Alex Davies was Vince Cable’s Chief of Staff when he was Lib Dem leader between 2017 and 2019, a time of tumultuous and febrile politics when our “Bollocks to Brexit” message gained us 16 MEPs at the same time as we won hundreds of new councillors. We used the unique opportunities offered to us in the European elections to the max.
He, like many of us in the party, including me, are concerned that the party’s messaging is too timid for the coming General Election and feel that we need to be offering a much more distinctive liberal voice. Having put virtually all our eggs in the Blue Wall, we think that our strategy needs to be refined to make sure that we make the gains we have worked so hard for over the past four years.
In an article for Comment Central, Alex sets out three ways in which he thinks we could say something different and popular. Essentially, he says not being the Tories is just not enough. Mid Bedfordshire gave us a clue on how the next election could play out if we don’t enhance our message.
On the airwaves – where most voters consume election campaigns – there is no ‘two horse race’ with the Conservatives. Rather Ed Davey has to be heard above both Sunak and Starmer.
He reminded us of what Paddy said just before the last time the British public dumped a failing Conservative Government for Labour:
“My fear is this,” he said, “that we shall see an election, and maybe a change of government – but we shall not see a change of direction. We shall still be starved of clear vision, a commitment to change, the courage to face up to what must be done. It is the first crucial role of this Party to see that that does not happen.”
He sets out three ways in which we could tweak our message to challenge Labour as well as oppose the Conservatives.
First of all, the single market. We need to talk about getting back in there:
The Lib Dems could argue that the British people cannot afford to pay for his political caution. Britain’s third party should be brave enough to say that only a ‘single market dividend’ will yield the billions needed to fund real change in the country.
Now, the party’s campaign strategists will argue that anything that feels like re-opening the Brexit debate will harm our chances in places that voted Leave and won’t give us the boost we need in Remain seats. But we are almost four years on from a disastrous Brexit which will have harmed businesses everywhere. This week, I’m lamenting the impending loss of the brilliant Cheese Shop in Cromarty, near where I spend much of my holiday time. Brexit, the owners say, is a factor in their decision to shut up shop after Christmas.
The last couple of years have not been without its difficulties, adjusting to a post-Brexit way of doing business with mainland Europe. This has contributed to our decision to finish, but that is not to say the business has reached the end of its life. It is still possible to import the cheeses, it just requires ordering more in one shipment (600kg) along with a lot more paperwork!
Everyone will know a business which has been adversely affected by Brexit. Maybe they work in one. A carefully constructed argument on how to fix the mess could be a vote winner for us. Certainly, Conservatives and Labour need to both be held to account for their failures. It is perfectly possible to do this without scaring too many horses.
Alex’s second and third suggestions tackle different aspects of the need to achieve net zero. First up, the cancellation of HS2:
The most vivid of the Conservative retreats on the environment is not their tweaks to the timescale for phasing out new petrol and diesel vehicles. It is the brutal, myopic cancellation of high speed rail and the prime minister’s proposed fire sale of the land on which it was to be built.
Yet Labour is notably silent on whether it would revive a national ambition to link London and Glasgow with the fast, modern trains needed to make domestic flights obsolete. Despite the barrage of bad press for the project, more voters continue to support HS2 than oppose it, with the margin of support markedly larger among voters under the age of 50. Liberal Democrats should be proud to speak for them.
Anyone who has ever spent any time with Ed Davey can be in no doubt for his passion for the environment and tackling climate change. I remember the first time I met him, about 10 years ago, at a bloggers’ interview at the Social Liberal Forum. He was so passionate, animated and interested on an issue he cared passionately about. As a party, we have a leader with the expertise and ideas to grapple with an existential threat to our planet and we should make more of this:
Just as Liberal Democrats capitalised on Vince Cable’s economic standing during the 2017-19 parliament, so now Ed Davey should be a leading voice on how – affordably and sustainably – to keep Britain’s lights on, homes heated and kettles boiling
We have under-performed at every election since 2001. We should have won so much more in 2005, but strategic decisions about the way we targeted our resources held us back. In 2010, we peaked too soon and didn’t seal the deal. We were never going to get the 30% we reached in the days of Cleggmania, but we should have done better than we did. The failures of 2015, 2017 and 2019 are still breaking our hearts and we don’t want to wake up to disappointment again.
In 2001, Charles Kennedy didn’t shy away from speaking up on the issues of the day. William Hague’s Conservative Party was ramping up the unpleasant anti immigration rhetoric and Charles was having none of it. When William Hague talked of Britain becoming like a foreign land, Charles called him out:
The Liberal Democrat leader, Charles Kennedy, said Mr Hague’s speech was “not common sense but complete nonsense”.
“The last time William Hague let himself and his party run riot on this theme of so-called patriotism and defence of the nation, he lost the Romsey byelection. He should have learnt the lesson then that British people are not taken in by his thinly veiled little Englander sentiments and populist propaganda.”
The next election will be the Tories throwing as much dirt as possible because that is all they have got pitched against Labour’s uninspiring “The Tories are terrible, we aren’t that much different, vote for us” message. We can and should do better. What we are saying on sewage and GPs is fine, but it’s not distinctive.
We have done a great job in building strong foundations in our target seats over the past four years. What we now need to do is to fine tune our national message to give us a USP that will resonate with people.
I’m not a fan of our “for a fair deal” slogan. I mean, it could be adapted by anyone. Let’s have something disinctively liberal that sums up our heart and soul. We are a radical planet-saving, establishment-busting, freedom-loving party and we should not be afraid to talk about our solutions to the many problems facing this country. People deserve that and it will pay dividends.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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*applause *
Double “applause”
Yes! Yes! Yes!
But is anyone listening? And if they are, will they do anything about it? And will they do so quickly?
I very much welcome this.
There are to points that I would add.
The first is that if we are to campaign on Europe we need to start with making sure that the party has ready access to some of the evidence about the damage that leaving the EU is doing to us. And the damage yet to come.
By the party I mean the members of the party.
That takes me on to a second point. We need to recognise that our biggest asset are our members. With modern communication asking members about their experiences on issues, and so building up enthusiasm is what is needed to get our party up in the national opinion polls.
Quite right Caron.
We should also feature our commitment to reform of the electoral system. We should not be deterred by those who argue that PR is merely an academic issue and is not relevant to the ‘bread and butter’ issues. It is our duty to explain to the public how FPTP has lead to ‘safe seats’, corruption and bad government generally. Electoral reform is no guarantee of better government but it is the ‘sine qua non’.
It is an issue that clearly distinguishes us from the Conservatives and the Labour leadership. Indeed, given that 80% of the Labour membership is in favour of PR, many of them will be persuaded to vote tactically for us.
Didn’t we learn the lesson from our poor result (despite an active campaign) in the last Holyrood election (down one seat a on previously record poor result) that if our slogan (then “Put recovery first”) could be used by anyone, it was not a good slogan?
Excellent article. Fully support.
We need to be the Party that articulates that the reason why everything appears to be broken or deteriorating in the country is all down to a broken political system. Just voting for a different Party without also changing the system will achieve nothing. Therefore, WE are the Party with the ideas to change the system: a fair voting system to stop us getting governments that only a minority supports; more devolved power so each country of the UK has more control over its own decisions; a social contract that protects all citizens from every facing destitution.
Quoting from Alex’s article “Yet Labour is notably silent on whether it would revive a national ambition to link London and Glasgow with the fast, modern trains needed to make domestic flights obsolete.”
