I’ve launched my new campaign video today: we need a new direction, it’s time to let go of the coalition.
I am standing for leader of the Liberal Democrats, and a New Direction for the party.
The Lib Dems should work with other parties on the centre-left to defeat the Tories at the next general election. Here's my plan for the future of our party 👉 https://t.co/8MERT2fmFT 🔶 pic.twitter.com/DS5uhAAsgs
— Wera Hobhouse MP 🔶 🇺🇦 (@Wera_Hobhouse) June 13, 2020
I was a councillor in Rochdale during the coalition — I saw its impact. But for our party, it has meant almost irreparable devastation. More than 2,500 councillors and 49 MPs were wiped out and it rocked the very foundations our party was built on.
It’s not to say that the coalition was all bad – equal marriage and pupil premium are just two of the many life-changing ideas implemented by Lib Dems – but some serious mistakes were made. We have acknowledged that – now it is time to well and truly move on.
The Liberal Democrats are not halfway between the Conservatives and Labour. We are a progressive, centre-left party, and we must fight for our values and beliefs from there.
We need a new direction; we must let go of the coalition and aspirations to return. We must get back to our liberal roots, serving our local communities, which is what we have always done best.
That’s where I will take the Liberal Democrats as leader.
Lib Dem Voice has offered the 3 declared leadership candidates one piece per week during the campaign.
* Wera Hobhouse is the Liberal Democrat MP for Bath and Vice-Chair of the Environment APPG.
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92 Comments
It is true that the legacy of the Coalition will not do us any favours.
What laid behind it was an ideological desire on the part of David Laws to reduce the size of the state to 35% of GDP, see https://www.libdemvoice.org/david-laws-lets-cut-taxes-and-spending-for-once-im-unconvinced-heres-why-29114.html
Given the General Election result in 2015 I cannot imagine the party will go down that route again.
There is no point in beating ourselves up about this but we do need to be clear that with the policies we have today that we are no longer obsessed with the size of the state.
What on earth does ‘let go of the Coalition ‘ actually mean ?
I should add that what we prefer today is a decentralised state rather than a small state.
As a non-LibDem voter, I might politely insert the sentiment that the 2010 Coalition was not inflicted upon the LibDems. The wider electorate were told at that time that they had voted in a manner which ‘insisted upon a coalition’. Personally, I did not vote Conservative, Labour or LibDem in 2010. I voted against AV in 2011. I would vote against PR yesterday, today, tomorrow and any day in ten year’s time.
I recall Charlie Kennedy’s startled face upon learning of the coalition agreement in 2010. ‘I didn’t vote for a coalition?’ he asserted. Nor did I. Nor did any part of the electorate. But we got it all the same. And the LibDem approach to the coalition was not wholly acceptant of it across its entire life. As a party, as a culture, as a psychology, I don’t believe you’re ready for a real coalition even now. But at present, that’s the only credible manner in which you’ll take part in a Government. It’s up to your party how you fill that discontinuity.
@Simon McGrath. For me it means stop trying to defend the indefensible.
@Douglas Beckley. As has been pointed out many times, the simple fact that the random electoral chance of a First Past the Post Election means that a Party could take part in a Coalition at any given time does not mean that it has to. The Liberal Party in Feb 1974 chose not to do so because the Tories refused to countenance Proportional Representation. From 1976-78 they entered a loose Pact rather than a Coalition with Labour. In 2017 the DUP entered a Confidence and Supply agreement that gave ‘their’ side some specific benefits without signing them up to every dot and comma of what the Conservative Government wanted to do. In the Scottish Parliament the Lib Dems spent 8 years in two very successful Coalition Governments that did not destroy our Party in Scotland – although the 2010-2015 Westminster Coalition certainly did. No Political Party should abandon it’s principles and critical faculties simply to get bums on Minesterial seats.
Paul Holmes
‘As has been pointed out many times’
I have no doubt it’s been pointed out many times. My point is that you don’t really present very reliable, nor credible Coalition partners.
The coalition did not offer the way forward for the LibDems that some imagined at the time. Clegg assumed that the LibDems could become an long term adjunct of the Tories, in the way that the German FDP right wing Liberals were tagged onto both the SPD socialists and then Merkel’s Centre Right Party. That was never going to happen with the Toxic Tories who targeted LibDem seats with endless amounts of centralised money and had many pages of right wing press rubbishing them daily for 5 years, building a nonsense rhetoric that people eventually believed, in “Calamity Clegg”.
The Tories then went onto repeat the trait by trashing even the DUP, a N.I. party who clings to the Tories as if an over enthusiastic Terrier around it’s master’s leg.
To leave the door open to repeating that catastrophic folly of a Tory LibDem coalition would be deserving of becoming mere history. Or to paraphrase: “The totally expected death of Liberal Britain”
As to a coalition with Labour, it’s risky and would depend on the leadership. The present labour leader is actually liberal with a small “l” and in favour of liberal and progressive causes. He’s even pluralistic rather than being tribal, authoritarian or a socialist ideologue. It’s the best chance since Blair, but Blair’s offer to Ashdown was overridden by the left and the logic of their ludicrously overblown majority on about 43% of the vote in ’97.
What is the alternative? A big push to the major league? It’s never happened to any smaller party where there was not a huge increase in the electorate, as Labour enthusiastically supported Women’s votes and copped the benefit from the female vote. Otherwise they might have remained a minor party.
It seems to me that the real choices are either meandering on with little ups and downs while risking irrelevance ( the BBC have decided the SNP on 4% nationally are far more worthy of coverage) and eventually some snuff election, or it is a Progressive Alliance to include Labour. That’s the choice.
A coalition with Labour based around PR voting would be the best chance, but to treat the coalition with extreme caution as the public did not get used to the idea last time, even if they liked the overall coalition policies (excepting some necessary reductions in expenditure by 2015.)
I do wonder what People like Douglas Beckley believes he is doing pontificating in a Liberal Democrat forum. Does he believe he might influence or discourage LIbDem activists or believers?
Anyone who opposes PR, opposes democracy, because what we have as a voting system is not the will of the people. The people voted for something different. With one exception in 2015, a majority of centre to left parties win the majority of votes every time, but the largest minority view on the right takes power, nearly always the Tory right. It is a total travesty and will yet see the break up of the country as so many as so fed up of incompetent Tory rule.
The tories over centralised Westminster Government presided over the worse virus damage in the World, whether on people or the economy and will soon worsen the economy by leaving he SM and CU of the EU with nothing to put in it’s place, no plan, no Customs IT, no facilities at ports, few road improvements or holding areas for lorries, no new 50,000 customs staff needed or civil service bureaucracy needed to run it, being recruited.
