Gordon Brown’s response to the economic crisis has been too little, too late.
For years I warned him of the oncoming economic problems. Unsustainable levels of personal debt, mostly secured against the illusory ‘wealth’ of rising, vastly inflated property prices. An economy based so heavily on debt was never going to be in a fit state to deal with global shocks like the credit crunch.
And so it has proved. Gordon Brown is now facing the consequences of his years of inaction. The housing bubble has burst. Unemployment is rising fast. Tens of thousands of families are losing their homes.
With people struggling with massive debts and fast rising bills it is now almost inevitable that the UK is heading for recession. Gordon Brown used to boast we were better prepared than our competitors for a downturn. Yet the OECD’s respected economic forecasters now predict we will fare worst among the world’s seven leading economies (G7) in the current crisis.
What Britain needs now, and urgently, is practical action to help people who are struggling – to put money back in their pockets, to cut their energy bills, and help them keep their homes.
Gordon Brown and Labour can’t offer that. They got us into this mess. Now they are veering between complacency and panic. Dithering on key decisions, muddling along on half measures.
David Cameron and the Conservatives won’t offer it. At a time when those on the breadline are struggling more than for a generation, their top priority is tax cuts for millionaires.
It’s not good enough to just keep muddling along and hoping.
We need a serious plan to get Britain’s economy up and running again.
That is why Nick Clegg and I have put together the Liberal Democrat Fairer Future Economic Recovery Plan.
Our plan would:
- Put more money in people’s pockets – tax cuts for people on low and middle incomes,
- Stop unnecessary home repossessions and provide more affordable housing,
- Make energy companies reinvest their windfall profits in cutting bills, and
- Deliver extra help for people in debt or who lose their jobs.
And we will bring the free-wheeling, ‘anything goes’ short-termism of the City to an end. We cannot continue with a culture where bankers pocket big bonuses for taking reckless risks, but when things go wrong government and taxpayers have to step in to pick up the pieces.
Please read the summary of the plan, and share it with other people you know.
There is only one party in Britain today with a serious and credible plan to get Britain’s economy back on its feet – and to provide real help to those struggling in the meantime.
That is the Liberal Democrats.
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30 Comments
Wow!
I thought our policies were better, but contrast this with what Osborne and Brown/Darling have just said, and you see how much better.
Vince Cable predicted the current credit crisis. As a party in purely political terms we should have been arguing the case for cross party consensus with Vince Cable as the principal authority the moment Northern Rock went into trouble.
THE HEADLINE SHOULD HAVE BEEN ” CLEGG CALLS FOR CABLE TO LEAD A CROSS PARTY TEAM TO TACKLE TODAYS INTERNATIONAL FINANCIAL CRISIS”
We have become a credit driven economy and two bank bailouts later there is still no end in sight !
Our Party must use its greatest economic weapon Vince Cable and champion a new style of politics but also explain in simple terms, the steps needed to tackle this global financial crisis.
David Cameron will steal our clothes when he has no answers and Gordon Brown is an architect of the demise but unable to provide a real rescue package as he will have to admit his mistakes!!
To reverse the current problems, Banks will need to lend each other and the general public but where will this credit come from ?
Vince the floor is yours, if ever we needed a liberal democrat policy agenda it is now.
Well Vince you were quite right on how you called this one. The scale and bredth of this collapse has been coming a long time; we saw the first tremours in what were called ‘corrections’ in the early 90’s.
The plan is indeed a radical reforming one and it is of course right that a Lib Dem governments priority should be the protection of the people worst hit by this crisis.
Arguing for radical structural reforms of how things are done is of course the most pressing priority regardless of how one views the long-term viability of capitalism. It’s things like this that make me proud of being a Lib Dem so all in all a job well done…
Let’s hope that this gets the media coverage that it deserves and that Lib Dem bloggers and the like do their bit too!
To my mind, none of this really addresses the crisis in the banking system which is what people are concerned about right now. The only nod in that direction is talk about banning short selling (which doesn’t get anywhere near the root of the problem) and a bit of populist stuff about City bonuses.