Sadly, our Party, like both Labour and Tories, swallowed the idea of HS2 without asking the right question: If we want a railway to give us the fastest trains from London to Glasgow is this the right route? The Victorian railway builders would have told us immediately that it wasn’t. The East Coast Main Line which ran up the less-crowded eastern side of the Pennines was always capable of running faster trains than the twisty West Coast Main Line, where Manchester is not even half as far from London as Glasgow is. The alternative to HS2, the HSUK proposal http://www.highspeeduk.co.uk/ was the right option and we as a Party should have supported it.
Now we have an HS2 which is just a stump, even if the link to Manchester is restored, because it was never designed to be properly integrated with other existing lines, let alone HS1 and the European high-speed network. It is pointless to build a trackbed at great cost capable of supporting 400 kph trains, when the trains themselves are limited to 300 kph by their tilting mechanism, which is needed to allow them to run as fast as the existing Pendolinos on the northern section of the WCML.
Might we make reform of the tax system and the Bank of England headline policies?
tps://www.taxresearch.org.uk/Blog/2023/10/29/question-of-the-day-is-it-right-that-those-with-unearned-income-pay-less-tax-than-those-who-have-to-work-for-a-living/
https://www.taxresearch.org.uk/Blog/2023/10/29/quantitative-tightening-needs-to-stop-now/
arch.org.uk/Blog/2023/10/29/quantitative-tightening-needs-to-stop-now/
Climate change is a key issue. Increasing numbers of people are being affected by severe flooding. Some places are being flooded more than once. Some have flood defences which are being overwhelmed – they are no longer good enough.
That issue involves policies which some voters (and the tory party) would treat as a war on motorists. But I’m not aware of any serious opposition to getting as much freight as possible off the road and on to railways – if only the railways had the capacity.
I’m not a tax expert but I see reform of the tax system as essential. The real problem is how to do it – it’s so complex and gives many oppotunities for exploitation by clever accountants. So cutting down in a big way on tax avoidance and spending the tax saved on the public services we all need and use might be the way to market it.
But please do it all in plain English, not economic goobldegook.
Of the three ways:
YES to HS2: In fact I’d say go further: Commit to – over 20-30 years – building decent >125mph intercity rail network connecting all parts of the country (reaching for example Brighton, Plymouth, Swansea, Glasgow, Aberdeen, Grimsby, Norwich). That would be true levelling up!
NO to single market. For goodness sake! That’s just repeating the failed 2019 strategy. Joining the single market means bringing back freedom of movement and all the problems that caused and would (rightly) be seen by many people as ignoring the referendum and re-joining the EU in all but name. We’d be hammered by the other parties and obliterated at the polls if we seriously adopted that.
YES to a strategy to develop sufficient clean energy (If that is what Alex Davies was arguing for – his article didn’t seem too clear there).
Spot on Caron,.
In whatever order works; defining issues LD can own .
Europe, electoral change and environment
“be seen by many people as ignoring the referendum” The referendum in which the Leave campaign claimed we’d still be part of the single market after leaving the EU? It would be about delivering what the referendum promised before May, Johnson et al decided that Brexit meant whatever they wanted it to mean.
@Simon R: Anyone who still thinks the 2016 Referendum result has any relevance at all is hardly likely to vote Lib Dem. It’s a spent mandate, same as this government’s mandate will be when it loses the next GE. And the policy is rapidly being exposed as a failure, just like this moribund government. As far as the Referendum is concerned, we represent the ‘opposition’, and just like an opposition after a General Election, we have every right to expose the failure of the policy that the referendum is said to have mandated.
Besides our approaches to Europe and to protecting the environment, we should be making plain that we are the party committed to reducing poverty in our country, and that our policies to do so are desperately needed.
Bravo Caron! At last you are getting behind those of us who have been calling for our leadership to get into campaigning mode. If we want to make significant progress it is not enough that we are a party of decent competent people: Our leadership needs to at least occasionally mention Brexit, a policy which once defined us and with sixty percent of people wanting us to rejoin the EU. The movement of Labour to the centre offers the opportunity to attack them from the left with some radical policies to tackle the poverty into which so many of our people have fallen under the Tories. We have these policies aplenty but need to select a few and hammer away at them remorselessly to achieve a political identity for our party again. The big question is ‘ARE OUR LEADERSHIP LISTENING TO OUR CALLS OR NOT?’ I see no evidence as yet that they are.
@Nonconformistradical
Tax avoidance is perfectly legal and can be a good thing. For example, single person households are able to claim a 25% discount on their Council Tax bill – those who know about this provision are therefore able to avoid 25% of their Council Tax by applying for the discount. Sadly, some of those struggling to make ends meet are unaware and end up paying more tax than necessary. Tax evasion is illegal but difficult to stop. For example, any time a tradesperson offers not to charge a customer VAT if they pay in cash, is seeking to evade paying income tax on part of their income – and any customers who accept the offer does so to evade paying VAT.
@Nick….Cameron was unequivocal in leave means leave – and went on to say that we’d withdraw from the SM – ending fom & sm rules…
@Alex those post industrial towns that voted heavily to leave were hardly living it up when we was in the EU – for many it was an irrelevance as hardly anybody voted in EU elections & they’d struggle to name an Mep let alone there own ..The EU just isn’t as popular as we’d like to think …Sm would be a tough sell even now…
Might H. Q. emphasize the pressing need to eliminate destitution?
https://www.taxresearch.org.uk/Blog/2023/10/28/destitution-is-not-inevitable-it-is-what-some-have-chosen-to-impose-on-others/
@Mary Fulton
I do know the difference between tax avoidance and tax evasion.
The single person council tax discount is an entitlement in my view and nothing to do with tax evasion.
I am talking about wealthy people with clever accountants who find loopholes in the tax system which most people could only dream about.
@Martin Gray: Those people are never going to vote Lib Dem, that’s the point. There is zero point in tailoring our policies to people who would never consider voting for us. People for whom faithful adherence to the result of the Brexit referendum will vote for True Believers, not poll chasers.
Bravo Leekliberal also! The distinctive national message that you and Caron and many of us want we must pressure our leadership to take on. It must certainly include our intention to tackle poverty, and this must not be buried in a half-mention in the Manifesto. The radical policy we have was passed at York (F12). to institute a Guaranteed Basic Income to end deep poverty and the need for food banks within ten years. This is not a policy ‘to frighten the horses’, because it is to be brought in by gradual already needed increases in welfare benefits. Poverty is likely to go on increasing with the forthcoming renewed cost of heating this winter.
We should also emphasise our policy on housing (F 31), not least because lack of affordable housing is also a contributor to poverty. The sharp increase in the cost of private rented housing, I understand some 10% since the mortgage interest rates rose suddenly, is another indicator of compelling need.
‘We are a radical, planet saving, establishment-busting, freedom loving Party.’
We are… the Green Party!
What you describe as ‘faithful adherence to the result of the Brexit referendum’ to me is basic respect for democracy: If you hold a free and fair referendum and the voters use the referendum to vote for X, then, like it or not, if we respect democracy then the Government should do X. (And I say that as someone who voted Remain and felt very sad when the referendum went the other way).
How would you react if the SNP followed your logic and declared the 2014 Independence referendum a ‘spent mandate‘ and therefore decided to declare independence anyway, on the basis that they believe remaining in the UK is ‘rapidly being exposed as a failure‘? (Yes I realise that’s hypothetical because in actuality they can’t legally do that: The point here is about the ethics of ignoring a referendum)
That last comment of mine was for @Alex Macfie, not for the posts directly above it.
Might it help if, with discussions like this one, H. Q made at least one comment?