Something will give and already after a few months of this government, Starmer is 32% ahead of the useless cavalier chancer Johnson, who shook hands with everyone in a ward, in pandemic until it near killed him and infected the Chief Medical Officer, the Chief Brexit Negotiator, the Health Secretary, various cabinet ministers and the Chief Advisor to the PM
Well she’s definitely not getting my vote. This is politically naive and nonsensical.
a) Naive, and I am being polite using that phrase, as the vast majority of our target seats are Tory facing. In those seats the Labour vote has been squeezed as far as it can and to win those seats one needs to persuade liberal Tory voters to vote for us, who didn’t last time out of fear of Corbyn. Most if not all of them think the coalition was a good thing and the best government we’ve had in years. To disavow that government as Wera seems to suggest is the political equivalent of throwing a bucket of cold water on them making it far harder to win those seats.
b) It’s nonsense as we are a party which supports proportional representation, so to say we are not going to do one when our policy is by definition we want to be governed by coalitions. Additionally, most people go in to politicals to make people’s lives better. How do you do that from the opposition benches?
If, and it’s not clear from the above, she would take us in to a coalition with the Labour then why rule out one party which greatly weakens our negotiating hand. Equally importantly, as many activists in Labour facing seats can testify to, Labour can be equally vile to deal with.
Again, what on earth is Douglas Beckley talking about. The press was full of people on all sides predicting an early end to the LibDem Coalition as “unreliable” , but whatever good and bad there was, it stuck and despite targeting LibDem seats with scandalous famous of dodgy centralised money not counting under constituency limits, Cameron did keep the door open for the coalition to continue. Some say he would have preferred that to having to rely on the ERG. A Tory group central to wrecking on the UK economy and de-industrialisation for the next decade, as we leave the Customs Union and Single Market.
To call the LibDems “unreliable” as coalition partners is not in view of the facts and abject proof of recent history. Why does he bother promoting such crumbling views here?
John.
I suppose I could pen a far longer response. But.
Has it ever occurred to you that people might simply disagree with you legitimately? Sitting on a catastrophic defeat only six months on, I’m wondering what it might take to make you attend to that?
“……… equal marriage and pupil premium are just two of the many life-changing ideas implemented by Lib Dems – but some serious mistakes were made. ”
The coalition raised the tax free theshold steadily and that process has been continued. It is now £12.5 k p.a. so has just about doubled since 2010. I’m not sure how much credit the Lib Dems can claim for this but the increases have been well worthwhile. They are an encouragement to the lower paid to work in the legitimate economy rather than resort to the cash-in-hand black economy.
This, though, is a rare plus in a whole group of negatives, the “serious mistakes”, on economic matters which have been grouped under the label of “austerity”. Nearly everyone accepts austerity was a mistake now. But, at the time, it was agreed by many politicians of all parties that we were “living beyond our means”, “the credit card was maxed out”, “we had to cut our coat according to our cloth”, “there was no money in the kitty “, “we’d been spending like drunken sailors”. “the party was over” etc etc. It was all nonsense, but it sounded plausible, and most voters went along with it.
“Austerity” is a legitimate way of slowing down an overheating economy and reducing inflation. Period. So why did otherwise intelligent people, mainly in the Tory and Lib Dem parties, but some in Labour too, think it was needed in the depths of the worse recession since the 1930s? I really don’t know the answer to that! But we have to avoid making the same mistake again!
Douglas, I am genuinely puzzled why people like yourself go onto this forum to pontificate. I understand that about 75-80% of people hold different views but that does not explain it. It now sound like pointlessly waving a supposed winning position which might make you feel better
The LibDems were the only party to get a significant increase in actual votes, by 1.3m. That is not votes that happen to be in artificially gerrymandered boundaries. For that to be described as a disaster only further de-legitimises the system.
The incompetent Tories stayed about level, but gained an overall majority of 80 seats then proved their incompetence by producing the worst dealings with the virus in the world.
Soon to compound their incompetence by leaving the SM & CU in Dec.with no plan, no Customs IT for 5 years ( that is forecast not to work), no port improvements, no 50,000 extra customs or 25,000 extra civil service bureaucracy needed to manage the nonsense, few road improvements and with Industry and finance leaving and shrinking or planning to leave the UK.
Meantime the U.S trade deal is to be no better or sooner than with the EU but on the UK will be conditional as to them having a veto on our trade deals, telecoms deals and courts to judge it all in USA, while breaking up the NHS and replacing UK farming with dangerous food from USA
Without actual democracy and Federal structure, the UK will break up. It is a sliver away from doing it now and things are going to get a lot worse with the aftermath of the virus and brexit mismanagement. It could have all been so much better
John Littler
That’s the second time in this thread the word ‘pontificate’ has been (inappropriately) used.
The website is called ‘Liberal Democratic Voice’.
Not ‘LibDem Echo chamber’ (Views not expressly contiguously with our own are unwelcome}
You can raise any number of arcane and irrelevant statistics to tell people you really won in 2019. It makes no difference. You lost, and lost heavily.
If you – you personally, you as an individual – don’t have what it takes to acknowledge contrary viewpoints, you’re in the wrong type of forum. I’m not going to give an acquiescent glowing flowery approval of a political party which is clearly failing. I’m giving you pointers to where you are failing – and a considerable part of your party doesn’t have the courage to accept contrary viewpoints. Which is why you feel the need to retreat into an echo chamber.
It’s a non-LibDem world out there. You don’t want to believe it, but it is. If you want to succeed, you have to proceed beyond your own comfortable political Fort Apache.
You personally demonstrate you aren’t capable of it.
Unlike yourself I don’t believe the number of votes is an arcane statistic. If you believe in democracy it has to matter because it is by definition, the will of the people. What we have now under a non democratic system of power allocation is just a system gerrymandered to take monopoly power.
Apart from your own dubious reasons to post in here, I see little advice other than discouraging future coalition.
If I was a minority Tory rather than having any other sort of politics or being an actual democrat, I would possibly support FPTP so my side could win power even when it had nowhere near enough support to justify it. But that does not make it right. It’s wrong and it’s been changed all over the world, with very few exceptions, in USA, Canada and the UK. All about gaining unwarranted power and refusing to share it and allocate it fairly. Canada itself came within 0.5% in a vote of breaking into 3 parts effectively.
Without PR voting and a Federal system to give the regions a proper input and resources, the UK is unviable, strained and will break up. England on it’s own would be it’s own worse enemy but it may well happen
Douglas Beckley
I would vote against PR yesterday, today, tomorrow and any day in ten year’s time.
So you believe that power should not be with a truly representative parliament, but instead with a single party even if it has true support of well under half the population?
And that people who have a minority view where they live should have no representation?
…’….dubious reasons to post in here…’…
John Littler.
As I say, ‘Echo Chamber’
You may be comfortable in there. But if you want to pretend it’s the real world, be my guest. The actual real world is very considerably bigger.
Matthew Huntbach
‘So you believe…’… etc.
No. I said what I said. I’ve been exposed to the PR argument for nearly fifty years. I remain unconvinced. I do not agree with it. That should not come as a revolutionary concept to a political activist. In democratic terms I stand in line patiently. I vote ‘for’ and mainly I vote ‘against’. I vote against PR. I am democratically entitled to. This particular thread is not about the technics of PR. In fact, 100% of the valid electorate were exposed clearly to the LibDem aspiration to adopt PR. A very considerable proportion of that electorate rejected it.
My observation of the LibDems in that respect is that you are extremely poor listeners.