With the prospect of huge sums of public money – here and elsewhere – being required to prop up the banking system, this talk about having spare money to give away in tax cuts sounds more and more like sheer fantasy.
Clegg’s candid friend – I recommend you check out http://www.libdems.org.uk/home/liberal-democrats-launch-new-deal-for-the-city-18414;show for more on the reforms beig proposed for the City. There is a fair amount of detail. This is just a summary.
Also worth noting Nick Clegg’s call today for all bank deposits to be guaranteed to protect savers – http://www.libdems.org.uk/home/clegg-government-must-guarantee-all-bank-deposits-to-protect-british-savers-11713303;show
On tax cuts, two points –
(1) The 4p income tax cut is costed and fully funded by a ‘tax switch’. It is not dependent on ‘spare money’. The party will not propose anything at the election that is not fully costed and funded.
(2) The tax cuts we propose would not only help people to get through these difficult times, they would have a macro-economic effect by releasing billions of pounds of consumer spending among low and middle earners. Focusing our tax cuts on these groups will have the strongest economic effect as they are the ones whose spending is dropping most dramatically and who are least likely to lock away the extra money into savings.
George C:
“The 4p income tax cut is costed and fully funded by a ‘tax switch’. It is not dependent on ’spare money’”
Yes, but of course I was referring to the “cut taxes even further” part, which does depend on spare money being available.
George C: I’m more with CCF on this one.
In his conference speech, Nick Clegg talked of building a new economy. Jumping back into growthism isn’t going to do it.
We’ve got a number of problems:
– Our mortgage debt is currently £1.2 trillion. In just the last 2 years, we’ve seen £200bn added to this, with much of that money *created* by banks.
Vince argued against demutualisation in the 1990s. We’re now in a ridiculous spiral of creating money and then trying to create the economic growth to ensure that that invented money doesn’t cause massive inflation (which is what mass printing of money does – it devalues all the money in circulation).
Why is Vince still proposing to support fractional reserve banking? Why is he trying to grab excess profits from energy companies, but not acknowledging the ~£70bn/yr they make from the right to create money.
We need a real debate on this, both within the party and nationally.
Vince is someone who can speak out about this, and so far, he’s not. The best he got was to acknowledge “their analysis is right, I’ll give them that” when ALTER proposed an amendment about bank created money for the housing motion.
It’s time someone got out there and told people the truth about where money comes from, whose pockets it end up in, and how that happens!
(rant over… for now!)
Ooops! The other problems being:
– A tax system that, by design, keeps poverty in existence (again.. acknowledged by Vince at conference – the ALTER fringe event)
– A planet with finite resources and a limited ability to sequester greenhouse gases out of the atmosphere and keep the climate stable…
It seems that this Plan has been abandoned already, in favour of a ‘ . . call for non-partisan co-operation in the national interest.’. Guido explains all at: http://www.order-order.com/2008/09/cable-flip-flops.html
Drone. Just because we’ll work with the Govt to sort out the mess doesn’t mean we don’t have our own plan that we’d rather introduce. Just means we’re realistic.
Guido scraping the barrel I feel – he’s long past his best.
GP: I disagree; I think Guido’s best years are yet to come, when he will expose the follies and avarice of the next Conservative administration, when they run into difficulties as they surely will.
As for our Plan [I wrote as one of Vince’s team] I think it will be filed and forgotten once Parliament reassembles next week and normal political life resumes. too much else is happening for anyone to attend to it.
Really? I despair of Guido in the last couple of years. I also think he has a soft spot for the Tories, so I’ll believe it when I see it . . .
Guido, who always likes to have a go at Vince, is now castigating him for having on the one hand a press release with a recovery plan, and on the other hand, having said count me in on cross party talks.
There would appear to be no conflict in the two statements.
But I notice with amusement that Guido is quite high in the Telegarph list of Right Wingers, just below Anne Widdecombe and Norman Tebbit in fact; so that again is a great disappointment to me as until recently I was agreat admirer.
Guido his soon going to fall out with his Tory mates, when he realises that they’re using him as a weapon against Labour, but even they aren’t dogmatic & unrealistic enough to accept his anarcho-libertarian nonsense.
