib Dems who first pointed out the excess profits of the energy companies which have now been taxed. We will seek out the further taxation needed, for example by reversing the Government’s tax cuts for big banks which saw the tax on profits cut from 8 per cent to 3 per cent last year, and taxing share buybacks by large firms. Just as it is our party not Labour, which is looking to tackle the poverty of 14 million people in our country and start by paying adequate amounts of Universal Credit and stopping its unfair withdrawal, we face the problems squarely and work out the answers. We will demand the next Government does the same, confident of the public’s support to end the neglect of these 14 years of Tory rule.
* Katharine Pindar is a long-standing member of the Cumberland Lib Dems
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103 Comments
IPSOS have Greens at same 9% as ourselves, young appear to be going there, not surprising because the Greens have a simple message, what is ours?
Renewal of aged infrastructure and adequate social care delivered through local councils requires heavily increased spending.
Some of that can come from borrowing; but we need to say that all Labour’s criticisms of Tory spending controls are empty words, unless they are prepared to raise taxes.
This would be a distinctive position. And it would also appeal to the many voters who want some realism from their politicians.
Good article btw.
You are right on every point.
As i have said before, Labour are not progressive but really small c conservative as they are showing themselves at the moment to be Tory lite. I hope that Lib Dems oppose forcibly this terrible policy initiative to supposedly curb the “sick note” culture. Most people are in fact genuinely unwell physically or mentally and to say otherwise is unfair and insulting, more to do with saving money than dealing with the problem. Not only are they insulting GP’s but also those workers to whom many will vote. No one mentions about bad management that may have caused the sickness in the first place. I had a boss who threatened capability to frighten staff and devaluing them but no one tamed this evil monster. Tories don’t care about people and they want to lose the next election but won’t admit it. They have lost the plot.
In the 1990s Paddy Ashdown promised 1p on income tax..
In Jan 2002 Charles Kennedy gave a Guardian interview when he declared that he may fight the next election “saying that we favour lower taxes”.
In 2017 Tim Farron repeated the 1p on income tax pledge ‘for NHS and social care’
In Sept last we dropped the 1p pledge..
What is the tax policy?
@ Chris Moore “Renewal of aged infrastructure and adequate social care delivered through local councils requires heavily increased spending”.
Indeed it does, but I must tell Chris Moore that when I was a Lib Dem local Government Cabinet Member for Social Care in the early years of the Coalition Government, that was the very opposite to what I experienced.
@ expats “What is the tax policy ?”. You tell me, expats. It changes with the weather and the phases of the moon.
I recall being asked to distribute leaflets with a penny on tax to improve education, then 1p for the NHS, and then in the Glenrothes by-election of 2008 to cut by 1p for no specified reason other than some sort of feel good factor.
“The one major objective……. to avoid adding to the National Debt through extra borrowing ….”
“Some of that can come from borrowing….”
What we usually refer to as “borrowing” is simply the swapping of one type of govt IOU (cash) for another (bonds). It’s only on very rare occasions that the Govt goes off to the IMF to request a significant loan. They never need to do that in any case. They didn’t in 1976 -but the Labour govt panicked. That’s another story!
The Govt issues the money as it spends and it recovers some in taxation. What it doesn’t receive back, the deficit, is the money that we save . Even if we save coins in a piggy bank we are still saving and effectively lending to Government. It’s us that decides what to save not the Government which decides what to borrow. It works like this for a local council but the Govt isn’t a local council. This does mean that the Government can’t simply spend what it likes and borrow the rest.
Regardless of whatever policies we advocate, we really do need to know how the economy works.
The government does decide the rates of taxation (but not the total revenue it will obtain). It is likely that the next Govt will, despite how much they might claim otherwise with their election promises, have to raise them. Not to raise ££ to be able to spend, but to create the fiscal space to be able to spend without causing inflation.
Thanks for all the comments so far. In the questions on our economic policy, I listened again this morning via YouTube to our Economy Spokesperson, Sarah Olney MP, speaking to the York Conference, and was impressed by her description of the proposed new policy of a 4% tax on the share buy-backs of big corporations listed in the London Stock Market. Sarah said that last year BP had an 11 bn profit, and spent more than 5 bn on share buy-backs, but less than 1 bn on low carbon energy development. The 100 biggest firms listed had in last two years spent more than 50 bn a year on buy-backs. Sarah, advocating a ‘responsible but bold’ policy for us, called for big corporations to spend on productive investments instead of so much on buy-backs: for them to invest in energy efficiency, Green technology and clean energy, to help confront the climate needs and move towards Net zero. She also said that we need spending on strong public services especially the NHS, and that the NHS must be healthy before the economy can be. The proposed tax would be expected to raise 2 bn a year. It sounds more productive and progressive to me than the Labour plan of chasing small businesses about tax avoidance, correct though that may be.
Thank you for a so relevant article!
To whom is the National Debt owed and what are its terms and conditions?
What is « financial headroom »?
Who decides what is and how much it is?
How can a nation function effectively, socially and economically, without proper maintenance and development of essential infrastructures?
Is it my imagination or has our party tacitly accepted austerity/neoliberal socio-economics?
Unless we have different attitudes to socio-economics from our competitors, which are, for those without ideological blindspots, obviously and increasingly failing, how can we help our country?
P.S. If you wish to consider the obvious failure and cruelties of current socio-economics, consider asking any of the 25% of our nation’s children who are permanently underfed.
Agreed Katharine – the tax on corporate buy-back seems very sensible. I’ve seen some criticism that it won’t work to raise revenue because corporations will stop doing buy-back, failing to appreciate that if they invest productively in their businesses that it’s good in a different way.
Young people need to see that the government is prepared to invest in the future, and the best way to do that is to give more time and attention to our environmental policies. That can mean strongly encouraging big business to invest in green technologies, or taxing them in a way that allows a future government to do more, but also making sure new homes are energy efficient and as many as possible have solar panels as standard, increase taxes on aviation to subsidise rail and buses etc.
@ Katharine Pindar “She also said that we need spending on strong public services especially the NHS, and that the NHS must be healthy before the economy can be”.
True up to a point, Katharine, but it is often forgotten how important quality Social Care (administered by local government) is.
Strong efficient social care could be a massive help and support to the NHS (and cost to the NHS). But, ever since 2010 I have witnessed cut after cut time and time again. It’s much more than the horribly named ‘bed blocking’issue. It’s also preventative work which I’ve witnessed both when I was a Councillor and afterwards.
Does any political party get it ? Punitive starvation of local government in recent years is a national disgrace……..
Whilst I do agree with the sentiment of this article, the differences between us and labour are too slight and technical to really grab the attention of young and left leaning voters. And the stupid thing is it would be incredibly easy for us to come up with at least a few bold progressive policies.
E.G. Back in 2010 we proposed hiking the tax threshold. The Tories have now reversed this, so why the hell aren’t don’t we readopt it? It’s not like there aren’t opertunities to raise tax to fund it. Eg right now the top rate of capital gains and dividend tax are significantly lower than the higher rate of income tax!
Meaning millionaires and billionaires are paying a lower tax rate than managers, doctors lawyers etc. We were willing to raise capital gains to end this situation in 2010, why not now?
The Tories have also completely reversed the progressive changes we made to the student loans system and left students with the worst deal they’ve ever faced, which was partly done just to stop wealthy graduates from having to subsidise poorer ones.
Why not at least bring back the system we put in place? If not move to something even closer to a graduate tax.
The best thing we can do for young people is to reduce the National Debt by increasing taxation on the property-owning, land-owning wealthy.
Fiona and David LG: yes, for young people we need to have policies that give them hope for the future, whether more emphasis on our environment, encouraging business to invest in Green technology and getting old homes insulated, new ones with solar roofs and electric heat pumps, or reforming the student loans system. David, why not advance a new motion at the next Federal Conference, which one hopes will be in September?