@Douglas “In fact, 100% of the valid electorate were exposed clearly to the LibDem aspiration to adopt PR. A very considerable proportion of that electorate rejected it.”
This is incorrect. We have never had a vote on adopting PR in this country.
The point about the 2010-15 Coalition is that we were not in a position to get the Conservatives to drop everything they stood for and instead take up Liberal Democrat policy.
How could we have done this? Only one way – if the Labour Party gave us strong support, said they liked what we stand for, and said they’d give us full support for when we stood up against the Conservative, and offered to form an alternative coalition which accepted more of our policies than the one with the Conservatives did.
Well, did Labour do that?
By not doing that, Labour greatly weakened us. A coalition with Labour was not really possible, as thanks to the disproportional electoral system there were not enough Labour MPs for a Labour-LibDem coalition to have a majority. However, if Labour had given us positive support when we did try to challenge what the Conservatives really wanted, we could have been much stronger.
Also, it did seem to me during the Coalition that there was another coalition, between Labour and the right-wingers who had taken control of the Liberal Democrats, to push the idea that our party had moved permanently to the right, and there was no point in challenging that because we’d permanently lost more left-wing support. I remember that argument being used in the 2012 party conference in Newcastle to oppose the strong opposition there was there to the legislation to change the NHS that was clearly against the Coalition agreement.
During the coalition Nick Clegg remarked that from the big bang until there was a monumental crash, the Labour and Conservatives were so bewitched by London’s financial services that they squandered other industries and allowed other communities to wither.
Since the majority of target seats are Tory facing, would it not make sense to position the party in the centre, criticising both the Conservatives and Labour for their record in favouring financial services and consequently their failure to preserve our industries and communities?
@ Douglas Beckley
I joined the Liberal Party because I felt it was appalling that the people I grew up with had no representation, because every MP in our county was a Conservative, so people elsewhere supposed that all of us where we lived were wealthy conservative types. There was no-one in Parliament who really spoke up for those of us who were not. It was only the Liberal Party, by their support for proportional representation, who really seemed to care for people like us – poor working class people in southern and rural England.
So, thanks, Douglas, for reminding me why, though I’ve been very unhappy about how the Liberal Democrats have been run for many years, I am still a member of it, and still vote for that party.
I find myself in complete agreement wit @Jeremy Cunnington. We want PR. We know that PR leads, more often than not to coalitions but we protest that we will have nothing to do with them. This is crazy. Look at our European neighbors, in Belgium, Netherlands, Germany, Italy, France, Sweden, Ireland etc, they all have coalition governments but we know better. By all means lets us use the experience of 2010-15 and make a better fist of it next time, but the idea that we stay out of government until we can form an administration of our own is not very realistic.
Douglas beckley
In fact, 100% of the valid electorate were exposed clearly to the LibDem aspiration to adopt PR. A very considerable proportion of that electorate rejected it.
So you and most others think the 2010-15 government was a good government? Because it was the disproportional representation system we have that led to it. It meant there were five Conservative MPs for every Liberal Democrat MP. That was despite the fact that the Conservatives only received about half as many votes more than the Liberal Democrats. Had there been proportional representation, there would have been three Conservative MPs for every two Liberal Democrat MPs.
A coalition that is five-sixths Conservative to one-sixth Liberal Democrats is obviously going to be very different from a government that is three-fifths Conservative to two-fifths Liberal Democrat, which is what proportional representation gives. Also, proportional representation would have enabled a Labour-LibDem coalition to be formed, it was the way disproportional representation pushed up the Conservatives and pushed down the Liberal Democrats that mean that could not be formed as to would not have a majority.
Or is it that you and most other people think the Liberal Democrats should just have voted for whatever the Conservatives want, rather than engage in some sort of negotiation, because that would give what the supporters of disproportional representation say they want – a government run by just one party even if it didn’t really have majority support?
Yes or no?
Chris Cory
By all means lets us use the experience of 2010-15 and make a better fist of it next time
We needed to make it clear that the 2010-15 coalition was five-sixths Conservative and one-sixth Liberal Democrat, and that its policies came from that. Also, that our ability to argue with the Conservatives and get them to agree to drop their policies and pick up ours was greatly reduced by there being no other government possible.
But our leadership didn’t do this in the 2015 general election, nor in the 2017 general election, nor in the 2019 general election. So they have allowed the idea pushed by Labour to be believed by most people – that we Liberal Democrats were full supporters of everything the 2010-15 government did, and a majority Liberal Democrat government would do the same.
That is what has caused us so much damage.
Note that the idea some have expressed, that becoming more like the Conservatives is how to win more votes in all those places where we were the main opposition to the Conservatives, is nonsense. That it is nonsense was proved by the way we lost so many votes in those places in 2015, and they have returned to safe Conservative seats.
Having grown up in such a place, my experience is that ordinary people there tended to see Labour as an elitist intellectual party that didn’t care much for them. So what happened is that people who really did want a more left-wing government often saw little difference between Labour and the Conservative and voted randomly for one or the other. That is why left-wing Liberalism worked so well to get their votes.
In those days, that way of thinking was in places where trade unions were weak, and so less so in all those places where there was strong industry with strong trade unions in control of the Labour Party. However, now, with the collapse of such industry, that applies to most of the country.
The crazy thing is that with the Conservatives supporting Brexit and saying that will “return control to our country”, in 2019 many thought of the Conservatives as the party of the left, in terms of taking away control from wealthy international business types and returning it to elected government. And our party’s leader did all that could be done to help support people thinking and voting in that way.
What seems to have been missed, in the PR debate, is UKIP …
Had PR been in force this party would’ve increased its share to around 50 seats but the ‘shots’ would’ve been called by a rampant UKIP.
A Tory/UKIP alliance would’ve had over a 50 seat majority and an increasingly right wing government. The fall of the ‘Red Wall’ would have happened in 2015 and this country would have had a ‘No deal’ Brexit within 12 months..
Scotland may well have, by now, left the union and a right wing government would be the only future,,,
So much blather about machinations. Let’s get down to visions shall we? The EU way!
FOCUS – on the four dimensions of competitive sustainability: economic stability, social fairness, the Green Deal and productivity and competitiveness, with a special emphasis on health and wellbeing.
REPAIR – build a modern, clean (carbon neutral) and healthy economy. Flatten wealth across the EU, reduce involvement of FDI asset sales (China)
RECOVERY – A climate-neutral, digitalised and resilient community, e.g. greater EU sovereignty on medical products and pharmaceuticals, pan EU social security
CLIMATE – Building renovation, renewables and hydrogen as well as clean mobility and the circular economy
To all of you, who are getting hot under the collar by the musings of a certain ‘Douglas beckley’ (Why the small ‘b’, Doug, or are you just getting lazy?), can’t you see that he’s just winding you up?
I notice from his first trip into the Lib Dem opiniondom (aka LDV), he confided that he had not voted “Conservative, Labour or LibDem(sic) in 2010”. So, did he vote at all? As for being against AV, that’s indeed one of the greatest criticisms you could level at the Lib Dem coalition partners, namely that, even though they agreed to go with a voting system only marginally better than FPTP, they the failed to campaign with any vigour and political nous to get it through.