@Katharine Pindar – I agree on poverty, absolutely. Ending poverty is a key founding principle of our party and has to be a key part of what we deliver wherever we have influence. Similarly I have always said that the people who sort housing will do the best long term good for the whole country.
Nick Barlow 29th Oct ’23 – 4:21pm:
The referendum in which the Leave campaign claimed we’d still be part of the single market after leaving the EU?
No, the Referendum in which some voters took little or no notice of what was said by either campaign before the vote.
The UK’s decision was to leave the EU in its entirety as stated at the time and accepted by both campaigns. Not everyone paid much attention to what was said – most people already knew how they would vote. After our decision to leave some remainers have attempted to rewrite history by pretending that a Leave vote only meant leaving the political part of the EU.
The Leave proposition was encapsulated in three words: “Take Back Control”. It’s not possible to take control of our money, borders, laws, and trade while in the ‘single market’ – the EU Internal Market. We’d have to pay (Norway paid more per head), we’d have to accept ‘free movement’ from the EU, we’d have to obey over three-quarters of all EU law (with no say), and we wouldn’t be able to operate an independent trade policy – a crippling handicap for the world’s fifth largest market…
1. The government leaflet sent to every household mentioned the “single market” 20 times and exhorted us to vote remain to stay in it.
‘Government leaflet on the EU Referendum’:
https://commonslibrary.parliament.uk/research-briefings/cbp-7579/
2. The Prime Minister, David Cameron, stated in parliament what each vote meant…
Prime Minister’s Questions: 15 June 2016: Answer to Nigel Adams:
3. The remain campaign saw leaving the ‘single market’ as the “key issue”…
‘Brexit vote was about single market, says Cameron adviser’ [November 2016]:
http://www.politico.eu/article/brexit-vote-was-about-single-market-says-cameron-adviser/
Thanks, Caron, for agreeing that tackling poverty is one of the key policies that our leadership should campaign on, along with our housing policy which aims to ensure that everyone, young or old, can have an affordable secure home. That the Liberal Democrats are absolutely committed to fight poverty and have the unique, radical policy of Guaranteed Basic Income, accompanying our demands that everyone on benefits should have the extra £20 a week again for starters, and that the need for food banks must go – these policies should be made part of our identity in the public eye in the next few months. The need is increasing all the time; there is even now a new report out on the increase of destitution in our country. Yes, we can and should campaign on many vital issues concerning health and caring, but do let us speak loudest of all for the poorest in our society – whom it seems that the Labour Party has forgotten, even though many of them actually are in work.
@Simon R: Democracy doesn’t mean what you seem to think it means. It means continuous challenge, not eternal conformity to the result of a vote at a particular point in time. Hence why we have regular elections. A new mandate overrides any previous mandate; thus campaign for such a new mandate is not disrespecting democracy, it’s part of democracy.
The Lib Dems could be accused of “ignoring” the referendum result when our MPs voted against the Brexit deal in December 2021. But it doesn’t seem to have harmed us electorally, as we have gone on to win 4 by-elections, all but one in majority-Leave voting constituencies. This is because voters tend to be concerned about their present, lived realities, not past events or abstract principles. The only people who will continue to be bothered about us “ignoring” the 2016 referendum result are those still fanatically loyal to the original cause of Brexit, and like I said they’re not likely to ever vote for us. (The same can be said of people who still harp on about the “Con-Dem” Coalition.)
As far as Scottish independence is concerned, I respect the right of those who support it to seek a mandate to take Scotland out of the UK. A unilateral declaration of independence would be problematic because it would be unlawful as you admit, and it’s the unlawfulness that would be of most concern to me, not the fact that it would contravene the result of a referendum from a decade ago. It’s moot anyway because the SNP is likely to do badly in the next election, for reasons unrelated to the issue of independence.
Caron – spot on.
Those of us who have been parliamentary candidates should take some of the bland blame though.
Summary of my campaign in the 2005 General Election: “Ruth Bright is local. Ruth Bright can win. Ruth Bright is local. Ruth Bright can win. Ruth Bright CAN win. PS did we ever tell you that Ruth Bright is local?”
Yawn.
@Alex Macfie
You make interesting points though I must point out that your acceptance of the right of those who support Scottish independence “to seek a mandate to take Scotland out of the UK” conflicts with current Liberal Democrat policy being against another independence referendum in any circumstances (and refusing to even acknowledge the concept of what may constitute a mandate for a second referendum.)
Guaranteed Basic Income addresses the current inequitable, and therefore inefficient, distribution of money/ the output element of destitution.
Might our party also address some major causes of our current, growing inequitable/inefficient destitution crisis as presented in the attached article/the input element?
https://www.taxresearch.org.uk/Blog/2023/10/30/sticking-plasters-no-longer-work-the-wounds-in-our-society-are-far-too-deep/
I agree with those who include elimination of poverty and also that it involves changes in our systems. So much is interconnected that we MUST challenge the proposals by Conservatives and Labour that merely involve tweaking the systems. Public services need to work together and centre on the people they try to serve rather than work in silos; they must also work with the third sector in communities and not rely only on professionals. For example, we rightly see rising calls for change in school curriculum, qualifications and school inspections but this by itself will not do enough to narrow the gap between the achievers and the others unless we also change the systems that deal with poverty, children’s social care, health, crime and youth services.
I think the implication is that a list of good policies will not be enough, more radical change in the entire approach to government and public services is needed and we must find a suitable way of summarising this. We lack a suitable vision without which slogans and soundbites will not be enough.
Herein lies the problem:
https://chrisgreybrexitblog.blogspot.com/2023/10/mustnt-grumble.html?m=1
1Yes,3Yes. 2 Poverty eradication Yes
HS2 has run into the buffers and unless we can say where the money would come from for the project and reassure those set to benefit from the alternative proposals that they would not loose out … Leave it alone. It is not distinctive, not a USP and would invite opposition attacks. Tory failure should be highlighted. Many are unconvinced of its ability to deliver on the claimed for benefits and I agree with them.
Great stuff Caron.
The word liberal can mean whatever you want it to mean. We need a policy which allows for a referendum before an application is made for renewed membership of the EU. My opinion is we should examine the best way of having some sort of enquiry before the referendum to bring together objective facts and the varying opinions.
We should also press for a clear method of stopping money influencing the result by running expensive campaigns to influence result.
Our fundamental problem here is that we are almost entirely focused on electoral tactics with no thought of basic electoral truths or the strategy needed. Hence, we once again get dubious “facts” stated like ‘We should have won so much more in 2005’. However, this totally ignores how hugely difficult it is for us to ever beat Labour in their areas or when they are perceived as being the answer to Conservative incompetence and bad analysis follows.
So we end up with a focus on caring issues – poverty, social care, NHS – that while important, as far as 90% of voters are concerned they are completely owned by Labour. Good luck if you think we can win on those. The same going for the environment with the Greens.
That leaves us with the usual niche Lib Dem hobby horses, electoral reform, devolution, basic income etc – again little more than 10% think these are at all important, and if you throw in the thankfully so far unmentioned gender politics, take us inexorably into the lonely badlands of irrelevance when it comes to most people’s voting decisions.
We have to come to terms with the simple fact that “Oppositions don’t win elections, Governments lose them,” and aim to win on the issues where the Conservatives are seen to be weak – the economy, running big projects, honesty and the Brexit mess – where everyone knows we were right, and Labour dare not say a word.
2005 was our high point in seats at 62. Wouldn’t we have loved to have such a poor result in any of the terrible three of 2015,17,19? Or in 2024? Surprised to see Caron tag this as an inadequate result.