David Raw: I think our party is well focussed on the social care needs that must indeed be fulfilled to back up the NHS, and with the funding crisis cutting valuable local government services of all kinds to the bone.
David Symonds: absolutely agree, David, that we must oppose the idea of a ‘sick-note culture’ and forcing unwell people into work. Poverty and bad insecure housing for families breed ill-health, both physical and mental. It is a shame that Labour does not focus on these well-documented associated evils, and Sir Keir Starmer does not lead well when he continues to maintain that the appalling two-child policy keeping many larger families in poverty cannot immediately be tackled, because if can’t be afforded. What should be the first Labour priority if not to tackle poverty? We shall have plenty to press them on if and when they accede to power.
P.S.on the ‘sick-note culture’ question. Daisy Cooper MP, our Deputy Leader, has just been on the Any Questions Radio 4 programme. Asked about the position with so many people now claiming sickness benefits, she said ‘Fix the NHS.’ This would allow many people (I assume she meant, waiting for medical care, delayed operations and so on) to get back to work. A good answer: so much about worker mobility must depend on people getting their medical problems fixed in a reasonable length of time.
David LG 19th Apr ’24 – 5:18pm:
…right now the top rate of capital gains and dividend tax are significantly lower than the higher rate of income tax!
While wages and salaries are tax deductible, dividends are not – they are paid out of after-tax profits. Dividend Tax makes the effective tax rate higher than on earned income. For Higher Rate taxpayers being paid dividends from a large business the effective rate is now 58.75% and for Additional Rate it’s 64.35%.
With Capital Gains Tax you are suggesting that someone who invests in a high-risk business, such as a restaurant, where they may well lose all their money should pay the same rate of tax on any gain as a salaried worker in a nice secure job in the public sector where they are statistically 10 times more likely to die while in office than be sacked for poor performance. The UK has a chronic problem with relatively low investment which would be exacerbated by such an approach. A sensible policy would be to scrap CGT and replace it with a Property Gains Tax on land and buildings only at a higher rate so as to be revenue neutral. This would help incentivise investment in wealth creation rather than bidding up the price of existing assets.
@Jeff I note you haven’t given a source for your effective dividend tax rates…
From using this calculator:
https://www.contractorcalculator.co.uk/dividend_tax_summary.aspx
I can’t see where you might be getting these figures. Remember dividend income is only subject to dividend tax and not income tax.
As for investors in business startups, there are other tax breaks etc. including the ability to offset gains against losses. Having over the decades founded a number of startups, I have no problem with the capital gains rate.
I treat capital gains tax in the same way as inheritance tax: largely avoidable if you plan ahead, but once you are in a situation where you cannot avoid paying the best course of action is to maximise your returns and go for growth, as 60 or 50 percent of a larger pie still leaves you much better off than a 100 percent of a smaller untaxed pie.
While we’re quibbling about tax rates, @Katharine claims in her article that we can raise money by reversing an 8% to 3% tax cut that banks supposedly enjoyed last year. Unfortunately that tax cut never existed. The actual situation is that banks pay corporation tax (like any other company) and also a surcharge for financial organisations. Last year the main corporation tax rate was raised from 19% to 25%, and at the same time to partially offset that increase, the surcharge was reduced from 8% to 3%. This meant that the tax banks paid on their profits actually rose from 27% to 28%. Reversing that would not help Government finances! https://www.gov.uk/government/publications/amendments-to-the-surcharge-on-banking-companies/amendments-to-the-surcharge-on-banking-companies.
@ Katharine,
” We shall have plenty to press them {Labour} on if and when they accede to power.”
Why wait until then? An election is an opportunity to challenge the policies of other parties as well as to present your own. At the moment the Lib Dems are giving Starmer a free pass even though, and as you say, you have plenty to press them on.
David LG is right. There’s too little difference between the policies of the main parties to enthuse the young at this election. We are unlikely to hear either Keir Starmer’s or Ed Davey’s name chanted at this year’s Glastonbury festival.
The insistance on a high proportion of housing being social housing is specifically excluding most young people. What they need is high quality, low energy but small flats close to facilities especially public transport and they need it built in in sufficient quantities to make market rents affordable.
@Roland regarding Jeff’s point on dividends, he’s broadly correct on the effective marginal higher and additional rate, it isn’t anything to do with income tax. As he says, dividends are paid out of taxable profits (so not deductible, and after wages and capital allowances are applied), your other component of the marginal rate is corporation tax (the 19% small business rate and marginal relief, equivalent to a 26.5% effective marginal tax, complicates calculations). This is why if we’d undertake tax simplification to align marginals on income sources, dividend rates on higher and additional bands may need to come down, it’s only the basic rate that is undertaxed relative income.
@David LG and others; Issues on only discussing rates of CGT being lower than income tax misses that we can’t simply just align bands; we’d need to reform the base too, a rate of return allowance, which is party policy as per a previous conference motion, at a % higher than inflation is needed. Not sure wrt Jeff’s idea on property and land gains, a property component could cause lock in same way sdlt does.
@Katherine Pindar I remain unconvinced on the size of the share buyback levy, it is 4x greater than the tax benefit, and subsequent levy, calculated and proposed by IPPR, and there’s not a good rationale to tax share buybacks more than dividends when they are practically equivalent economically from a company and shareholder context, just arising in different contexts.
You, however, are right that we are more progressive than Labour all in all, Labour have in fact tended to be inclined to some conservatism even when regarded as progressive, so we should shout about it!
“it is our party not Labour, which is looking to tackle the poverty of 14 million people in our country and start by paying adequate amounts of Universal Credit and stopping its unfair withdrawal”
For many young people, the unfair withdrawal that affects them is that study means you are not looking for work. Give students the same rights as those looking for work and our campaigns in the university towns would have something to work with. Those were once our natural targets and we have ceded them to the Greens.
Dividends and share buybacks are simply two ways a company can give spare cash to its owners (the shareholders). Share buybacks are often more tax efficient than distributing dividends, but imposing a tax on buybacks will likely mean companies will do that less often and pay higher dividends instead, which will result in a net increase in tax take for the Exchequer. What it won’t do is boost investment by companies – they’ve already decided to give that cash to the owners rather than invest it anyway.
Also, dividends aren’t paid out of profits (at least in the short term). Loss-making companies can and do pay dividends. The only requirement is to have the cash available to distribute.
Peter Martin. Our party is not focussed on the Labour Party at present, Peter, because as you know the pressing objective for both parties is to get rid of this Tory government with its appalling policies as soon as possible. But young people should be informed that, with the present Labour leadership, they should not expect too much from a new Labour government, and should be looking at Lib Dem policies and our candidates for election to ask better. The first grouse about Sir Keir Starmer is that he is not accepting the need for a fairer voting system than First Past the Post, which effectively makes many votes useless and voters unheard, contributing to the general disillusionment about politicians which the Tory government has achieved.
@ Peter Davies. I think the glaring deficiency in Labour politics to most thoughtful young people in our country today is likely to be the apparent inattention to the great evils that William Beveridge so effectively picked out before the ending of the Second World War and which the post-war Labour Government responded to. The evils of poverty, ill-health, problems of education, job prospects and housing, all still so prevalent in our unfair society today. I trust that Steve Trevethan’s hope is right, that our party is offering the socio-economic solutions that are so desperately needed.
@ Katharine The party needs to respond positively to this report on the Two-child limit and the benefit cap :
University of York
https://www.york.ac.uk › news › research › two-child-li…
17 Jul 2023 — The two-child limit was implemented in 2017 and prevents families from receiving additional means-tested support for their third or subsequent …
Taxing capital gains and income the same would be madness. As Rachel Reeves says, bad for investment and unless you can spread the capital gain back over the years it was gained and account for inflation, unfair.