His only friends left will be a few hysterical right-wing bloggers & the usual libertarian “contributors” on here…
I’ll have a modest charity bet that the net tax cuts policy is quietly fudged away by the time of the Election. In the inevitably recession to come/that has just started
– tax revenues will fall of a cliff.
– social spending will have to rise
– the PSBR, already enormous will grow
– we’ll need yet more money for market intervention.
Promising tax cuts will look and be exposed as shallow populism. It’ll dominate every leaders interview and press launch. Most voters won’t notice but the mdia clas which frame narratives won’t allow us such an easy pass particularly when we have ben out flanked on the esponsible left by the Tories who are teling the truth – no cash available for tax cuts.
We have two options.
1. quietly drop it
2. have the policy burn up on reentry to he atmosphere in an election campaign.
I can’t hep bu think Vince knows tis in is hearts of hearts. As he has done his magisterial tour of the studios tis last wek he hardly ever mentions the policy.
CGA,
Otoh, if the election is 2010, the recession may be over by then.
Vince is clearly an expert at not falling down a mineshaft. He has spent years rightly pointing at the sign that says “Danger Area”. Gordon has ignored him, walked on past, and duly fallen down the mineshaft.
Unfortunately, what we now need is an expert with the very different skills of climbing the vertical face of a mineshaft to escape! Vince may also have that capability, but I fear he has not yet proved it.
Will Hutton says we need something like a pan-European modified Paulson plan. I have no idea if he’s right, but he does sound like someone who really deserves to be listened to with respect. And that’s what we need, just now!
Joe Otten – So you’re saying our policies should address the hypothetical unknown far future, not the presnt day reality? Help – where is our policy on combatting the alien invasion from Alpha Centauri?
A “pan-European modified Paulson plan” is the very last thing we need. There has already been more than enough privatisation of public wealth without saddling additional billions onto the next generation of tax payers.
The answer to the debt crisis (for that is what it amounts to) is NOT to run up more debt! Like it or not, we must let the second Great Depression run its painfully corrective course and plan instead for the action that will be necessary in its aftermath. Reducing the tax burden for the low paid asap is an absolutely critical first step towards this. Collecting the revenues that governments allow our rotten economic system to freely transfer from public to private hands via the banking and property sectors is the vital follow-up – otherwise, sometime after 2010, the bubble will just start inflating all over again.
David Allen
Vince saw some time ago the basic thing that is wrong – too many of the financial institutions have too little capital. (It is interesting that the consenus of US economists seems to be just catching up with him.) That makes it difficult both for the institutions to trust one another – their reluctance to lend to one another fuels the credit crunch; and to work through the montain of bad and complex debt to be sorted out. There is plenty of capital available in the world’s markets; but a lot of bankers have been refusing to pay the stiff price at which it is on offer. What needs doing is some form of making the bankers take their medicine. How to do that is not a subject for party political statements from any responsible politician, but Vince knows that is the way to go.
That priority task is not tackled directly by the Paulson plan; though it may well help indirctly. A euro-wide plan to sort out complicated doubtful debts would have its merits in the medium term; though national programmes in the euro area will probably be preferred. Sterling is outside the euro; so we do not have the option of joining in a euro area plan if one develops. But each and every European country that needs a medium term plan should be able to produce something better than Paulson has proposed.
David Allen, no, I suggest we need a basic policy position that is applicable in “normal times”, and specific measures to deal with booms and busts – eg repaying debt and borrowing.
It would be a mistake to agree a party policy that is only applicable in a recession, and put that in our manifesto, only to find that the recession is over by the time of the election, and the economy is normal or booming for the whole of the subsequent parliament.
The Tories are trying to sound prudent with their refusal to promise anything, but even they don’t expect a recession to last for the next 6 years.
Joe Otten, the problem is there is no such thing as “normal times”. Clegg himself has argued that the “penny on income tax” was the right policy ten years ago, but that a tax cut is the right policy now. In principle, it is only sensible for Clegg to argue that policy should vary with the prevailing economic conditions. If you think you can just keep on forever cutting taxes, you are either a Tory, or a populist charlatan, or both!