David, good intervention, but we don’t actually need to have the highest popular appeal on any of the caring issues or indeed on the environment. We just need to improve our relative appeal. The party’s initiatives in the health field may actually be paying off. So I think we should persist.
Agree with you that PR is of interest only to a tiny section of the electorate. As for gender politics, again it’s a key issue for a tiny minority. But a massive yawn for the rest of the electorate.
Nigel Jones. You say you want a change in the systems that deal with poverty, children’s social care, health, crime and youth services. I don’t know how we can change systems, though as you say everything is interconnected and public services need to work together.
I found myself in puzzlement thinking, ‘If these are the solutions. what are the problems?’ and wanting some definitions and clarifications. And it seems to me that, overall, we Lib Dems should stand for Social Justice in our country, and renewal of the broken Social Contract between all citizens and our government. It’s not just a Fair Deal that we want (or at least I hope we want), it’s a Just Society, in which deep poverty and extreme inequality will be seen as evils which we citizens and our government will work together to abolish once and for all.
While we can be clearer that we want the UK to re-join the single market we need to also make it clear this is unlikely to be possible within the next five years of the next general election. We need to consider if it will ever be possible to re-join the single market if the Conservatives respond to this policy by saying they would leave it if they won another general elections.
Vicky Pryce in the Green Book podcast made it very clear that HS2 was a poor investment. Also there has been opposition to it because improving rail links across the north and the Pennines would provide a bigger economic dividend. In one of the recent by-elections didn’t we say we were against it?
Ed Davey’s record in government on the environment is not all positive. Talking about the environment will not be distinctive as both the Greens and the Labour Party will be doing it. However, we do need to articulate our green policies especially our programme to insulate all Britain’s homes by 2030 by providing free retrofits for homes of people on low incomes and subsidised retrofits for the rest of the homes in the UK.
What would be distinctive would be highlighting our policy to end deep poverty in the UK within the decade.
David Evans. I think, David , you haven’t noticed how the Labour party has changed since they booted out Corbynism. Good capitalists they are now, keen to support entrepreneurs in new technologies and environmentally friendly business, with the entrepreneures to provide two-thirds of the capital and the helpful state the other third. And as for poverty and equality – when did you see the current Labour leadership hold forth about them?
But, Chris Moore also, I do think we should make electoral reform a red line if we come to negotiate with Labour. The Electoral Reform Society puts out an excellent definition of how stunningly disempowering and anti-democratic First Past the Post is, and the forces are gathering that demand the changes.
@Chris…
“As for gender politics, again it’s a key issue for a tiny minority. But a massive yawn for the rest of the electorate”……
I detect a pushback from the public on this & no doubt it will be raised at a GE ….The progressive left has abandoned all reasoned debate on the issue in the name of inclusivity – it won’t get that luxury at a GE.
Caron Lindsay,
“We have under-performed at every election since 2001. We should have won so much more in 2005, but strategic decisions about the way we targeted our resources held us back. In 2010, we peaked too soon and didn’t seal the deal. We were never going to get the 30% we reached in the days of Cleggmania, but we should have done better than we did.”
In 2001 we gained 6 seats and in 2005 we gained 11 seats. I don’t understand what decisions about targeting you are referring to. I don’t think there was much the party could have done regarding the damage caused by Cleggmania to our targeting strategy.
@Martin Gray: Nah, the public are mostly bored stiff by gender politics. Sure, it will be raised, but mainly by people with agendas. The Tories are using it as part of their strategy of using culture war wedge issues to distract voters from the mess this government has made of this country’s economy, but it’s unlikely to work because people tend to be more interested in bread and butter issues such as whether they can actually obtain such foodstuffs at reasonable prices.
Like Michael BG and others, I don’t understand this idea that we “underperformed” in 2005. It was in the backdrop of a Labour government, so we were mainly campaigning against Labour, but we simply didn’t have very many easy Labour-facing targets. In the circumstances, a net gain of 11 seats overall was pretty good. As for our Tory-facing battlegrounds, I think we had a net loss of 1 (with lots of swings and roundabouts) against the Tories. Pretty good given our historical tendency to fall back against thte Tories following a Labour government.
2010 was a much worse result for us. To put it bluntly, we should not have lost seats to Labour in that election. We also missed some low-hanging fruit like Islington South & Finsbury. But we had been coasting in the opinion polls and local election results before then, actually ever since Nick Clegg became leader. Cleggmania may have saved us from an even worse result in 2010.
Thanks for the response Chris. I’m afraid that saying things were already going downhill in 2005 is a standard fig leaf used to attempt to hide the catastrophic impact those who worked to undermine Charles had on our party.
As for your specifics, the point I am making is that we would need an absolutely colossal improvement in our popular appeal on any of the caring issues to even increase our vote by a tiny amount. Generation upon generation of experience makes it common knowledge that it is Labour. You won’t even scratch the surface of it until Labour in government totally betray that belief.
We have to accept that we are back to being a small party fighting to get noticed and huge expenditures of money and effort will come to absolutely nothing unless there is a lot of acceptance already there that we are right on an issue and both the Conservatives and Labour are wrong. That open goal is the collapse of our economy due to Brexit and our focus has to be on old style liberals in the shires (who allowed themselves to be conned into believing they were Conservative) but can now see the corruption and incompetence that party stands for, and see we can win because we have a substantial local presence.
Conservative seats in the West country, a few key areas around the home counties and occasional other seats have to be our focus.
While it is possible that we talk more about the damaging effects of Brexit, there is no quick fix as I have pointed out above. Also Labour are talking about changing our deal with the EU to reduce the damaging effects of Brexit.
We need distinctive policies which can be achieved within the term of one parliament. In the 1992 and 1997 general elections we had our policy of putting 1 penny on income tax to pay for more investment on education. Therefore we need to set out what tax increasies we would implement to pay for our programmes on the NHS, education and poverty.
@ Michael BG,
“Therefore we need to set out what tax increases we would implement to pay for our programmes on the NHS, education and poverty.”
Even on a conventional calculation 1p on income tax isn’t going to go very far.
If politicians were being honest, they would say they can’t make any promises on fiscal policy. It needs to change in response to the needs of the economy at any one time which isn’t easily predictable.
The obvious threats to the economy at present are:
1) the high level of private sector bad debt. The number of firms going bust is rising sharply and is the highest since 2009. One bad debt can create other bad debts in an avalanche effect. If house prices, the collateral for much of this debt, continue to fall the avalanche will almost certainly happen.
https://www.bbc.co.uk/news/business-67261798
2) International factors. The wars in the Middle East and Ukraine being the obvious examples.
Hi David, I feel you are being over-pessimistic in the wake of the by-election!
On health and caring, our leader has vital personal experience and is authoritative.
Katherine: I’m in favour of PR. But it’s way down the list of voters’ priorities and banging on too much about it, makes us look out-of-touch with concerns of the vast majority.
Regarding gender politics: I agree with Alex that this issue switches of most voters. And a culture wars campaign won’t get the Tories far, because it won’t appeal to moderate voters.
However, the issue could also be a serious vote loser, if we handle it crudely.
Hi Chris, I wish you sere right when you say “I feel you are being over-pessimistic in the wake of the by-election!” However it is based on over 40 years of experience when Lib Dems and before that Liberals went in to General Elections saying things like “All we have to do is be distinctive and explain to people about our policies and we will succeed”.
It has never worked!
1) It is massively more difficult than people imagine, and so
2) We never had enough time, resources, activists etc. to do it.
What has worked is getting Lib Dems elected to councils, winning by elections, taking control of councils, running them better than the others and delivering for local people.