@Nick Baird. I’m pretty sure that companies are only allowed to pay dividends out of actual profits. My understanding is that, if a company is currently making a loss but still legally able to pay dividends, then the available cash will have come from profits made in previous years that the company chose to hang on to rather than paying out at the time.
Dividends can only be paid out of profits that have actually been made, but there’s no requirement to pay the dividends in the same tax year that the profits were made.
@ David Raw. Hi, David, you are quite right to draw attention again to the two -child limitation and the benefit cap, which are helping to keep many families in poverty. Our party had already voted against those matters and covered much more in its Spring Conference in York last year, passing the policy motion F12 Towards a Fairer Society and policy motion F18 A More Caring Society, both of which I commend to you. In the September Conference in Bournemouth we also passed the F28 Food and Farming motion, which aims among much else to end food poverty, particularly child food poverty, by ending deep financial poverty as set out in the Towards a Fairer Society paper 150 (which led to motion F12), and extending free school meals to all primary school children.
I could go on, particularly caring about our proposal to end deep poverty, including a radical overhaul of the welfare system ‘so no family ever has to use a food bank in Britain’, as covered in the F12 motion. The policy papers which precede the motions are the results of months of committed work by ordinary members chosen for the party working groups, and the motions are costed. I haven’t heard of the Labour Party doing that sort of diligent work in preparation for its own Election Manifesto.
On the question of salary vs dividend payments:
“Many directors choose to take the majority of their income in the form of dividends, as this is usually more tax-efficient.”
So unless company directors are collectively making a big mistake, it would seem that there is indeed some unfairness in the way some can play the system but others cannot.
https://www.unbiased.co.uk/discover/tax-business/running-a-business/salary-vs-dividends-taking-income-from-your-company
@ Katharine,
” …young people should be informed that, with the present Labour leadership, they should not expect too much from a new Labour government…..”
They have surely grasped as much already. You don’t need to do much yourselves. Rachel Reeves and Keir Starmer have already done that job for you.
“The first grouse about Sir Keir Starmer is that he is not accepting the need for a fairer voting system than First Past the Post…..”
Have you asked young people what their “first grouse ” might be? Unless you’re confining your survey to cohorts of Young Lib Dems I’d be surprised if a commitment to PR would be top of their list. The idea that voting for a party which supports PR will produce a government which will create a more progressive government is somewhat questionable in any case.
This is not to say we shouldn’t have PR. However you should know from previous experience that it’s going to take much more than putting such a commitment in your manifesto to get the young enthusiastic about politics again.
“..the proposed new policy of a 4% tax on the share buy-backs of big corporations listed in the London Stock Market.” is a step in the right direction but it’s inadequate.
Up until the of the Thatcher era the practice had largely been banned from the 1930s. A previous generation had learned lessons from the Wall St crash of 1929. It’s clearly a mechanism to artificially manipulate a market.
As the link below puts it:
“Executives are seeing an easy arbitrage: borrow a small fortune at 4 percent and spend it on their own company’s stock, thus driving up its value by 10 or 15 percentage points. Why would anyone resist this overnight wealth? Get the loan, drive up the price of one’s shares, sell enough to pay back the loan and pocket the rest. It is worth noting that until 1982, stock buybacks were illegal—deemed as market manipulation. But since then, they have become the irresistible opioid of the financial world.”
https://www.forbes.com/sites/petergeorgescu/2020/05/13/stock-buybacks-are-banned-let-it-be-a-trend/
Thanks for the support on the share buybacks proposed policy, Peter Martin. Just now I want to add a few facts about what we want to offer young people on housing, for Peter Davies, who made suggestions in a comment yesterday morning. The September motion which the Young Liberals amended, F31, Tackling the Housing Crisis, is pretty comprehensive. It asks for the introduction of binding targets for affordable and social housing set by local authorities, which should be allowed to borrow to build their own. It would abolish residential leaseholds and cap ground rents to a nominal fee. To ensure a fair deal for renters, it seeks a national register and minimal standards for landlords, extending the default tenancy for three years, introducing rent smoothing for the first three years of a tenancy, and abolishing all evictions except where a tenant has broken the terms of the rental agreement. On tackling the climate crisis, we will seek higher minimum standards for new builds, to insulate all British homes to the highest possible EPC standard in ten years, and create locally designed and implemented Environmental Improvement Areas. So I guess it’s up to all of us to ask our local authorities to seek to do more, and your idea, Peter, of ‘high quality low energy small flats close to facilities especially public transport’ sounds good advice for provision for young people in urban areas.
@Peter Martin: Yes you’re correct that, if you run a small business, taking your income as dividend will typically mean paying less tax than if you take it as a salary. I know this because I run a small business! I’m quite sympathetic to the argument that it would be fairer to equalise tax for all forms of income, but there is another side: As an employee your income is stable: If you earn £40K this year, then – barring something awful – you’ll probably earn £40Kish the next year and the year after etc. You also have all sorts of legal protections like the minimum wage and sick pay and so on. But if you run your own business you have none of that. If you could earn £40K this year, and then next year work just as hard and earn nothing or even make a loss. No stuff like sick pay or statutory holiday. And if you make a loss, you still have to pay any employees. There’s possibly an argument that that higher degree of risk justifies a lower tax rate, plus the fact that you generally want to encourage more people to set up in business because that helps jobs and growth and innovation etc.
But like I say, I can see both sides of the argument.
@Katharine: 3 year default tenancy and no evictions other than for breaking the contract? Umm… how does that work if – say – for some reason, I have to move away from home for 8 months and want to let out my house during that time? Or if a house is let to students and the landlord needs to know for 4-5 months in advance if they are definitely going to move out at the end of the academic year so she/he can let for the following year? Or if a landlord has to stop letting in order to renovate a house? Or if tenants are obviously not looking after the house and causing undue wear and tear or annoyance to neighbours but without actually breaking the terms of the agreement?
I agree that we need good protections for tenants to ensure they are treated fairly and properties are habitable etc., but you need to be careful about introducing well-meaning but over-zealous regulations that actually make the housing crisis worse by preventing reputable landlords from letting and possibly causing more houses to be left empty.
@ SimonR,
There some other advantages. Such as: you can’t be sacked if you own your own business! You can put your partner and children on the payroll even if they don’t actually do very much! If you, or your employees, invent something worthwhile it’s you who benefits rather than your employer. I’m sure there are others.
When you put everything in the balance, the case for equalising the income tax system as far as possible has to be the one that should prevail.
Simon R. Your comment is landlord-oriented and there is no harm in that. But we are talking about people’s homes here, and the shocking insecurity of suddenly being required to find another, quite probably only at a higher rent, and with the probable resultant difficulties of jobs or schools becoming less accessible. People fortunate enough to have a home or (often) multiple homes to let should consider the needs of their tenants, whether they are likely to move on in a few months or would like to stay put, and in changing circumstances should surely discuss them with the tenants. We know that rents now tend to be so high that young people often can’t afford to save for their own home and are stuck with renting, and that many families evicted are stuck in bad temporary accommodation which harm the children’s health for many months. And older people may be obliged to stay as tenants for ever, finding the Tories’ wish for everyone to be able to own their own home mere wishful thinking in these days.
@ Simon @ Katharine,
I would say that there is a general consensus that tenants should have more rights and guarantees than they do. Germany seems to have developed a more equitable system. Around 50% of homes are rented there so neither landlords nor tenants can be too unhappy with it.
It’s not perfect from the tenant’s perspective as the linked article points out. It sounds like it might not now be as good as it once was. However, Germany would be the first place to look if we are seriously wanting an improved model for the private rental sector.
https://www.expatica.com/de/housing/renting/rent-in-germany-103803/
We need to have an appeal to both young centre left and outward looking centre to centre right voters. Those who have deserted Labour since 2019 are likely to be of an Owen Jones persuasion and probably won’t vote LD.