Poor Ms Hobhouse must be in despair that her piece, and rather a good video, has been hijacked by their fellow party members and the occasional and, it might be argued, inevitable ‘agent provocateur’, like Mr ‘b’. Let that be a lesson to the other Leadership candidates as they start to post their messages.
@ expats “Scotland may well have, by now, left the union and a right wing government would be the only future”. Presumably you mean in England, expats ? You may be right. I voted ‘No’ in 2014 because I didn’t want the North of England to suffer permanent Tory Government.
Not so sure now, it’s a more open question if there’s a second Indy Ref. In domestic politics, Holyrood and local government, we have PR, a better health service, enhanced local benefits and no nonsense such as Academy Schools or supporting nuclear weapons – the latter one of the reasons Ms Swinson lost her seat.
Scotland traditionally is left of centre, usually more progressive socially, and it’s decisively pro EU Remain. But it’s now inhibited by a right wing Tory government in London which it didn’t vote for. I wouldn’t be the least surprised if Scotland concluded enough was enough given the opportunity….. and it might suit Mr. Johnson to do this.
Denmark, Norway and New Zealand have similar size populations, but nobody ever says now they shouldn’t have autonomy to run themselves (look at Covid outcomes).
Scottish Lib Dems say they want to remain in the EU….. yet don’t see the inherent contradiction of remaining in the Union. Surprising, because in the Liberal supremacy over 100 years ago, Dominion status for Scotland (as for Ireland) was Liberal policy. Is it now more to do with party tribalism ?
Re-reading Schumacher’s, ‘Small is Beautiful, A Study of Economics As If People Mattered’, might be in order.
The Fixed Term Parliament Act is an important reform and avoids a PM, such as Margaret Thatcher, abusing her power in a country which does not have a written constitution.
PS. Happen to agree with Wera’s stance, but whether she should be Leader ??? That’s quite another question, but who could ? There’s not just a policy vacuum.
Richard Underhill 14th Jun ’20 – 9:40am…………..The Fixed Term Parliament Act is an important reform and avoids a PM, such as Margaret Thatcher, abusing her power in a country which does not have a written constitution………….
That was in 2011..Since then there have been 3 GE’s two of which were in direct contradiction of the FP’s that “the legislation removed “the right of a Prime Minister to seek the Dissolution of Parliament for pure political gain.” ..
BTW,,This party ‘broke ranks’ to allow the December GE and, had that election not taken place, just imagine Mr. Johnson’s chances of a post Covid election victory.. Oh. Dear; never mind!.
Douglas beckley 13th Jun ’20 – 3:49pm
We know that the best electoral reform is the Single Transferable Vote and we should have the courage to say so. We celebrated the election of Naomi Long in an election in which the whole of Northern Ireland voted.
To me, the key words in Wera’s video come very near the end and are “I have a *detailed* plan for the future of our party.”
Wera then follows it with three points
– We need a new direction
– We must break with the coalition years, and
– bring in a new, successful progressive politics.
All very laudable, but
– What direction?
– What sort of break? and most importantly
– How?
Please can we see your detailed plan Wera?
She may well get my vote
I worry that the social liberal vote may split between Wera and Layla, equally worthy candidates, letting in Ed Davey espousing free markets and the austerity of the coalition. But aren’t nominations still open? Wera was interviewed on LBC this morning and emphasised her local government background and ruled out a coalition with the Tories, music to my ears. Iain Dale on LBC will be holding a hustings with all the candidates in the near future. Please make sure this information goes on here so people can phone in with questions. I am waiting to hear Layla’s programme but would be more inclined to vote for her.
Surely the “Lesson” to be learned from The Coalition is Dont ? Dont join a Coalition as a Junior Partner.
There is no prospect of The Libdems joining a Coalition with The Tories in 2024, there is every possibility of Us joining one with Labour. The question we should be asking ourselves & Candidates for Leadership is whether we should join a Labour-led Coalition & what Price we should demand.
We know what the result of another Coalition will be, would it be worth it if we can get Electoral Reform & how do we make sure that Labour stick to any deal made ?
Most of us have ‘let go’ of the Coalition – it was of its time, it’s not gonna be repeated anytime soon with Boris Johnson leading a populist, authoritarian, hard Brexit, race-baiting Tory Party. Nobody in the party, surely, wants a Lib/Con deal of any kind post-2024 general election. We’re attacking the Tories in the media far, far more than we attack Labour nowadays (I don’t recall any attacks on them since Starmer took over, although they deserve one for backing the Tories on 10 years for people who vandalise memorials).
So what’s the point of saying this? Why virtue signal to people who are gonna vote Labour come what may in 2024 anyway? Those who want to vote ‘tactically’ will do so, just as they did in 1997, 2019 and every election in between. Those who don’t want to do so won’t, and won’t be taken in by any talk of us trashing our own record. Trashing your own record wholesale, and repudiating your own past 100%, is rarely a good idea in politics. It certainly isn’t for a Lib Dem party with precious few allies in the media to talk us up – we have to do it ourselves.
Let’s diss the only time we’ve been in govt for 70 years. Ridiculous position. Won’t be getting my vote. If we can’t defend what we did in govt we should give up.
marcstevens
I worry that the social liberal vote may split between Wera and Layla, equally worthy candidates, letting in Ed Davey espousing free markets and the austerity of the coalition.
That is the point of AV, to stop the effect of vote splitting. It means if there are two candidates you like and one you don’t, you can safely vote for whichever of the two you prefer and not worry it will split the vote and let in the one you don’t like, because you would give you second choice to the other one you like. So if the one you like best comes third, and the one you don’t like doesn’t get an actual majority, your vote will be transferred to the other one you like.
This is really the equivalent of having a repeated election, dropping off candidates who got the lowest vote, until one does obtain an actual majority, but done in one election rather than repeated election.
AV is NOT proportional representation, because it still means for constituencies only the majority view get an elected representative. We should have made that clear about the AV referendum in 2011, as a good example of how the Coalition involved a compromise which moved just a little bit towards us. It’s not useless, because it still solves the issue of people feeling forced to vote for someone other than their first choice for fear of splitting the vote. However, it was part of the way we were damaged that it was suggested that we had switched to preferring AV over STV, which was not the case. We did nothing to stop that being believed. So that was part of the assumption that we could get whatever we wanted from the Coalition, as if it was a 100% Liberal Democrat government.
What was then needed was a proper explanation of how AV works. I went to the London LibDem conference in 2011, where those in charge of what was to be presented in the referendum campaign showed what they would do, and I asked the why it did not involve a proper explanation. They said that was because people would find that boring. I then stated that I believed the lack of proper explanation would lead to the referendum being lost – that was at a time when public opinion surveys still suggested it would be won.
Similar applies to the EU referendum. We need to treat ordinary people with respect by giving proper explanations to them so they are not enslaved by ignorance, instead of doing politics with a sales approach, elitist and vague in detail.
Just listened to the interview! What a train wreck! Given how Hobhouse was so critical of the Coalition I’m not sure if she’d even get my vote in a general election!