We win elections by moving closer to what people want – which is effective local politicians, doing stuff they need.
We don’t win by telling people this is the Lib Dem stuff that should be important to you, because it is important to us and somehow expect them to move to us.
It’s a bit like Katharine telling me “I think, David , you haven’t noticed how the Labour party has changed …” Terribly condescending and elitist. As for “The Electoral Reform Society puts out … etc etc.” As you and I both understand, Liberals have known this for decades and it has never won us an election!
We have to get real.
Peter Martin: “If politicians were being honest, they would say they can’t make any promises on fiscal policy. It needs to change in response to the needs of the economy at any one time which isn’t easily predictable”.
Quite so. Why people should imagine that a particular approach is going to be the ultimate panacea is wholly illogical. Circumstances are changing all the time. The responses therefore often need to be moulded accordingly. If there was a simple formula, one assumes one would have been adopted!
Politicians can and should promise that public services will be maintained to a high standard and social security is maintained at adequate levels to meet basic needs regardless of fluctuations in the business cycle.
That does not entail making undeliverable promises on fiscal policy. It does mean realistic budgeting based on moderate economic growth; setting taxation at sufficient levels to meet planned needs for day to day costs; borrowing as needed for necessary infrastructure spending and housing and allowing automatic stabilisers in the form of reduced tax collections and increased social security outlays (and potentially job guarantees) to do the work of fiscal stimulus during downturns.
The focus is on delivery of the public services that people rely on. It does not require breaking the bank, but does require an honest debate about the need for adequate and appropriate levels of taxation and investment to deliver the basic services people need.
High levels of corporate and mortgage debt are always a threat to economic stability and the debt overhang will likely be a drag on economic growth in the next parliament. We cannot rely on fiscal stimulus in an inflationary environment to generate economic growth to maintain delivery of essential public services. They have to be funded on the basis of needs.
Peter Martin,
If we said we were going to spend an extra £66 billion a year (on education, providing more free childcare, the NHS and social care and ending deep poverty) by the end of the next Parliament and we didn’t want to borrow to pay for it, then we would need to state how we would raise this extra revenue. You are correct 1 penny on all the income tax rates would only raise about £8.7 billion. Equalising the tax rates for Capital Gains with Income Tax would generate between £6 and £12 billion.
David Evans,
40 years of experience only takes you back to the 1980’s, and so doesn’t cover the 1960s where the number of Liberal MPs increased from 6 to 12 in 1966, or the 1970s where the number of Liberal MPs increased from 6 to 14 in February 1974. These are the years which are closer to now than the 1980s when the Liberals were in alliance with the SDP. In 1997 our share of the vote fell by 1% and we won 26 seats more than in 1992. I don’t remember our campaigning in 1997 being much different than in 1992, but I do remember we were much better at targeting in 1997 than 1992. In both elections we did have a distinctive policy (see my comment above).
David Evans. Could you please read my comment again, David? You had written, on the 30th, that ‘we end up with a focus on caring issues – poverty, social care, NHS’ – which you say 90% of the electorate think ‘are completely owned by Labour’, so according to you Lib Dems can’t win on those. I replied – on the same day, politely – that you appeared not to have noticed that Labour has changed so much that they don’t even focus on poverty and inequality at all now, but are business- orientated. So the public’s perception of them, as Sir John Curtice’s polling analysis shows, has also been changing . He has pointed out that we are losing support to Labour, even among Remain voters. I suggest to you that voters will scarcely be switching from us to Labour because they decry our emphasis on a society fair to all and with real concern and outstanding policies for the poorest.
Chris Moore: (please spell my name correctly, Chris) – I am of course as well aware as you that voter reform is not compelling for the public, and I specifically name it as a red line between us and a future Labour government wanting our support, but NOT, of course, one of the key themes we should be claiming as part of our identity, of which fighting poverty should I believe be the first. Please see my comment of 30th October, 1.04 am.
@ Michael BG,
You yourself quoted Ann Pettifor who claimed that Green expenditure was self financing which is true in the sense that its spending all returns to Government in taxation revenue. However this is missing the point. It’s a difficult concept for some. I suppose on the doorstep, especially, it’s not realistic to try to explain it properly and you are going to have to come up with some explanation to suit.
I was listening to John Curtiss explain how you can do better and I’d say he does have it right. It’s not really about the minutiae of detailed policy. Most voters will be right in thinking that you won’t be in a position to implement them in any case.
Joe Bourke,
The so called automatic stabilisers do not provide a sufficient fiscal stimulus to turn a recession into economic growth. As we have increasing unemployment the government should be looking at how it can reduce inflation and stimulate economic growth to provide work for the unemployed.
Peter Martin,
“You yourself quoted Ann Pettifor who claimed that Green expenditure was self financing” I didn’t quote that section of her article Joe Bourke did (29th Oct 2.22pm).
On 30th Oct at 12.42am, I summarised her position so I could refute it. I made clear it that it isn’t true. I wrote, “the amount returning the government reduces each year until it is close to zero”. On 31st Oct at 12.15am I made my position even clearer, “the amount returned to the government via taxation never equals the amount invested or spent by the government. It can get close but it will never get there. This is a mathematical fact.”
On 31st Oct at 9.02am you agreed and wrote,
The government spends money into the economy and it get(s) a percentage back in taxation revenue. We shouldn’t want it to be 100% otherwise we wouldn’t have those £10 notes in our wallets! https://www.libdemvoice.org/the-green-book-returns-the-podcast-goes-live-74141.html#comment-586224
You have make it clear that the government’ spending does not all return to it.
David Evans makes a fair point when he explains that our emphasis on caring, health and social welfare can only have limited traction in comparison to Labour. Labour can easily afford to underplay or even equivocate on these issues because there is an ingrained presumption that they will look after these areas (for similar reasons we do not have to put extra stress on electoral reform).
I do think that we do need to be ‘distinctive’ though. The point is that rather than think we can explain our policies during a campaign we should aim to build up an identity that allows people to project a fairly accurate account of our policies onto the Party.
I am not sure that the position of the Party is so close to the sixties and seventies as Michael BG suggests, however the combination of Jo Grimond’s leadership of the main Party and an active, radical group of Young Liberals had created a fairly strong Liberal image at that time.
The fact that Labour could win in a true blue seat like Mid Beds raises deeper questions about what the Lib Dems are here for. Unlike Labour, being distinctive is part of our raison d’etre. By the way 2005 was a very good result because it was a rare example of the Liberals gaining seats in an election where the Tories made a lot of gains (1983 being another).
@ Michael BG,
“You have make it clear that the government’ spending does not all return to it.”
Maybe a tiny proportion is lost permanently, some coins may be dug up by future archaeologists, but pretty much all of government spending does return to government in taxation revenue eventually .
Where else can it go?
On a theoretical level, destruction of banknotes may be illegal but it is effectively a payment of tax. It saves the government the job of tearing up their own IOUs.
This of course doesn’t mean that the government can spend without limit even though whatever it does spend will nearly all come back in taxation revenue sooner or later .
Saying all government spending comes back in taxation sooner or later is the same thing as saying taxpayers are ultimately liable for all government spending. Both are just statements of fact.
State pension outlays are increasing rapidly as large numbers of baby boomers reach retirement age. Those pension payments (as with all social security) are enabled by the taxes collected from those with other sources of income. Increased funding is required across all government departments and that funding will come from taxpayers whether for current spending or for capital spending consumed over time.
It is for that reason that tax reform is urgently required to avoid exacerbating inequality by placing excessive tax burdens on earned income relative to unearned income.