@ Peter M. and Simon R. There are certainly arguments for and against dependency on renting: there are, for instance, good housing associations such as my local one, I understand, where tenants have security of tenure and can live in one of those properties indefinitely We don’t want, indeed, to frighten off potential landlords, Simon, but the pendulum has swung too much their way, I believe. When house owners switch to Air B’nB lettings in holiday areas or suddenly turn homes into holiday lets, giving long-established tenants notice, the pursuit of profit can cause real hardship.
In cities, I understand there is buying of housing as investment without necessarily offering them as homes, despite the desperate shortages. It’s part of the deep-rooted inequality of our society where the rich continue to get richer and the poor stay poor, which I wish we could understand the Labour Party will try to address. (Peter, I couldn’t make the reference work, but in any case Germany is a less unequal society than is ours.)
I think the imbalance is between good and bad landlords. We have quite a lot of rules but they are almost unenforcable. With the current shortage of property to rent, tennants will colude with landlords that ignore them. There is also a deliberate bias in favour of individual landlords against corporate ones. The Tories have always considered rented housing as something to invest in rather than somewhere to live.
@Katharine: Yes, it’s true I pointed out how things look from a landlord’s perspective, but equally, you were taking things only from the tenant’s perspective. The problem is, both sides are vulnerable. A bad landlord can make life a misery for a tenant trying to enjoy their home, but equally a bad tenant can financially ruin a landlord. Maybe not a concern for corporate landlords who have hundreds of properties, but certainly a concern for the small landlord renting out one house. There are lots of horror stories about bad landlords renting uninhabitable properties etc., and we should take action to stop that, but that doesn’t mean we shouldn’t deny good landlords some protection in law too. There’s also the very practical reason that, if good landlords don’t feel they can let safely and – for example – evict tenants if it’s appropriate, some will simply exit the market and then people looking to rent will find it even tougher.
The real imbalance at the moment is the shortage of places to rent: That’s what makes it so tough for renters. The best protection you can give renters against bad landlords would be having enough houses that tenants know if there are problems, they can easily find somewhere else to live. That’s unachievable right now without housebuilding on a massive scale, but at least we can try not to make that imbalance worse by discouraging potential landlords from letting.
Peter D./Simon R. As you say, Simon, there is a basic problem of not enough houses to rent, and I would add, the shortage contributing to the rise in cost of renting. But there do need to be more rules to protect tenants, certainly generally against no-fault evictions, which the Tories have failed to bring in. Certainly to ‘discourage bad landlords from letting’ would be good, if possible. It’s an increasingly complex situation, I think, because many individuals have invested in more than one property to rent, such as a neighbour of mine who says the income from his rented properties ‘is his pension’.
Marco, you raise an interesting point, thank you. We are clearly trying to appeal, nationally, to both centre-right (inclined to the Conservatives) and centre-left (inclined to Labour) voters, and are entitled to do so honestly, in our quest for ‘a fairer society’. But I am not convinced now that we cannot appeal to Left-leaning voters, because this discussion has reminded me that our party actually has high ideals, harking back to Lloyd George and then to William Beveridge, and shown in our attacks on poverty and passing the Guaranteed Minimum Income policy at York last year, with the associated intention of getting rid of the need for food banks. And where is the equivalent Labour Party policy? We will need to remind them that they should care about poverty and inequality, as well as about determined advances to combat climate change – but more than that, they should concentrate on the problems of ordinary people in Britain today, as our local councillors do so well. So we have plenty to ‘Tell the young’ – and the Owen Joneses! I am proud to be a Liberal Democrat.
@ Katharine @ Simon R,
“{House Building on a massive Scale} That’s unachievable right now….”
Maybe it isn’t!
The Government could create as many ££ as it likes to build as many houses as it likes. Providing houses were sold at a higher price than the building cost, which really isn’t going to be that difficult given the price of housing, the “taxpayer” will come out ahead. Even if this reduces houses by 25%, which would be no bad thing, there shouldn’t be any losses involved.
We know this won’t happen though! So why not? What’s the catch?
@Peter Martin haven’t you yourself have (quite correctly) often pointed out the need to think in terms of resources rather than money? 😉
There are differing estimates of how many homes the UK is right now short of but they are generally all in the millions. To build that many homes, you need a lot of trained construction workers, plumbers, electricians, etc. How long will it take to find and train enough people? You need to plan out where the homes will all go, how to provide accompanying community infrastructure, transport networks and utility supplies, then go through the usual planning processes. And to actually build them, you’ll need to find a massive quantity of raw materials. How long will that all take? Today we’re struggling even to manage even the 300K/year homes the Government wants to build, which itself is barely enough to cover the rate at which the population is increasing, let alone start to clear the backlog.
You don’t even need to think about money to realise that it will take many years to do all the things involved in getting enough houses built that we no longer have a shortage. That’s what I meant when I said that fixing the imbalance between renters and landlords (the shortage of places to rent) is unachievable (right now). I don’t mean that it’s unachievable in the long term, just that even with a determined Government doing all the right things, it will take many years to do.
@ Simon R,
Yes well done! 🙂 It was a somewhat tongue-in-cheek comment.
I usually have difficulty in persuading contributors to this site to think in terms of resources. I’m always trying to explain that it’s not really about making sure programs are “fully costed” and knowing “where the money is going to come from”. This can mean that things might be more affordable than might otherwise be expected but in this case it’s just the opposite. Building houses is less affordable for central government that might be expected on the basis of an household economics argument. It would still work for the regional and local govts though, which is no doubt why there will be some government regulation to stop them doing exactly this.
Having said that there is still a lot central government could do if it really wanted to. The problem is that there are reasons for it not to really want to. Electors in the shires, who like their bricks and mortar based wealth, and the need to provide a high value collateral for the sea of private debt upon which our economy currently floats.
Remember that ordinary voters are typically not partisan ideologues. In the Kennedy years we were able to appeal to younger voters with a radical agenda but without the toxic baggage of the ideological left. It’s a matter of capturing their imagination. The young voters who flocked to Corbyn were mostly ordinary people, not some new Red Guard.
The evidence eg from You Gov is that most people who voted for Corbyn are sticking with Labour. They have only lost 8% of their 2019 vote to the Greens (a 2.5% swing roughly) and the Greens are on 12% among 18-24 year old vs 8% overall. I would conclude that most voted Lab in spite of Corbyn not because of him and aren’t alienated by Starmer.
@Peter Martin: Well you’ll get no disagreement from me about the need to think in terms of resources. I would love it if more people here thought not only about how much money they want the Government to spend but also about whether the stuff they expect that money to buy actually exists (and if not, how easily it can be created) – because I’m pretty sure we’d then see much more credible policies being suggested. But I’ll leave that thought there as don’t to hijack Katharine’s article for an unrelated discussion 🙂
Peter Martin,
“The Govt issues the money as it spends and it recovers some in taxation.”
You are quoting MMT as if is actually how the economy works, and it isn’t how it works. The government does not issue money as it spends. The Bank of England allows money to be created by the banks, but could allow the government to create it.
Even in MMT the deficit is not just savings. Government spending plus investment plus exports equals government revenue plus savings plus imports when the economy is in equilibrium.
You say that the next government will increase taxation rates “to create the fiscal space to be able to spend without causing inflation</i?”, but this is the same as increasing taxes to cover the extra spending, because without this, the extra spending funded by borrowing or money creation is inflationary.
Steve Trevethan,
Our current fiscal rule as set out in the pre-manifesto is “that day-to-day spending does not exceed the amount of money raised in taxes over the medium term, with additional flexibility during periods of economic crisis”. I would like it changed to ‘that the current budget should nearly balance over the economic cycle”. However, our fiscal rule is not as neo-liberal as the Labour Party’s.