@ Russell Simpson “If we can’t defend what we did in govt we should give up.”
And which particular piece of legislation was the most outstanding success in your opinion, Russell ? Was it Universal Credit & Welfare Reform, the Health and Social Care Act, the Privatisation of the Royal Mail or was it a combination of all three wrapped up in a policy of austerity and the defenestration of local government ?
PS I seem to remember something about student fees, not increasing VAT, the Referendum on the Alternative Vote….. maybe it was one of those ?
To be fair, I personally thought changing the succession rules on the monarchy should have swept us to success in 2015….. but hey ho, the electorate are an unreliable lot.
Russell Simpson: What interview? Did you intend to have a link with your comment?
Russell Simpson 14th Jun ’20 – 1:38pm…………………Let’s diss the only time we’ve been in govt for 70 years. Ridiculous position. Won’t be getting my vote. If we can’t defend what we did in govt we should give up…………
The electorate have already given their verdict both during and after the coalition. Trying to rewrite it’s history will just create more problems. .After all, most of those responsible have “cashed in their chips and left the game”…
Just because you disagree with her views does not make it a car crash. And she is right to dismiss the notion of a coalition with the Tories. I would never vote for anyone who is uncritical of it and the misery your austerity measures caused for so many of us.
Martin
Apologies. LBC interview earlier today (Iain Dale). Referenced in a comment but not the article.
“I worry that the social liberal vote may split between Wera and Layla, equally worthy candidates, letting in Ed Davey espousing free markets and the austerity of the coalition.”
Fortunately for you, Ed Davey has done and will do neither – his campaign’s been squarely focused on what we need to do *now*. His biggest focus so far has been on doing right by carers and building a green economy. He’s making the big arguments and focusing on the big ticket issues that the country cares about – rather than self-flagellating and focusing all his energies on how we can make the Labour Party like us.
I am increasingly of the view that the real dividing line is not whether you are pro-coalition or pro-progressive alliance, it is whether you are “more Hampstead than Hull” in terms of which demographic of voters you want to appeal to.
There is a lot of talk of Labours red wall crumbling but the yellow wall mainly in the South West had already crumbled.
The quickest route to a respectable seat tally runs through St. Ives, Cheltenham, Eastbourne etc i.e. seats where woke metropolitan remainer types don’t dominate.
Some would probably write these seats off but with the right policy agenda I think they could be won back.
Why do we have to talk down our achievements in government? There is so much to be positive about and if you can’t then surely it is better to say nothing about it if we are to convince people to trust us again.
I agree with much of Matthew Huntbach’s analysis. The mistake in 2010 wasn’t going into Coalition with the Tories, it was how the Coalition was conducted by our leadership at the time. The Nick & Dave Rose Garden press conference set completely the wrong tone, and things got worse from then on. Our leadership portrayed it as a “love-in”, when it should have been done as a business arrangement. We failed to differentiate ourselves from the Tories until far too late. We should have made clear from the start that a government that was 1/6 Lib Dem and 5/6 Tory was going to have mainly Tory policy, and that an undiluted Lib Dem administration would have done things differently.
For me, moving on from the Coalition is not about “dissing” it, but about allowing it to wither on the vine. A leader completely unconnected with the Coalition would be able to legitimately say the sort of things I and Matthew Huntbach have said; if pressed, they can say about the conduct of the Coalition “That was what the previous leadership did; we are not them, we would do things differently.” The hard left would continue to attack us over it, but it would increasingly seem like flogging a dead horse.
@Marco: Cheltenham is similar to Bath, an urban, metropolitan majority-Remain constituency, quite unlike either St Ives or Eastbourne. I don’t like words like “woke”, but if you must, then Cheltenham probably has a lot of such people.
marcstevens: The leadership election is conducted under AV. Splitting the vote isn’t an issue.
@Matthew Huntbach
We needed to make it clear that the 2010-15 coalition was five-sixths Conservative and one-sixth Liberal Democrat
Weasel words again. If we had made it a condition that we would not accept any rise in tuition fees, the Tories would have been faced with accepting it or triggering another election. After 13 years out of power what do you think they would have done? We had a costed plan for reducing tuition fees to zero so we certainly could have held them at £3k per year. Similarly, we could have blocked Lansley’s NHS reforms because Cameron gave Clegg that opportunity but he wanted Lords reform instead. Our problem was not five Tory MPs for every Lib Dem MP; it was every time the Tories came calling, Clegg and Alexander just rolled over and let them do what they liked. When you need a majority in the House of Commons it doesn’t matter if there are 163 MPs in each Party or 293 in one and 33 in the other, you still need them all to vote for the Bill.
Alex Macfie – fair enough I’ve never been there.
There are probably other examples that would have been better e.g Carshalton Sutton Brecon Hazel Gr
Plus seats where no real Lab vote to squeeze
In most seats to get over the line need some
C1C2DE voters + leave voters.
The 2010–2015 Coalition government is NOT “the only time we’ve been in govt for 70 years.” We were in government in Scotland 1999–2007 and in Wales 1999–2003 (both Coalitions with Labour). In neither case did our participation in government cause electoral disaster (in fact we actually increased our share of the vote for both legislatures in 2003). Some might put that down to our partner in government being Labour, but I suspect it’s more likely because those in our party who put the coalitions together actually knew what they were doing.
Don’t forget also that we are currently in government in Wales.
“We were in government in Scotland 1999–2007 and in Wales 1999–2003 (both Coalitions with Labour)”
Ok but is that really “Government”? You’ve been in local government too. Is that also “Government”?
‘Yes’ is the answer to both questions if we are to take the word literally. And the Scottish and Welsh assemblies are local governments on just a larger scale. They all collect taxes and spend what they’ve raised. If they don’t raise it they can’t spend it. The concept is no problem for Lib Dems. So there’s limited scope for screwing things up.
But when that thinking is applied to a national currency issuing government……
“Ok, but is that really “Government?” , says Peter Martin.Thus speaks the English supremacist.
You really are a hopeless old right winger aren’t you, Peter ? Try saying that at Murrayfield in Edinburgh or the Principality Stadium in Cardiff and see if you get out alive. Not a clue.
@ David Raw,
It’s nothing to do with left and right. The majority opinion in the SNP, maybe in PC too, is in agreement with what I’m saying. The devolved governments in Edinburgh and Cardiff are not the governments of independent and free nations. That’s why they want full independence.
Full independence has to involve having your own currency. That’s why they won’t be allowed to use the pound and that’s why they’d be throwing it away again if they adopted the euro.
But if that’s what they want – good luck to them. I don’t want the UK to break up but, on the other hand I don’t want any country to be forced to remain against its will.
Peter Martin 15th Jun ’20 – 8:24am…………Full independence has to involve having your own currency. That’s why they won’t be allowed to use the pound and that’s why they’d be throwing it away again if they adopted the euro…………………
It’s to the advantage of both nations to keep the pound.
Several countries around the world use the currency of another state- Montenegro currently uses the euro, despite not being a member of the European Union.