Fiscal stimulus does not generate sustainable economic growth. It is a stimulus to reboot aggregate demand at times of high unemployment. To sustain increased government spending into the economy requires greater levels of taxation to recover that spending. That is why it is important that any sustained fiscal stimulus is directed at deficit financing of productivity enhancing investments that generate ongoing economic value and not simply worsen stagflation or act as another form of redistribution outside of welfare. Job guarantees and training for long-term unemployed might serve the dual purpose of adding some useful economic value and automatic stabilisers that justify making payments above that of welfare provision.
Radical tax reform including Land Value Taxes (not tweaking of income tax rates) should be part of a distinctive LibDem offering at the next election.
@ Joe,
You could equally say that running a deficit in trade means *ultimately* we’ll all be liable to make good that by running a trade surplus to compensate. In other words instead of UK shoppers seeing lots of Danish Bacon, It will be Danish shoppers seeing UK bacon on their supermarket shelves.
Instead of seeing lots of VWs on UK roads we’ll see lots of UK made cars (Nissans?) on German roads.
But, when is this ever likely to happen? What does ‘ultimately’ mean in this context?
I think you have acknowledged the “twin deficit hypothesis” which is easily explained by the theory of sectoral balances. A deficit in one will be mirrored by a deficit in the other.
Peter Martin,
a trade deficit is funded by the selling of assets to overseas investors i.e. property, shares in UK companies or other financial assets like securitised mortgages or gilts.The twin deficits hypothesis implies that increased fiscal deficits will lead to increased imports and a widening of the trade deficit requiring higher levels of asset sales to finance. Conversely, a trade surplus can obviate the need for fiscal deficits by employing surplus capacity in the economy.
The continual sale of assets means most privatised UK utilities (and other UK public companies) have a high proportion of overseas investors requiring interest and dividend payments. The cost of servicing these investments is paid for in higher levels of water, energy and housing costs today, not in the future.
With respect to domestic deficits it has to be appreciated that the largest proportion of financial assets are held by the wealthiest parts of society. This is the problem with making assumptions based on aggregated sector analysis. It does not account for the fact that current spending deficits are borne by taxpayers, but the bulk of the savings accumulated are concentrated in relatively few hands.
@ Joe,
“a trade deficit is funded by the selling of assets to overseas investors..”
As always you present the mainstream, pro -establishment right wing view. This is that the countries who run trade and budget deficits are alone responsible for them. The conventional view has led us into the economic mess we face at the moment. Rightly, many are calling out for some new thinking.
So what is this? On this particular point it is that many countries deliberately tilt the tables, largely by manipulating their exchange rate by deliberately exporting capital to ensure a trading surplus on their current account. Inevitably this means that countries who choose not to do this will run current account deficits which in turn will translate into government budget deficits. The government will, to prevent recession, need to top up ££ in the economy to replenish the ££ lost to the economy to pay our net import bill.
Sure, the government could act to prohibit anyone in the UK selling assets. This contradicts the desire to encourage foreign investment. You have to make up your mind. Do you want to make it illegal for foreign interests to own our football clubs, our windfarms, our water utilities, our gas supplies, our railway companies etc.
Yes or no? You can’t have it both ways.
Martin,
I agree that the Labour Party is associated with the NHS, but they have not talked about relieving adult poverty for decades (I am not sure they was doing it even in the late 1970s). Therefore our policy to end deep poverty within the decade is distinctive to us. Another distinctive policy is to make all personal care free and abolish the £86,000 spending requirement before personal care is free being brought in, in 2025. Indeed we need to be talking about these policies before the general election.
In 1964 the Liberals had 11.2% of the vote; in 2019 we achieved 11.6%.
In 1970 the Liberals had 7.5% of the vote; in 2017 we achieved 7.4%
The way the period is remember is not reflected in the share of the vote the Liberals achieved. Maybe because the coverage of the Liberals in the media was greater than it is now.
Peter Martin and Joe Bourke,
I demonstrated on the other thread https://www.libdemvoice.org/the-green-book-returns-the-podcast-goes-live-74141.html#comment-586224 that mathematically the total amount spent by the government does not return to the government. I pointed out that with 35% returning to the government each year, with no interest after 18 years the debt is still nearly 4.3% of the original amount borrowed and so not all of it has returned to the government by then. Even after 22 year there is still 1.17% left. It has nothing to do with someone putting the money in a safe place and then forgetting about it. Therefore after 23 year over 99% has been returned.
Joe Bourke,
An economic stimulus generates economic growth and so long as the government doesn’t reduce spending the economic growth is not lost. If increased government spending is required without stimulating the economy then the expenditure needs to be covered by increased taxes. I agree that job guarantees and training for the long-term unemployed are useful but they don’t necessary make much difference to economic growth.
I do hope that our policy to replace Business Rates with a Commercial Landowner Levy makes it into the manifesto, but it wasn’t in the pre-manifesto.
Instead of the the income from imports being used to buy property and shares, it could be lent to the government.
@ Michael BG,
“Instead of the the income from imports being used to buy property and shares, it could be lent to the government.”
Some of it is via the sale of bonds to overseas buyers. I don’t see any problem in Govt doing this. I do see a problem in selling other types of assets though. If Joe disagrees with the sale of assets he needs to clarify which ones he means.
I suspect he’s against Govt selling bonds but would support the right of an individual to sell his expensive London flat to the highest bidder even if it was hardly ever used. That’s a Liberal position.
Michael BG,
fiscal stimulus is a temporary measure to support aggregate demand when the economy is experiencing cyclical unemployment in a downturn or aftermath of an economic shock UK Fiscal Policy Sustainable economic growth requires either increased capital. e.g. investment in new factories or investment in infrastructure, such as roads and telephones; an increase in working population, e.g. through immigration, higher birth rate; or an Increase in labour productivity, through better education and training/job guarantees or improved technology.
To deliver significantly improved levels of public services, maintain the triple lock on state pensions and increase the level of welfare provision the next parliament will need to increase the level of taxes as a % of GDP. Non-inflationary economic growth can be stimulated with a shift of the burden of taxation away from earned income to land value taxes and other sources of economic rents. Simply increasing state spending without increasing taxation levels is likely to produce the same kind of stagflation as was seen when this was tried in the 1970s.
Local councils need to be able to retain their business rates and collect Land Value taxes to address their urgent funding needs. More and more councils are being driven to the edge of bankruptcy by the impact of inflation and a combination of escalating rented and numbers of homeless requiring assistance More English councils expected to fail owing billions
Peter Martin,
the BofE held the bank rate at 5.25% yesterday Bank of England warns UK faces stagnating economy as it keeps rates at 5.25% The central bank said growth would remain “well below historical averages” over the medium term, even as its forecasts signalled that inflation is set to remain more persistent than it previously expected.
In an article from 2016 the FT writes “It’s now time to dust off those postwar history books. The balance of payments current account deficit has averaged about 7 per cent of gross domestic product over the last two quarters, the biggest by far in the country’s history and one of the largest worldwide. The deficit has widened rapidly in recent years, despite sterling’s extraordinary 2008 decline. At that time, policymakers convinced themselves that a fast depreciating currency would help rebalance the economy: it would become less dependent on debt-fuelled consumer spending and more focused on export-led growth. But the results were disappointing: exports were held back while, even now, the Office for Budget Responsibility can only make its growth forecasts add up by assuming that households will indulge in yet another borrowing binge The UK’s balance of payments conundrum
The impact of the Russo-Ukraine war has dropped out of inflation figures, but the UK has the highest rate of inflation among the G20 countries and the impact of import tariffs on food from the EU does not yet appear to have narrowed the trade gap.