Alan Jelfs,
The best thing the government can do for young people is to invest in infrastructure and people so that the economy growths at a faster rate than the National Debt.
Alex, I believe that our party too could inspire the young. We have had at least three inspirational leaders in the last 20 years, and we are building the foundations for others. How about saying, ‘It’s time for you to move over, Labour, and let us reclaim our rightful leadership of Liberals and the progressives of the Left.’ We have the unrivalled proud history and we are maintaining it: our membership is the radical force that carries good policies through. We were the main party that fought Brexit, and we can lead the country back to close association with the rest of Europe, not only in terms of shared defence, but in economic development and management of migration. We are internationalists, we welcome the possibilities that migrants offer us, and we aim for a British society where everyone is encouraged to expect the chance of a good life. Etc. Add your own variations! Radical Liberalism should be our watchword, and we have no rivals in progressive yet broadly based thinking.
@ Michael BG,
I also don’t want to hijack Katharine’s thread but I’ll just make two very brief points:
Commercial bank money which is created by lending isn’t the same as Government money which is created by spending. Lending is different from spending.
In other words the Government (including the actions of the BoE which is part of Govt) creates net credits in the economy whereas the commercial banks cannot.
Its is savings in the broader sense. ie Including our overseas trading partners too.
@ Katharine,
How about saying, ‘It’s time for you to move over, Labour, and let us reclaim our rightful leadership of Liberals and the progressives of the Left.’
They’ve already “moved over” so there is no need to bother.
There is huge scope for a party to the left of Labour to be electorally successful. So it’s more a matter of doing rather than “saying”. Unfortunately, LibDem strategy is solely about attracting ex-Tory voters.
So, we’re unlikely to see much in the way of a “radical force” from the Lib Dems in the coming General Election.
Don’t you believe it, Peter. We are not SOLELY focused on ex-Tory voters, which can be only a short-term strategy. Our Social Liberal Forum Council in our summer meeting will be discussing ‘What’s next for our party’, with two of our women MPs sharing with us. And meantime there are thousands of Lib Dem activists out on the doorsteps, letting voters know what we are about, and boosting our chances of having still more of our admirable councillors and Council group leaders winning at the May elections. Come and join us!
“Britain does not have a ‘sicknote culture'”. wrote the journalist Frances Ryan forcefully in an article in yesterday’s Guardian. After describing the government’s new heartless and impractical proposals to reduce welfare benefits, she concluded that what Britain does have is “a record high NHS waiting list, widespread food poverty, stagnant wages, low benefit rates, crippling housing costs, a broken social-care system, poor long Covid support and inadequate mental health services.” Just so, and these and the like evils are being and must be addressed by our party. Yesterday in the Commons for example our deputy leader Daisy Cooper MP spoke of the hardship that has now come to light for hundreds of home care workers, who, earning in part-time work slightly more than is allowed to supplement their benefits, have found themselves years later hounded for thousands of pounds in accumulated debt and penalties. It is of course the Tory government that shows systematically the heartlessness to the poor, the disabled and the unwell which justifies our party’s determination to oust them. But it seems likely that our party will then need to continually press the prospective Labour government to give priority of funding to remedying so many ills.
Sorry about my missing “>” yesterday and so much being in italics.
Simon R,
What Katharine refers to in her article is not a return to the pre-tax changes rates as you imply. I agree that it is disingenuous to say that the banks have had their corporation tax rates reduced by 5%. What we are calling for it the restoration of the 8% surcharge for banks.
On tonight’s Newsnight it was reported that in 2022-23 234,000 homes were built, therefore it should be possible to build 300,000 without the need to train lots more construction workers, plumbers, electricians, etc. and over a five year Parliament it should be possible to reach our target of 380,000 new homes a year.
Indeed, to deal with the shortfall will take decades. I remember a 2019 Shelter report saying we should build 3.1 million social homes over 20 years and 209,000 a year by 2034.
Peter Martin,
Even in my Borough Council area there are wards where we are fighting Labour and so want to persuade their voters to switch to us. There are other wards which we hope to gain from the Conservatives and so even in those wards we are trying to persuade Labour voters to vote for us. So our election strategy is not solely about attracting ex-Tory voters.
@ Michael BG @ Katharine,
I can find plenty of LDV postings which are critical of Rishi Sunak and the Tories. Similar articles on Keir Starmer and Starmite Labour are somewhat more difficult to locate. Maybe you can help me out?
There’s plenty of scope for legitimate criticism. The two child policy on benefits for example. No different from the Tories. More generally, their fiscal and monetary policies are the well to the right, politically. Again no different from the Tories. The Starmer which served under Jeremy Corbyn prior to 2020 doesn’t appear to be at all the same person we see and hear now. He clearly has a personal policy of saying whatever he feels will win him the next election. Not that there is anything wrong in winning elections but the democratic process does require at least some small level of integrity in our politicians. We have to be confident that what they say before an election at least bears some resemblance to what they might say and do afterwards.
I know Lib Dems can be critical of Labour when it suits them. There didn’t seem to be a problem in that respect with Jeremy Corbyn. I’m happy to help out if required. There’s plenty of ammunition to use!
Labour in 2017 failed to oppose the 2 child limit. Interestingly, few people noticed.
Peter Martin/ Marco. We are pretty well aware of the deficiencies of the current Labour leadership, Peter (thank you for the offer), but I didn’t know that the two-child policy wasn’t opposed by that party in 2017, thanks Marco. The Corbyn-led leadership did propose some things acceptable to our party, it seemed – nationalisation of water supply, perhaps – maybe nationalisation of British Rail as well? But we don’t need to go back now but preferably focus on the present and the future. It appalls me that the Labour Party apparently is not democratic, in that a majority of their members want a fairer voting system but the leader won’t accept it, or abolition of the two-child restriction either, whatever his membership thinks..
On the priorities of that party’s leadership, I note that the Shadow Chancellor Rachel Reeves is saying that she wants the taxes they propose to pay for NHS and school reforms. No mention of upholding and sustaining the benefit system, now so much under threat from this heartless government, or of tackling poverty especially child poverty straight away. Yet 3.7 million people suffered severe food insecurity in 2022-3 according to the Independent Food Aid Network. Labour, work like us for a fairer society in which authorities do care for the welfare of all our citizens.
Peter Martin,
My point was not that the government could not create money and spend it into the economy. They could. Corbyn and McDonnell and others suggested that instead of the Bank of England allowing banks to create money into the economy it should instead allow the government to do so (People’s Quantitative Easing). My point was that it doesn’t do it. It is not how the economy at the moment works.
I was countering your comment, “LibDem strategy is solely about attracting ex-Tory voters” and pointing out that in my Borough Council area we are attracting Labour voters to vote for us.
I accept your point that we see Starmer as a more acceptable future PM than Corbyn. However, I couldn’t see any Liberal Democrat attacks on Corbyn when I did a search on the internet. I found an article saying we attacked Labour in our mid-Bedfordshire by-election campaign. It is recognised that we do better in general elections when there is a Conservative government when the Labour Party is seen as an alternative government. Therefore it is not in our interest to attack Starmer as the moment.
@ Michael MG,
JC and JMD didn’t quite get their economics right. The Treasury did issue currency directly during WW1: The so-called Bradbury pound. There is no need to do that now because the BoE is wholly owned by the Treasury. Theoretically the commercial banks could be nationalised too, making all bank created money also government money. However it wouldn’t change anything fundamentally unless there was no requirement for them to at least break even.
Government is a currency issuer – so it has to be in debt and deficit. Otherwise it won’t have issued anything.
There might be one exception to my comment about “solely attracting Tory voters” in the next GE: The constituency of Sheffield Hallam. However, even there it would be possible to win by ignoring Labour and recruiting disaffected Tories.