Back in 2018, when it was claimed that Scotland ‘would keep pound’ in years after independence, Mark Carney, then governor of the Bank of England, told MPs that “from the strict economics”, a currency union would not require a political union. And, outside of a currency union, from a technical standpoint there is nothing to stop a country using the currency of a foreign state without permission.
An independent Scotland could use the pound, the US dollar or the Vietnamese Dong.
And they will be allowed the same influence over the direction of those currencies by their respective central banks.
That is, none.
“there is nothing to stop a country using the currency of a foreign state without permission. “
No there isn’t.
But it’s madness to think that the Bank of England would contemplate a bail out of independent Scottish banks who got themselves into financial trouble, or support independent Scottish citizens with a Deposit Guarantee Scheme for the first £75,000 of their deposits?
Indeed a savvy Scot would do their banking over the border in an English bank for security of their (independent but foreign used £’s),
So much for Scottish independence with British (£’s) in your pocket?
Laurence Cox:
Exactly, coalition government involves compromise. The mistake that Clegg & Co made constantly throughout the Coalition was that instead of making clear that the Lib Dems had to compromise, they were making it look as if the Lib Dems supported all Coalition policy, i.e. that Lib Dem MPs were voting for Tory policies not because we were required to by the Coalition Agreement, but because we actually believed in Tory policies.
There were plenty of opportunities to show voters what undiluted Toryism and undiluted Lib Demmery might have looked like in practice. I still believe that the Lib Dems missed a trick by failing to talk about what Tory and Lib Dem MEPs (who were not bound by the Coalition agreement, as the EP is a separate institution from the Parliament seated at Westminster). IMO it should have been the focus of our 2014 Euro election campaign, with us pointing to the Tories’ somewhat unsavoury European allies and holding their MEPs’ voting records as examples of what the Tories would have done in government on their own, while our MEPs’ records could have been used to demonstrate what undiluted Lib Dem policy looked like. But no, it had to be all about Nick Clegg and his utterly pointless debates with Farage.
@ expats,
Yes the Scots could use whatever currency they like, as Innocent Bystander suggests, but that not having full independence. The same problem applies to the euro using countries too. As Italy has found out it can’t just do what it likes. There are, of course, pros and cons to that. The pro is that there’s ultra low inflation. No-one can fault the EU on that score!
I probably should have said Scotland won’t be allowed to use the pound under the same terms as they do at the moment. They’d be like Ecuador in relation to the American dollar. The US Fed can create as many of them as they like. The Ecuadorians can’t create any.
@ Alex Macfie,
“Clegg & Co….were making it look as if the Lib Dems supported all Coalition policy, i.e. that Lib Dem MPs were voting for Tory policies not because we were required to by the Coalition Agreement, but because we actually believed in Tory policies.”
“Clegg & Co” did a pretty good job in that respect! So much so that I’d question if they were just “making it look” that way!
I’d say that Clegg, Alexander, Laws, and even down to Ed Davey and Jo Swinson did actually believe in all the pro-austerity guff they were putting out. If they’d felt differently there would have been more obvious signs of dissent. If Davey and Swinson had been a bit smarter they would have had one eye on their future careers and they would have known that being seen to have rocked the boat and maybe even getting themselves sacked, on any issue of their own choosing, wouldn’t have done them any harm at all.
But, they would have had to have known that the coalition’s austerity policies were never going to work and there’s no evidence they thought that way at the time.
Laurence Cox
If we had made it a condition that we would not accept any rise in tuition fees, the Tories would have been faced with accepting it or triggering another election.
Yes, and if they had accepted it, what would they have done as their compromise? They wouldn’t have supported big tax rises to pay for it, as what they stand for is keeping taxes low. So, they’d have paid for it by even bigger cuts elsewhere, including huge cuts in the number of university places.
And if they’d triggered another general election, how would it have gone? If our votes were unexpectedly high, maybe people who hadn’t considered voting for us would switch to us. But it wasn’t like that. We had an unexpectedly low share of votes, it was clear our support was going down, and we’d almost certainly have lost seats. Also, the Conservatives and Labour would both be keen to say the country is in a mess due to our existence and refusal to accept a coalition meaning no stable government and so we need to be got rid of for our country to get back to having a good government.
The idea that a third party can get whatever it wants from a coalition is nonsense. This was particularly so in 2010, when there were not enough Labour MPs to form a Labour-LibDem coalition, so we couldn’t compete with Labour and the Conservatives to join whichever offered us the most. Instead, Labour were quite keen not to have a coalition so that we would be forced either to form one with the Conservatives or have another general election, and in either way, Labour could use that to help destroy us and so return to a two-party system in which they were the only opposition to the Conservatives.
The belief that third parties can get whatever they want from a coalition has been a common cause of the collapse of third parties in many other countries where they have joined a coalition and found how limited they are in what they can really do. The small parties that do well in coalitions are those with strong committed support who only care about a few issues that can easily be given to them without a high cost to anything else, the opposite of us.
That is why those of us who understood this told Clegg to be very careful and make it clear from the start that we had only a small say in what the Coalition would do, and it was a long way from what we would do if we were the main party of government.
The key question about coalition that we need to answer is not answered by any of those nice reassuring “We won’t go into coalition” comments or “what else could we have done” ones or even “Trashing our record won’t do any good.”
The fundamental question we need to answer about coalition will not be answered by high level statements about what I would do in the future, which there is no agreement about anyway, but will only be answered by asking what went wrong in the party at all levels over five long disastrous years that allowed it to happen.
Fundamentally, what happened was that a leader, with a different vision to most of the rest of the party, was allowed for five years to engage in a war against the party’s long established core values which had led it to the verge of real success and political influence and power, and took it from something that could do real good in the country to the near basket case it is now.
The one thing we need to do is learn and have a real “drains up” review like the Thornhill review tried to be with the election but with a more diverse group to carry it out prepared to really dig out the truth.
We all know how it ended up for the party as a whole, but what we need to find out is why we as a party and individuals actually allowed what was going wrong from the very start to carry on for five years, with ever increasing evidence that it was destroying us as a political force, possibly forever.
As a party with a belief in the need to “balance fundamental values” in order to “build and safeguard a fair, free and open society” and an alleged set of checks and balances to do so including:
– Devolved powers and organisation,
– Leader and Party President,
– democratically elected committees at all levels,
– elder statesmen and women with many decades of experience of politics and political action.
– local parties across the entire country.
Why did we allow it to happen to ourselves and how do we prevent it happening when the next time comes?
Because if we can’t make it work for ourselves, how can do it if we ever get in government?
David Evans asks “if we can’t make it work for ourselves, how can we do it if we ever get in government?” It is a good question. Many of the comments above seem to display a geunuine lack of understanding of the reality of government.
Shortly after losing his seat in 2015, Vince Cable gave a frank interview on his experience of coalition https://www.theguardian.com/politics/2015/sep/05/vince-cable-historically-coalition-will-be-seen-as-success that gives a good insight into the reality of government.
“the emphasis on consumption rather than investment, the continuing reliance on house price inflation as the driver of growth, the decline in productivity and innovation mean fundamental problems are not being addressed. Osborne’s Treasury effectively controlled government, with a hands-off Cameron. Nick Clegg and Danny Alexander were too accepting of the Treasury line.”