The big exporters are not reliant on currency manipulation. Germany, Japan and China export because there is high worldwide demand for what the quality and cost of the goods they produce.
Joe Bourke,
A fiscal stimulus increases demand in the economy and this leads to increased production. This doesn’t always need investment in new factories, but it can lead to increased production capacity. Production could be increased by just employing unemployed people.
It is party policy to replace Business Rates with a Commercial Landowner Levy. I assume you have read the paper to go with the policy passed in 2018 as you and Tony Vickers are thanked for commenting on the drafts. I assume the revenue from it will be distributed as that from business rates is now.
The stagflation of 1974-75 was caused by the Yom Kippur War and the huge increase in the price of oil. I believe that governments can stop stagflation by using government resources to ensure the price of oil or energy is not increased and so causing the initial inflation.
Indeed, the Bank of England is forecasting zero economic growth for 2024 and only 0.4% for 2025, with inflation above 2%. They are reducing economic growth and causing unemployment to reduce inflation, there should be a better way. The government needs to come up with policies which reduce inflation and increase production. I can’t see this government doing this.
Michael BG,
trying to stimulate demand with large scale fiscal or monetary stimulus when inflation in the UK is the highest among G7 and G20 countries would be folly for any government as demonstrated by Truss and Kwarteng.
The term stagflation was coined in 1965 to describe a period of stagnant growth combined with rising prices and unemployment i.e. the conditions we are seeing now Is stagflation coming to the UK?
To address rising unemployment without exacerbating inflation requires direct support to the labour market in the form of regional employment guarantees, adequate staffing of public services financed by taxation and targeted spending on domestic infrastructure and housing that employs domestic labour without leaking directly into increased levels of imports,
Joe,
I wrote that there should be a better way to reduce inflation without reducing economic growth to zero. If the government built houses in the north-east those employed doing it would spend the normal proportion of their earnings on imports. You are suggesting that the government should stimulate the economy with a fiscal stimulus so long as it is in a region of high unemployment, but it is still a stimulus. Do you know if those people unemployed in these regions are willing and able to work in the construction industry? If not, then the wages of those working in that industry in the regions which get the stimulus are likely to increase, causing inflation.
Our inflation is not caused by too much demand in the economy. It is cost-push inflation. Once the increase in raw materials has worked through the system, the wage increases will gradually reduce in line with the reduction in inflation leading to lower inflation. https://www.forbes.com/sites/forbesbusinesscouncil/2022/07/11/the-myth-of-the-wage-price-spiral/?sh=2d4279e27d80
However, if I accept your idea, then the government should be building infrastructure in the north-west (5.3%), north-east (5.2%), west midlands (5.0%), London (4.8%), Scotland (4.3% east (4.3%) and east midlands (4.1%){the percentage in brackets is each region’s unemployment rate}.
The GDP of the UK is about £2180 billion. £10 billion is only about 0.46% of GDP. This could divided £757 for the north-east, £1.75 billion for the north-west, £1.41 billion for the west midlands, £1.7 billion for the east, £1.42 for the east midlands, £1.3 billion for London and £1.6 billion for Scotland.
@ Joe,
The existence of a trade deficit is an indication that our trading partners wish to spend less buying from us than they earn selling to us. It’s generally considered a good thing if domestic residents spend less than they earn, so why is it a bad thing if overseas residents do the same.?
I’ve already given you a reference to show that Japan doesn’t allow the Yen to freely float. Surely you don’t think the Chinese do that with their Yuan? You can’t be that naive. I can supply a reference on that if you feel you need one. Germany uses the euro which is a cheaper currency than would be a freely floating DM.
Tariffs generally don’t do much to reduce trade deficits. They do reduce trade in both directions but the gap will still remain. Any country applying an import tariff will be reducing the potential purchasing power of its overseas trading partners. See Lerner’s symmetry theorem.
@ Michael BG,
“I wrote that there should be a better way to reduce inflation without reducing economic growth to zero.”
Any suggestions?
The classic Keynesian policy is to impose a Price and Incomes policy at the same time as as reflating the economy by fiscal means. The only country to make that work in peacetime for any period of time , as far as I know, has been Germany which imposed authoritarian controls, in the immediate pre-war period, which probably would be unacceptable to most Lib Dem members. In the post-war period the ruling and working classes agreed on a power sharing compromise which involved such policies as having workers, and TU representatives on the boards of directors, plus a guarantee of effective full employment, in return for settling pay claims amicably and by the use of arbitration rather than fighting it out in the British style.
This worked for a 50 years or so but the introduction of the Hartz reforms signalled the end of any agreement with German labour unions by German capitalism.
So, you would need to somehow establish a similar agreement in the UK too. I just can’t see it happening.
https://en.wikipedia.org/wiki/Hartz_concept
Peter Martin,
in a healthy economy trade should be balanced over-time as exchange rates adjust to the fundamentals of competitiveness and comparative advantage (i.e. surpluses in some years, deficits in others). The fact the UK consistently has run a current account deficit for over 40 years makes it precariously dependent on overseas investors reinvesting surplus in Sterling financial assets.
The Yen is a free floating currency Japan’s Currency Policy in Times of Uncertainty “finance ministry officials are usually content to let markets determine its worth. But due to its safe haven status, the yen can rapidly appreciate during periods of uncertainty. When that happens officials give signs to market participants that they are watching the trend, and are prepared to intervene if necessary”.
Germany has not used the DM for over 20 years. It has consistently run trade surpluses for many decades both before adoption of the Euro and since. China has adopted a managed float i.e. allowing the Yuan to float within a range against the dollar. The reason it has significant trade surpluses is has either much lower wage costs or higher adoption of technology than most of the G20 economies to which it exports.
These countries rely on home grown competitiveness and productivity to maintain strong export markets. In a world of inelastic demand for many commodities and products and where major trading partners can quickly respond to competitive devaluations, exchange rates have little influence on their level of trade compared with efficiency of production and/or lower labour unit costs in the case of China. Economic policies need to be based on facts not spurious theories that clearly bear nor relation to reality we see. Each of these surplus countries in developing their economies and growing export markets have focused on prioritising bank credit creation for industrial investment and adoption of new technology to maintain competitiveness. The result for China and others has been to bring hundreds of million of people out of destitution towards a decent standard of living.
Peter Martin,
I am not sure that Keynesian theory includes price and incomes policies, which were tried in the UK in the 1960s and 70s. The Hertz reforms seem a retrograde step.
It is Rishi Sunak’s fault we are where we are. He should have intervened in the economy to remove the inflation caused by higher world oil and energy prices. However, we are where we are. I am thinking that the Liberal Democrat policy of reducing VAT by 2.5% is what is needed. I think it would decrease inflation by about 1.5%. I think that some increase of income tax rates for earnings above £36,000 should accompany it, as well as some increased government spending. With economic growth forecast to be zero next year, the economy should be able to cope with at least an economic stimulus of 1%, which as Joe as suggested some of which, needs to targeted into particular regions.
The government also needs to ensure that those businesses that have a Covid loan are not put out of business because of higher interest rates and reduced demand. As well as ensuring there is sufficient credit for businesses at affordable interest rates.
Hello Katharine,
Yes I read your comment and I have read it again. Sadly despite your protestations your latest response is not correct. You did not say ” politely – that you (i.e. I) appeared not to have noticed that Labour has changed so much that they don’t even focus on poverty and inequality at all now, but are business- orientated”. What you did say, clearly and stridently was “I think, David , you haven’t noticed how the Labour party has changed since they booted out Corbynism.”