The two main problems with our tax system are that it is overcomplicated and enforcement is inadequate, which incentivises non- compliance. I don’t see enforcement as a bad thing for small businesses. As a bookkeeper I’ve seen many small business owners work hard to keep good records and pay the correct taxes. They are frustrated by those who get away with not paying their taxes and can undercut the prices of honest business owners. Having more tax inspectors on the ground would be useful not just for enforcement but also education. If it is done with a focus that is not punitive but educational, it could mean HMRC working hand in hand with business owners and tax advisors to ensure that the correct taxes are paid. This can only work if tax is simplified. At the moment the tax system so complicated that even trained tax advisors are confused by it and the guidance provided by HMRC often only adds to the confusion.
Looking back at this discussion, there has been much to-and-fro debate on taxation, for instance capital gains and dividend taxes, what is paid and what should change. I would like to see our party set up a working group on taxation policy, to consider our plans and further them, to be ready for the new government. We are committed to add to taxation, to have funding to support investment and the growth of the economy, and to back our social justice policies. But the question is, as Chris Moore put it near the beginning of this discussion (April 19). will the Labour Party be prepared to raise taxes? if not, he wrote, “all Labour’s criticisms of Tory spending controls are empty words.” Quite so, and the challenge should be put.
Our party, as well as Labour, seem disinclined to tackle the tax issue because we want to win those Tory-facing seats. Why are Keir Starmer and Ed Davey not shouting against the Tory mantra that we are a heavily taxed country when we are not. We are about average for total tax intake in developed countries according to IFS and OBR; both say we are high taxed compared to long ago but “UK has gone from being a high-tax country in the 1960s to be a relatively low-tax country today” said the IFS and repeated by the OBR in March 2023.
The Reith lecturer recently commented that if we want good public services we need taxation levels like others in Europe. The key is to include in our message that we also want a fairer tax system and that we can all play a part in improving Britain, including the contribution that public services can make to grow our economy. Indeed if we are not prepared to contribute to our nation’s improvement with our money as well as our work then it will not happen.
There’s a story of a preacher who said to his congregation “The good news is that we have money to pay for our development project; the bad news is that it is in most of your pockets.”
The scariest three words in politics are “LOW TAX PARTY”. The Tories always kid us that they have the magic elixir to cut taxes without harming public services and the national economy. Like not painting the windows, it works, at first. Like not painting the windows, it eventually leads to rot. After prolonged Tory rule, in 1997 and again in 2024, everything in Britain is rotten. Labour will eventually have to restore a viable level of taxation, slowly get Britain back on track, and no doubt, get pilloried for their misuse of money by Tory billionaires in superyachts.
Labour, and the Lib Dems, are handicapped by a justifiable fear of the propaganda which the “LOW TAX PARTY” and their media allies will direct against them. How can that spell be broken?
Perhaps a non-party “Campaign for Sensible Taxation” could help? A non-party group could tell the truths which the parties are scared to tell.
Elizabeth Pears. Thank you for joining in, Elizabeth. You raise for me the interesting question, how far is it sensible to spend money to make savings? I thought when I heard of it of the actual expense of Rachel Reeves’ proposal of expanding the task force of HMRC inspectors in order to catch tax avoiders , and that Government always seems to want to slim down the public workforce rather than increase it to save money. But you as a book-keeper say, yes, it would be good to have those extra people, because tax avoidance is (I presume you are saying) just wrong. That the inspectors’ role could be educational as well as punitive is a good liberal idea that I find hard to believe – but no doubt you are right, that the tax system needs to be simplified. The thousands of home care people who have been charged, we learnt, large sums for earning more than the allowable amount and not declaring it seem likely to have been very often acting in error rather than through intent, but the inspectors seem not to have been in an educational mode or at all forgiving mood.
@ Nigel Jones and David Allen. You are surely both right in insisting that we are not a heavily taxed country today. (And public opinion polls seem to have found that a majority of people would rather have good public services rather than further tax cuts.) Both of you say that our party as well as Labour are still afraid of seeming to be against having lower taxes. It’s true that our main campaign is directed at winning over ex-Tory voters, but you also know that there is a strong movement in our party that wants our bold policies to be publicised, including those on fairer taxation. We can all join in proving to the public now that the title of this article is justified.
Peter Martin,
It seems that you have agreed that currently the Bank of England does not create money for the government to spend. I hope you will ensure that in future you make it clear what happens in the UK is not what could happen under MMT.
As you recognise that the government doesn’t spend the newly created money into the economy there is no reason why they should run a budget deficit. As I have pointed out – Government spending plus investment plus exports equals government revenue plus savings plus imports when the economy is in equilibrium. Therefore it is possible for there not to be a government budget deficit.
Just because economic theory does not dictate that a currency issuing government has to run a budget deficit, this does not mean that I think the government should have a budget surplus.
Elizabeth Pears,
Indeed, it would be a good thing if there were ‘more tax inspectors on the ground’ especially if they had an educational role rather than just an enforcement role. It would also be good if the tax system were simplified.
Nigel Jones and David Allen,
At our recent conference I asked a question about researching tax changes to increase government income. The answer was that the Federal Policy Committee had discussed this issue and agreed what would be in the manifesto about raising more government income. The pre-manifesto contains some commitments for the government to spend more money than at the moment. Therefore there is an implication that our manifesto will contain extra government spending and where this is day-to-day spending it will be fully costed by tax changes (new ones like the one announced by Sarah Olney at conference and tax reforms as we have as policy).
Since the subject of loss of carer’s allowance has been raised, the structure of carer’s allowance is something that clearly needs fixing. At the moment there is a cliff edge at £151 per week after tax, NI and allowable expenses. Many carers have casual work fitted around their charges’ needs so they don’t actually know how much their net income will be in a week. There needs to be a change so that at worst the marginal effective rate of tax on their income never goes above 100%. Maybe it could be integrated with UC so the combined rate never goes above the rate endured by tax payers on UC.
@ Michael BG,
The BoE does and has created money for the Government to spend. I haven’t said otherwise. Where do you think it comes from in the first place? Where do you think the billions (approx £800 bn) came from to support the economy through the post GFE slump and Covid crisis?
The simplest way would be a straight swap of Treasury bonds for BoE cash. However, this is frowned upon in banking circles. The work around is for the Treasury to sell new bonds into the market at the same time as the BoE is buying up old ones.
Sure, it is possible for Governments to be in surplus. But, a quick look at those World Debt clocks will tell you how unusual it is.
Governments have worsened poverty levels by failing to appreciate that the question of surpluses and deficits is a very much secondary consideration. The important one is running a monetary and fiscal policy to ensure all resources are fully utilised whilst at the same time not overdoing it and causing too much inflation.
@MichaelBG. You must not have been reading LDV during the two elections where Corbyn was leader. It was filled with vitriol about him and one person, at least, claimed he was a threat to national security and could not be allowed to have access to sensitive information.
Not one of our finest moments.
Peter Davies. It does seem that there needs to be a change in the rules on taxing home carers, and your suggestions do sound useful. I hope our spokespeople will take them up; perhaps you could email them about it.
Peter Martin. I think that you and Michael BG do agree that monetary and fiscal policy should be run so as to use all resources, as you say, and to maintain equilibrium, as Michael says, and that indeed questions of deficits and surpluses should be secondary.
‘Why don’t we take the UK’s third-biggest party seriously?’ was the headline in Martin Kettle’s interesting Op-Ed in Thursday’s Guardian. He discussed the fact that the just-deceased David Marquand and Frank Field, excellent leftist-leaning reformers, never got to join our party, and that Marquand never saw the major realignment of the progressive wing of British politics that he wanted. Kettle remarks on Paddy Ashdown’s success in leading 64 Lib Dem MPs in 1997, but asks what would actually change for us if Labour wins a large majority this year, as Tony Blair’s Labour did in 1997? My first thought is that the Liberal Democrats will probably have a better chance of increasing influence and growing strength during the 2025 Parliamentary term, under the government of Keir Starmer’s Labour Party on its present showing, than we ever did under the progressive government of Tony Blair. All to play for, not just the present expected downfall of the Tories.