“The economy turned out all right, but I don’t think that was because of [Osborne].”
“Without anybody really noticing, Osborne has increased considerably the scale of cuts,” he says. “They are committed to taking another £40bn out of the economy. The housing policies are appalling.
” Historically, the coalition will be seen as a success, and people, once they have seen Tory government on its own, will realise the difference. Absence makes the heart grow fonder.”
“Politics is a dirty business and corners have to be cut, liberties taken – otherwise you lose. The Lib Dems were outmanoeuvred at every stage in the coalition, and would perhaps have been stiffened by a little more self-interest.”
“The election was an enormous setback for the idea that you can have the best of both worlds – be a radical centre-left party but soil your hands in government. The public walked away from that, but I still believe we will be vindicated in the long run.”
“It’s a long way back, but membership is going up, and unlike in the Labour party, there is a sense that we’ve touched bottom. We can only go up.”
Following on from Vince Cable’s 2015 Interview both he and Jo Swinsion were interviewed by Sky TV at the 2018 conference https://news.sky.com/story/sir-vince-cable-admits-regret-coalition-austerity-policies-may-have-led-to-brexit-vote-11499891
“A decade on from the 2008 financial crisis, which preceded the 2010-15 coalition government, Sir Vince attacked a lack of capital spending in the years since the global economic meltdown.”
“One of the aspects of austerity that did most harm was the massive cutback in public investment. I know that it’s the emotive stuff around social security spending that gets people angry. But the thing that did harm was the big cutbacks in investment and that’s what has caused many of these northern communities to continue to decay.”
“We’ve got this ridiculous policy, which I and some of my colleagues in the coalition spent five years fighting, where the Treasury will not allow capital investment beyond a certain, very limited, level.”
Jo Swinson said “”Negotiating with the Conservatives meant compromise and some of those compromises sucked. We should have done more. We were right to cut the deficit, but those who were already struggling paid too high a price. Let me be blunt, if we are to claim the successes of our time in government we need to own the failures of it too. We lost too many arguments. When they fought dirty, we were too nice. And austerity left behind people who liberals are in politics to protect.”
The Tories won a majority in 2015, squandered a massive lead in a disastrous 2017 election campaign and came back to win a majority in 2019.
This current health and economic crisis is very different to the conditions of the 2008 banking crisis. The kind of long-term structural unemployment seen in the 1980s is likely to return this summer and autumn. To be relevant the Libdems needs credible answers – the kind of answers Vince Cable had in 2008. Only then will voters sit up and take notice.
@David Evans. As always, you don’t pull any punches. As you say, we claim to favour a “fair, free and open society”, but those are all terms that are open to a lot of interpretation and I can’t imagine any mainstream politician standing up and saying that they weren’t in favour of a fair society. I’m sure the Lib Dem ministers during 2010-15 would all say that they were pursuing those goals in government.
As for the checks and balances, how exactly were these “democratically elected committees” or local parties supposed to control what was happening at the top ? As for devolved powers, what powers are these and to whom are they devolved ? In practice our party is as centralised as Labour or the Conservatives, as the Thornhill Report confirms. The obvious conclusion is that the errors of the coalition years, like those of the 2019 election sprung from a disconnect between the party and the leadership.
@ Joe Bourke,
“We were right to cut the deficit……” Jo Swinson.
The problem is she thinks this happened mainly by cutting govt spending and perhaps with some help from a VAT rise. But, cutting spending cuts revenue too. Raising taxes slows the economy and also cuts revenue. So the deficit is largely unchanged.
On the other hand, if interest rates are lowered by 5%, there’s little or no incentive to save. But there is every incentive to borrow and spend in the housing bubble which does, for a short time, speed up the economy and raise govt revenue thus closing the deficit.
So austerity failed even on its own terms. The reduction in the deficit which Jo Swinson is pleased about was achieved by saddling the younger generation with debt or pricing many out of the housing market completely.
And Vince Cable thinks “historically, the coalition will be seen as a success”. I’d like to know how bad things would have had to be for it to be seen as a failure!
Peter Martin,
the deficit was cut by economic growth and keeping overall spending relatively flat in real terms. That is what reduced public spending from 46.3% of GDP in 2009 to 39.3% and eliminated the deficit in current spending (excluding capital spending) before the onset of this pandemic.
Giles Wilkes was a special adviser to Vince Cable during the coalition. In a report of reforming the treasury he describes the reality of government budgeting:
” fiscal rules determine the profile of borrowing. The assumption is that if these are not prioritised, financial market confidence in the ability or willingness of the government to keep its promises will evaporate, sending bond markets into crisis, hitting business confidence and raising interest rates to damaging levels. During the coalition, the treasury assumption was that both economic growth and interest rates would stabilise at around 3%.
Tax policy is largely hoarded by the Treasury. Responsibility for forecasting how much tax will be harvested is outsourced to the OBR to eliminate the risk of optimism bias.
The amounts left over for public expenditure are whatever is needed to make the figures balance. For example, if it is determined that tax in for a particular year will be £710bn, and borrowing should be no more than £40bn, then total spending has to be £750bn. It is a residual.
From here on the question is how the spending envelope is divided out. More than half government spending is “annually managed expenditure” – the demand-led transfers that are largely determined by pension and benefit policy and contracts, such as debt interest. Much of this is de facto fixed by settled policy and political positions.
This means that departmental spending totals (RDEL) need to take the strain. Within this envelope, large parts like the NHS will be explicitly protected, and others like MoD and spending on the devolving regions implicitly, by the positions taken by the political leadership.
Therefore at the end of this entire process, a small fraction of all public spending (the amount spent on most of the major departments) is expected to absorb all the volatility of the changes in all the other elements.”
“…departmental spending is determined not on the basis of what might be needed in that area, but by what happens to be left over once a host of other political commitments have been made. ”
This is how investment spending and local government financing came to be reduced by so much. Not by design but by what funds remained after the key borrowing target, tax and spending commitment decisions has been made by the treasury and the Chancellor (not by departmental ministers on the basis of need).
@ JoeB,
You’re just as wrong headed as Jo Swinson!
You both have yet to realise that government spending creates taxation revenue that matches the spending to the penny for any positive tax rate. And it does that instantly unless the players in the economy, which includes companies and our overseas trading partners, slow down the process by holding onto their money for a period of time. A process known as “saving”.
Saving can simply be having money in your hand. Any pause between earning and spending, no matter how short, causes saving to occur. And that saving, when netted off against loans issued, has precisely the same short term macroeconomic demand effect as taxation.
So to reduce its deficit the government needs to reduce any tendency for us all to save and increase any tendencies for us to borrow which can be regarded as desaving. That’s why interest rates were reduced from about 5% pre GFC to close to 0% post GFC.
Your mental model is wrong with the mistake being, no matter how much you may choose to deny it, to think in household economic terms.
PS Note that, although we can in principle have “any positive tax rate”, the actual rate should be chosen for other reasons. Namely, the avoidance of high inflation rates and to maintain a value (what you would call confidence) in the currency.