Where I have to part company with Clegg is on the absurd premise that current conditions are well suited to cutting taxes. In a recession, earnings and spending both fall, thus reducing Government’s income tax and VAT receipts. A government which then compounded its resourcing problems by cutting tax rates would have to make draconian cuts to public services – and abandon any attempt to take climate change seriously.
If we plan to outflank Cameron on his right, that’s what it means.
Dave Allen,
Maybe there are no normal times, but if we are thinking about policy for the next manifesto, then we are probably talking about implementation some time between 2010 and 2014, and therefore not talking about today’s economic circumstances.
Now perhaps this does mean there is something a little artificial about all tax/borrowing/spending policy debates. But what is the alternative? To say that all our actions will be dictated by unpredictable circumstances, with no indication of in what direction our initiatives will pull?
Joe Otten: The alternative is to avoid being obviously dishonest! If you make a statement about economic policy, and you don’t include the clear qualification that you are only talking about a long-term aspiration, then the voters can only assume you are talking about the near-term future. I hope you will agree with me that in the near-term future, overall tax cuts are not realistic.
You can, of course, do what Cameron is doing, and argue that tax cutting is something you would aim to do in the more distant future. That would, at any rate, be less crazy.
However, I would still warn against it. I accept that it should be possible to be able to trim some fat from Labour’s spending programmes. However, the future is not bright. We will need massive investment in greener energy and transport to combat climate change and peak oil – and this isn’t optional, it’s about survival.
If we call for a green “Apollo programme”, while claiming that it won’t cost anything, we will only make ourselves look ridiculous!
What people don’t perhaps realise is that there’s actually money riding on these discussions.
Nick Clegg told the Northern Echo on Friday:
He said: “I will give £10 to anyone who can explain to me how cutting taxes is not a good progressive thing to do – it’s about lowering taxes for people on lower and middle incomes and making wealthy people pay some more.
http://www.thenorthernecho.co.uk/news/3727893.Lib_Dem_leader_joins_calls_for_N_E_rail_link/
I’m not sure staking the princely sum of £10 on the “progressiveness” of his economic policies conveys quite the unshakable confidence he intended, but then again we know times are hard in the Clegg household…
David Allen,
I guess it is unstated, but I had always assumed that when we talk about policy for the next manifesto, we are talking about implementation within one parliament, but clearly the sooner the better. A long-term aspiration on the other hand would be something probably not achievable within one parliament.
My bet is that by the general election in 2010, the recession will be over – although with the data arriving in arrears, it probably won’t be seen to be over. Cameron knows this, but he is using the situation as an excuse for offering nothing more than progressive mood music, so that if he wins there will be no progressive commitments to hold him to.
Joe Otten
One of the unstated but excellent things in our current economic policies is that they are not tied to the duration of one Parliament. For economic policies which can do lasting good, a one Parliament horizon is wrong. First, many of the lasting changes, like institutionalising a steady, year in-year out improvement in public sector productivity, need longer to put them firmly in place. Secondly, timing of fundamental economic improvements has to adapt to events. What is vital is to not lose sight of where we wish to go in the while navigating through a passing financial storm.
CCF: Ten quid! My gosh, he really does value our advice …..
Once upon a time, a fresh new MEP named N. Clegg set up his office in my area (Rushcliffe). It came unfurnished. Then, just at the right time, my company decided to have a style revamp and chuck out a lot of perfectly good office furniture. So I bought several car-loads at the knock-down staff price, carted them across, and donated them. As I puffed up the stairs with the final load, Nick’s office manager was waiting with a little gift to show how much it had all been appreciated. A bottle of Asda’s Bulgarian Country White Wine….
(Nick, I should add, was away in Brussels at the time, and didn’t know about the furniture. I think the office manager decided to spend his own £2.89 on my present – and no doubt that represented several days’ wages!)
Joe Otten: Follow CCF’s link to the Northern Echo, and I am afraid you will find that both of us have got it wrong.
” (Clegg) said: ‘A recession is exactly a time to put more money in people’s pockets.’ “