@ Katharine,
Here’s a quote from the Starmerite rulebook which you might find useful to steer the young away from the Labour Party.
This seeks to protect the expulsion process from judicial interference and a duty of fairness.
“Neither the principles of natural justice nor the provisions of fairness in Chapter 2, Clause II.8 shall apply to the termination of Party membership pursuant to Chapter 2, Clauses I.4.A and C.”
LABOUR’S RULE BOOK 2022
Chapter 2.II.8 guarantees the right to dignity and respect and a right to be treated fairly by officers of the Party 😊
These changes were railroaded through the 2021 conference at a few hours notice.
If Starmer is so keen to deprive the right of natural justice to even members of his own party what can we expect of him when these need to be applied generally and to the wider community?
The purpose of Lib Dem attacks on Corbyn was to reassure Con~LibDem waverers that we would not help Corbyn into No 10. The main reason I got on the doorstep for voting Tory in my Tory-facing target seat was Jeremy Corbyn.
Our position will not have changed minds of Corbyn fans, who were going to vote Labour anyway. But it also will not have played any part in the toxification of Corbyn. This is the narrative of some on the left, that our attacks on Corbyn somehow turned voters against him and led to them voting Tory. This would mean people who weren’t going to vote for us being influenced by us, something that seems fanciful. It exaggerates our importance in the political conversation. Corbyn was already toxic.
On Corbyn being “a threat to national security”, many of his foreign policy stances were and are certainly deeply problematic. These include his uncritical support for groups such as Hamas and his apparent softness on Putin (e.g. he was equivocal over the Salisbury poisonings, and on the Russia-Ukraine war he appears to make a false equivalence between the two sides).
Alex Macfie 27th Apr ’24 – 6:22pm….On Corbyn being “a threat to national security”..
I have no axe to grind for Corbyn BUT he was, like this party, against the disastrous wars in Iraq/Afghanistan and also those in Libya and ‘Syria’ which this party supported..
I’d suggest that the UK’s involvement in those conflicts did more to threaten our national security (and to trigger mass migration into Europe) than anything Corbyn could have done..
Katharine Pinder. Due to the lack of inspections, small businesses are expected to self report their income without adequate support or supervision. They may have the help of an accountant but that’s no guarantee that they are getting it right and if they get it wrong then it’s the business that pays not the accountant. (Also, accountancy and tax advice is under-regulated so there are lots of rogues out there.) When VAT inspections were more frequent it helped businesses understand what was expected of them. In the past I have taken on clients after painful VAT inspections and helped them to organise their systems. This not only helps them get their taxes right, but also run their businesses better as they have access to better financial information if they keep good records. Over recent years HMRC has been making some effort to educate small business owners and accountants and I think this could be developed further along with more frequent inspections.
It is the DWP who is responsible for the excessively punitive and cruel response to carers. HMRC had given them the information and they sat on it, allowing carers on low incomes to build up massive debts.
Peter Martin,
You now are recognising that the Bank of England did not create money directly for the government to spend (People’s Quantitative Easing). It could have done so and neither of us would have any problem in it doing so. As you say during Covid the Bank of England did Quantitative Easing and in effect ended up owning lots of government debt. Therefore you should not be saying that in the UK the Bank of England creates money for the government to spend, because as you recognise it does not do so.
Part of the increase in inequality and poverty in the UK is the reliance on monetary policy to stimulate the economy since 2010. We agree that the government should use both fiscal and monetary policy to ensure full employment and to maximise the use of available resources while keeping inflation under control. Since the end of 2021 this government has failed to do so.
Mick Taylor,
I didn’t write there were no personal attacks on Jeremy Corbyn by Liberal Democrat party members. I wrote I couldn’t find any from the party leadership. All I could find was Jo Swinson saying he was not suitable to be the PM to stop Brexit.
Alex Macfie,
Attacking Corbyn for the reasons you state would not have been very effective in getting anti-Corbyn voters to vote for us. In 2017 when the Labour vote increased by 9.6% ours fell by 0.5%. As I have already stated we mostly do better under a Conservative Government when the Labour Party are seen as a suitable alternative government (1964, February 1974, and 1997).
Katharine,
I wish I shared your optimism about a Starmer Government. I also don’t consider that the Blair government was progressive enough. Its reforms to the benefit system made things more difficult for people who can’t work or can’t find suitable work.
Correction: Martin Kettle in his piece I quoted above correctly spoke of 46 MPs being led by Paddy Ashdown in 1997, not 64 as I wrote with a slip of my typing finger. I think, continuing my thoughts on the Kettle article, that the start of Tony Blair’s government was indeed progressive, as I suppose was expected by Paddy Ashdown, and was acknowledged by the later Liberal Democrat leader Tim Farron. But as this article and commentary shows, less is currently expected of the potential government led by Keir Starmer {thanks, Peter Martin, for additional alarming facts!)
How then should Liberal Democrats plan to react to the expected Labour Government? Do we offer to support them conditionally? I would like them to be persuaded to support social justice measures, welfare reform and much-needed enhancement of payments, plus our GBI proposal, besides addressing the climate challenges and the NHS and other local services desperate needs. But if we meet with disappointments, could there come a time when we should be aiming at leading a realignment of the progressive forces of the Left and Centre-Left, and regaining our long-lost leadership position?
@ Michael BG,
A more exact figure for QE is £895 bn. This is money created by supposedly independent BoE to buy up govt bonds on the secondary market which then ended up with the government and which it has spent. Every penny! It was necessary that the Govt should have instructed the BoE to do that – so it’s not a bad thing. So I’m really not sure what you’re saying.
If a person isn’t allowed to buy cigarettes from a tobacconist, for whatever reason, but then buys them from an intermediary who buys them from the tobacconist, is that person supplying money to the tobacconist? I would say ‘yes’ but you’re saying ‘no’.
It’s a pretty thin argument.
@ Katharine,
I was just watching a clip of Keir Starmer being interviewed by Sky’s Sophie Ridge. She was pressing him to explain how he would fix the public sector without spending any extra money. He didn’t want to properly answer the question. Naturally. He was happy to say it was all because of Tory mismanagement, but in the end he did seem to concede that nothing much would change until we had economic growth.
However, this is not what he said when he was running for the Labour leadership. Then it was that higher taxes were needed on higher earners to help solve our economic difficulties. Now it is that we can afford to remove caps on the bonuses of bankers and at the same time keep their tax bills down but we can’t afford to remove the benefits cap on the children of the less affluent.
If you’re serious about ‘progressive politics’ you shouldn’t be allowing this guy to escape without proper scrutiny of his many inconsistencies and shifting of positions.
@ Alex Macfie,
“Corbyn was already toxic.”
Would LibDems accept some ‘toxicity’ in their leader, if it meant increasing the vote share to 40% which is the figure Corbyn achieved in 2017?
It really depends on what you mean by “already”? The barrage of accusations came afterwards. Until the 2017 election the consensus of right wing opinion was that Corbyn’s Labour would naturally self destruct. When this didn’t happen a new approach was seen to be needed.
@Michael BG: I know that Lib Dems do better when Labour is electable, but we could hardly have pretended that Labour under Corbyn was electable and have expected the electorate to believe that.
@Peter Martin: Corbyn was popular among his fans, but he was deeply unpopular among swing voters, which is why Labour lost both elections fought under his leadership.
@expats: You know what they say about a stopped clock.