As if I hadn’t been paying any attention whatsoever as to the massive changes in Labour since Jeremy Corbyn was replaced. To me that makes it not a polite comment, but a simply a put down – prior to you simply repeating your previous contention which I had clearly pointed out was hoping for the impossible.
Quite simply, if we want to be successful in the next election, we won’t do it by fighting on areas where Labour are historically strong, but on areas where both the Conservatives and Labour are clearly weak.
@ Joe,
“The fact the UK consistently has run a current account deficit for over 40 years makes it precariously dependent on overseas investors reinvesting surplus in Sterling financial assets.”
If they didn’t re-invest their surplus the £ would fall, they wouldn’t be able to sell their products at a profit, and so they would lose their export market. There wouldn’t then be any deficit to finance. In other words the net exporters have to lend their surpluses back to their customers, the net importers, to enable them to make future surpluses.
Whether this makes sense only the lenders can decide. It’s really outside our control to do much about it short of doing what the Chinese do and deliberately suppressing the value of our currency. You must be one of the few people in the world who think the Chinese don’t do that. They’ve even developed a system of using a dual currency enable them to better do that.
As the article in the link below explains:
“The Chinese economy relies on its two currency system to *regulate the exchange rate of its money* and maintain control over foreign investments.”
We’d probably be better pegging the £ to something like 15% below market value against either the $ or euro. The same method that Denmark has chosen.
https://silverbird.com/blog/articles/why-does-china-have-two-currencies
@ Michael BG,
Keynes himself had mixed feelings about the need for incomes policies as described in the link below. There is a potential clash of philosophies in that we all tend to think that wages and salaries should be freely negotiable between employers and employees but on the other hand if this is allowed at the same time as full employment is guaranteed there’s nothing to prevent inflation getting out of hand.
We haven’t had incomes policies since the 70s when a largely Keynesian macroeconomic framework was replaced a monetarist framework. The important change though was that any commitment to full employment was abandoned and the threat of unemployment was used as an inflation control.
https://www.economicshelp.org/blog/164672/economics/prices-and-incomes-policy/
@ Katharine @ David Evans
“….. you haven’t noticed how the Labour party has changed….. ”
Maybe it hasn’t changed at all? This is the sort of thing Keir has written on his website:
“Abolish Universal Credit and end the Tories’ cruel sanctions regime. Set a national goal for wellbeing to make health as important as GDP; Invest in services that help shift to a preventative approach. Stand up for universal services and defend our NHS. Support the abolition of tuition fees and invest in lifelong learning.”
Sounds fairly traditional Labour to me.
Or maybe he hasn’t noticed that it’s still up there 🙂
https://keirstarmer.com/plans/10-pledges/
I suspect that he doesn’t believe any of it.
” put human rights at the heart of foreign policy. ”
“Increase income tax for the top 5% of earners, ”
“Support common ownership of rail, mail, energy and water; end outsourcing in our NHS, local government and justice system.”
I have this bridge you might like to buy….
Peter Martin: thanks, Peter, for exposing the hopelessly nebulous nature of Keir Starmer’s apparent aims, further exposed it seems by Jenny. When not nebulous, he can be plain wrong – to ‘Abolish universal credit’ would plunge thousands INTO poverty. What a contrast that paragraph makes with our own deeply thought-out and well-researched policies:, especially our Guaranteed Basic Income policy which is to be gradually attained by BUILDING UP Universal Credit in the first place.
What disturbingly little thought is apparent in this mish-mash of vaguely popular-sounding ideas. No, David Evans, we don’t need to fear competition on the grounds of welfare policy, tackling poverty, social care or health matters: we just need to let everyone know that we are seriously committed to relevant reforms which we can spell out and also pay for. As I said before, the Labour Party under Sir Keir seems much more orientated to business and enterprise now than to relieving poverty, and there was nothing patronising or eliteist in pointing out such simple facts as I see them. (The word ‘politely’ was just an ironic reference to my replying quickly to your comments, whereas you take days impolitely to reply to mine – as you have just shown again.)
@ Katharine, @ Jenny,
Thanks.
It’s not always the cream that rises or floats to the top.
Peter Martin,
I couldn’t see any quotations from Keynes showing his support for an incomes policy on the page you provide a link to. I understand that some Keynesians did support an incomes and prices policy in the 1960s, 70s and 80s. I think the Alliance still supported them in 1983.
Hello David, I don’t know if you are still out there.
I agree with nearly all you say.
But I’d like you to think again about campaigning on health. You say that this area is clearly Labour and there’s nothing we can do about it. (I hope I haven’t misrepresented you.) It seems to me that this is precisely why we do need to challenge Labour in this area.
We have some good ideas on health and social care. And I believe we have made headway with some improvement in our poll ratings.
I remind you of our previous 1p on income tax for the NHS which became a policy the public identified us with, showing that haadway can be made.
We can’t just cede areas to Labour fatalistically.
Remember how Tony Blair took on the Tories on crime on which they were considered to be invulnerable.
@ Michael BG,
Sorry, I was thinking of giving this reference to start with but then changed my mind.
https://www.tandfonline.com/doi/abs/10.1080/09538259000000016
The problem with prices and incomes policies, from a left perspective, is that they are only really about incomes. MMT itself uses the idea of a Job Guarantee to fix wages rather than prices which can be whatever the market decides. This does give me some political problem with at least this part of it.
Chris Moore,
I agree that we need have better policies than the Labour Party on the NHS and social care, especially now they are so conservative with regard to increasing current spending to fix the problems caused by the underfunding of public services over the last 13 years.
Peter Martin,
The two examples are unusual situations, an overvalued pound and a world war. Incomes and prices polices were a failure in the 1960s and 70s and there doesn’t seem any way they could be made to work. This is why other methods need to be used to control an overheating economy.
I am not aware how a Job Guarantee would stop wage increases, I do understand how a large pool of unemployed people does.
@ Michael BG,
“I am not aware how a Job Guarantee would stop wage increases, I do understand how a large pool of unemployed people does.”
It’s basically the same method. Except that instead of having large pool of unemployed. and underemployed (don’t forget them), you’d have a large pool on a Job Guarantee.
Another way of looking at it is that the JG creates a “labour standard” instead of a gold standard to anchor the currency in something tangible. I don’t see how this MMT concept could work under capitalism with its inherent class conflict but it is a possibility for some future socialist society.
Peter,
Thank you for explaining that a Job Guarantee stops wage increases in the same way as a large pool of unemployed people does.
I understand that your view of a Job Guarantee pays the minimum wage and this acts as an anchor to wages. My view of what people would be paid on a Job Guarantee is different. I don’t understand how a JG would anchor the currency.
@ Michael BG,
It’s obviously better to have a pool of employed rather than a pool of unemployed. The idea is that workers can bargain for better wages but if they overdo it and price themselves out of a job they end up with less money on a JG wage rather than being out of work completely.
If you imagine a society where everyone is paid the same flat rate then there would be by definition no wage led inflation. This is not to say that prices would always remain the same. If there is a supply shock then prices will rise but it won’t be caused by rising wages.
It’s when we make the model more realistic in terms of differentials that the difficulties arise.
https://www.mmt.works/mmt-full-employment-and-the-job-guarantee-jg/
Peter,
I don’t imagine a society where everyone is paid the same.
I don’t accept that the government can set one wage level which meets the needs of different size households and pays their rent. This is why the amount people should receive when in a Guaranteed Job should be related to their benefits and be higher than their benefits and so make them better off than if they choose not to take a Guaranteed Job.