Peter Martin. Excellent points about the inconsistencies of Keir Starmer as Labour leader; I think we are drawing attention to some of his weaknesses in this thread, and must continue to do so nationally. We can and should compare what we have to offer ourselves, being prepared to tax more (including bankers’ bonuses) to pay for social justice measures, caring about poverty and the plight of carers and the sick and disabled. Ed Davies with Laura Kuenssberg this morning on BBC 1 said over-70s and people with continuing health problems should have access to one named doctor, besides reiterating that we need 7000 more doctors being trained. (I’m sure the doctor who has just transferred from Conservative to Labour but is standing down as an MP should be urged to join us!)
Elizabeth Pears. You make a good case for the needs of small businesses, for instance to get more help from HMRC, and I think our party will always be alert to and wanting to help the needs of individual workers in our society. (Please though can you spell my surname correctly.)
https://www.newstatesman.com/politics/uk-politics/2024/04/youre-not-paying-as-much-tax-as-you-think
This article in New Statesman reports on the latest OECD survey of wage taxation and shows that people on average earnings are actually paying net (after including benefits) a smaller proportion of their income in taxes than they were in 2010. It is those on well-below-average incomes who have been hit the hardest. The UK at 28.6% is nearly 5% below the OECD average for taxation, so there is plenty of headroom for increasing taxes without reducing competitiveness.
@ Alex,
If it’s any consolation to you, Jeremy Corbyn has far fewer friends on the left than he used to. The feeling is that he’s hung on for far too long without clarifying what he intends to do in the coming months. He won’t say anything against Starmer in case he’s expelled from the party even though he’ll be expelled in any case as soon as he runs against an official candidate.
But it’s not about Jeremy Corbyn any longer whatever he decides. Keir Starmer is the man in charge of the Labour Party now and has been since 2020. His track record of political inconsistency is staggering and yet he gets away with it time after time because no-one will tackle him on it. Even the Tories are pretty useless.
It shouldn’t matter where any politician stands in the political spectrum. We need to know that what they say before an election will at least bear some resemblance to what they might do afterwards.
https://www.politico.eu/article/all-of-keir-starmers-u-turns-in-one-place/
Thanks, Peter: that Politico list is pretty condemning of the Labour leadership. Basically, it does seem that Keir Starmer and his team are intent on sticking to a newly-found centrist point of view, with adherence to fiscal rules which their erstwhile supporter Will Hutton wrote back in February should be torn up. There is a lack of honesty in the change of tack, and serious implications for any actions by that party to help the poorest and weakest of our society if and when they gain power. We do indeed need to hold them to account, and that means we Lib Dem activists must keep reminding our own leadership of our better stance and firm commitments. Basically, that we will find the taxes necessary for healing our society if given the chance, and must meantime press the Labour party to change tack this time for their core principles and commit to the necessary remedial work.
Katharine, you make a fair enough point highlighting, ” intent on sticking to a newly-found centrist point of view, with adherence to fiscal rules”.
In all fairness I’m compelled to say that I remember (and still very much regret) a more than fair amount of that sort of stuff getting onto the agenda between nine and fourteen years ago……. which, of course, doesn’t make it any better now coming from a different source in 2024.
Here is another couple of “U turns” that Politico has missed:
Selections for Labour candidates needs to be more democratic and we should end NEC impositions of candidates. Local Party members should select their candidates for every election.”
He can’t blame this one on the Tories or the State of the Economy. This was a tweet made during his leadership campaign, in early Feb 2020, and clearly designed to deceive Labour Party members as to his future intentions.
The term U turn is being far too generous. I doubt anyone believes he meant a word of it.
He’s on record as saying that Jeremy Corbyn would have made a “Great PM” . Now, one of the questions he’s reportedly most wary of is to be asked if he really wanted Labour to win in 2019.
Alex Macfie,
While accepting that Jeremy Corbyn has problematic foreign affairs stances as you say, I still think he would have made an acceptable PM compared to Boris Johnson, Liz Truss or even Rishi Sunak. I think John McDonnell has a much better understanding on how to run the economy than Rishi Sunak or Jeremy Hunt.
In 2017 if more than 16 Liberal Democrat or Labour MPs had been elected I would hope there would have been a minority Labour Government which wouldn’t have been able to carry out all of its re-nationalisation or Trade Union policies. Hopefully in such a situation we wouldn’t have been tempted to allow a minority Conservative Government to be formed.
I still think in 2019 it should have been possible to get a majority in the House of Commons for a government to hold a second referendum on Brexit with Remain as
one of the options.
Possibly final thoughts in this thread. I agree with Michael BG that a government by Jeremy Corbyn would have probably been more acceptable than those led by Boris Johnson or Liz Truss, and that John McDonnell (whose approach to business leaders was positive) would have been a Chancellor with better chance of running the economy well than Jeremy Hunt. As Michael agrees, Jeremy Corbyn’s stances on foreign affairs and on major nationalisation intentions were problematic, but if his government had been a minority one with some Liberal Democrat involvement, the more extreme policies would probably have been ditched. I think his views on poverty and inequality would have produced more compassionate results than a Keir Starmer’s government seems likely to produce. As Peter Martin has been showing, the present centrist stances of the prospective new government are not consistent with Keir Starmer’s previous declarations when fighting to become leader, and mean we cannot trust him for consistency.
@ Laurence Cox. Thank you, Laurence, for noting the evidence that taxes can indeed be raised without harming competitiveness. That the poorest have been hit hardest is also evidence that our policies to restore social justice are required. Social justice, not ‘fairness’, that mealy-mouthed slogan, should be the call.
@ David Raw. True, we can deplore again the wrong-headedness of our leaders in the Coalition if we wish, but I think it is more important to ensure that our present leadership remains determined to demand taxes are raised as needed by the prospective new government, and especially for the spending that the Liberal Democrats believe our struggling society most requires.
@Michael BG: You can rest easy there. The post-2017 Parliamentary arithmetic allowed a Tory~Lib Dem hookup. And we said No. I don’t know exactly how any exchange between the two parties went, but it’s reasonable to assume that Theresa May would have reached out to the Lib Dem group first, seeing as we had more seats than her eventual Confidence & Supply partner the DUP.
Taxes will probably have to rise to support extra spending in the next Parliament unless we have a 2008 style economic crash in the meantime. Some MMT enthusiasts give MMT a bad name by arguing otherwise. They never quite get past the obvious point that currency issuing govts can never run of of dollars and pounds etc. If what they advocate sounds too good to be true, that is because it is.
They are keen to tell you that taxes don’t fund spending, which is true, but they are far less keen to explain what they are for. This is to give a value to the currency and to create the fiscal space for govts to spend without causing excessive inflation.
In other words, MMT is different from mainstream economic theory but it isn’t quite so different as some make it out to be. Having said that, it is far better at explaining what we need to do to make the most of the real resources which are available to us
Alex Macfie,
I don’t remember anyone in the party saying Theresa May contacted the party to talk to us about supporting her minority government after the 8th June 2017 general election. I understand she was not very good at working with the party during the Coalition Government. I would be very surprised if she approached the party. It was on the day after the election that Theresa May announced her intention to have a confidence and supply agreement with the DUP. Therefore I think we can safely assume she never approached us to support her minority government.
Peter Martin,
I think you comment of 10.33 today does give the impression that you are talking about MMT and not what actually happens in the UK.
Katharine Pindar, apologies for the incorrect spelling. I’m normally very careful about things like that. Thank you for responding to my comments. Commenting on articles is very much out of my comfort zone so I appreciate your responses.
@ Michael BG,
It is often said that MMT is a description of what actually happens in the economy rather than something that is arbitrability implemented. In other words, there’s no real difference between the two.
This is not to say that all those pulling the levers necessarily know this but most probably do. They probably won’t want to admit it though. For example, they’ll call for everything to be “fully costed” under normal circumstance but when we have a National crisis such as we had with the Covid epidemic they knew well enough how to operate the system.