@ JoeB
The amounts left over for public expenditure are whatever is needed to make the figures balance. For example, if it is determined that tax in for a particular year will be £710bn, and borrowing should be no more than £40bn, then total spending has to be £750bn.
I’ve quoted this passage to illustrate how you, Jo Swinson and Giles Wilkes are all guilty of household economic thinking. This is how you and I would conduct our own finances. Either personally, or if we were running a business. We’d look at how much money we had coming in, we’d add on any amount we were prepared to borrow, and that would give us a figure for what we had to spend. Which is fine because we’re households in economic terms. We aren’t currency issuing governments.
The correct course of action for a currency issuing government is to continually adjust its spending and taxation to avoid the perils of inflation, on the one side, and recession on the other. There’s no need to subcontract anything to the OBR. It’s just a waste of money. Or waste of resources – to get it right! They can’t know what the tax take will be in any case. It will depend on how much Govt spends into the economy and how much of the proceeds of that spending the participants in the economy will choose to save.
It’s really no wonder the ghosts of the coalition years are continually coming back to haunt you!
Peter Martin,
Giles Wilkes, as an advisor to Vince Cable, was and is an influential voice with a good understanding of how government works and how the treasury operates. This is what makes his views valuable. He writes with the benefit of real-world experience in government. That is something you would do well to pay attention to if you expect anyone to give any credence to your comments.
@ Joe B,
Look, this is just an argument to authority. I’ve no doubt that Giles Wilkes is correct when he says that the Treasury does work this way. The question is “But, should it?” It’s not that the Treasury has any great record in economic forecasting! As you say yourself:
“During the coalition, the treasury assumption was that both economic growth and interest rates would stabilise at around 3%.”
That was way off! So why no soul searching?
You must know that in economics there’s no consensus. There’s no real authority to appeal to. There’s too much politics in the mix for that. So it’s not at all like having a discussion about Quantum Mechanics and we can both go to Richard Feynman’s excellent lecture notes to settle the matter.
If you consider I’m wrong please explain in your own words why.
It is important to distinguish between asylum seekers and recognised refugees. People are not trees and should not be tested for age by counting rings.
If the caseworkers in the Home Officer are institutionally xenophobic and refuse when they should not there is a right of appeal introduced by a former Conservative government.
Granting limited leave to remain has the attraction to caseworkers and throughput managers of speedy decision making. Deferring the substantive decision until the age of 18 years has practical difficulties which may encourage caseworkers and senior caseworkers to be “pragmatic” and look for a way to make a grant, perhaps under the Human Rights Act.
Peter Martin
You write above “you, Jo Swinson and Giles Wilkes are all guilty of household economic thinking”. Neither I or any of the above have likened government finances to that of a household. Tax yields are not dependent on government spending they are dependent on economic growth. Economic growth comes from two sources – increases in the size of the labour force or increases in total factor productivity. Taxes are the means by which government can draw on putput. If output declines, so too do taxes. If output increases, tax increases with it.
The treasury and the Bank of England have a primary focus on financial stabiliy i.e a state in which the financial system (the key financial markets and the financial institutional system) is resistant to economic shocks and is fit to smoothly fulfil its basic functions: the intermediation of financial funds, management of risks and the arrangement of payments. A stable financial system creates a favorable environment for depositors and investors, encourages efficient financial intermediation and the effective functioning of markets, and hence, promotes investment and economic growth.
Borrowing limits are determined by the long-run cost of servicing debt i.e. the interest rate, The interest rate is determined by the rate of growth in the economy. It is the Bank of England the forecasts the long-run equilibrium interest rate, In simple terms, the equilibrium interest rate is the real rate that is consistent with constant prices and for which GDP, in the long run, is equal to its potential. If a central bank pursues a positive inflation target, the equilibrium rate ensues when inflation is permanently at its target rate.
During the coalition, that forecast was 3%. Currently, it is 2.25%. That is the rate that the treasury will use in its projections for long-term costs of refinancing debt in the future. If interest rates remain below 1% (and they can only do so in a low growth, low inflation environment) then the cost of servicing debt is unproblematic in the short-term. If it increases to 2.25% as forecast by the BofE then the cost of servicing debt will become a significant burden on public finances and the economy, requiring a higher nominal surplus in current spending before interest costs i.e. lower spending in other areas.
This resolution foundation paper discusses how longer-term planning of public finances should be managed https://www.resolutionfoundation.org/app/uploads/2020/04/Doing-more-of-what-it-takes.pdf.
“The coronavirus outbreak is likely to leave the public finances much more exposed to a sudden increase in interest rates or rise in inflation. In these circumstances, it can be tempting for governments to continue to rely on their central banks to affordably finance what becomes a structural deficit – either through continued direct monetary financing or pressure to keep interest rates low. In the UK, a permanent return to the so-called ‘fiscal dominance’ of monetary policy would risk an increase in inflation. In addition, it would prove to be self-defeating fiscally, given that inflation-linked debt accounts for 25 per cent of the Government’s total outstanding debt stock. Both the Treasury and the Bank of England should have an incentive to end monetary financing of deficits as quickly as possible, in order to keep inflation expectations firmly anchored around the 2 per cent target.
It is only by making a credible and binding commitment to return its deficit to more sustainable levels that the Government can demonstrate to markets and the public that it will not continue to rely on monetary financing or interest rate suppression to meet its liquidity needs, or to keep its debt serving costs affordable.
Therefore, fiscal policy needs to commit to returning the public finances to a sustainable trajectory once the coronavirus outbreak is over, social distancing restrictions have been eased, and the economy is recovering. Starting from a position in which the Government does not have an operational set of fiscal rules, this would require the articulation of a new fiscal framework which should have the following features:
• A credible long-term objective of returning the public finances to a safe and sustainable position;
• A medium-term target that translates that objective into a path for some measure of the deficit over the five-year forecast horizon; and
• A set of transparent conditions under which the framework becomes applicable, linked perhaps to the lifting of public health restrictions and the restoration of the economy to sustained growth.
Based on previous Resolution Foundation work, an example of a revised fiscal framework achieving these objectives would be one that:
• Stabilises and then improves net worth within five years of the end of the outbreak and restoration of sustained growth. Given the potential for the Government to be forced to acquire a large stock of private sector assets and liabilities during the pandemic, a focus on managing not only the stock of debt but also the Government’s wider balance sheet is desirable;
• Keeps the gross debt-interest-to-revenue ratio below 10 per cent at all times. This would ensure that the Government takes timely action to reduce its liabilities if borrowing costs begin to rise; and,
• Returns the current budget to surplus within five years of the end of the outbreak and restoration of sustained growth. This would allow the Government to borrow to invest in infrastructure and other assets that help support the post-outbreak economic recovery.
Any fiscal consolidation should ensure that the burdens of adjustment are shared This Government’s commitment to this new framework would be helpfully underscored by the announcement of specific measures that help to deliver its fiscal objectives. A tax surcharge on higher earners who were able to continue working full time during the lockdown and recovery would not only support the credibility of the Government’s commitment to restoring fiscal sustainability, but also ensure that all citizens share the burden of restoring the economy and public finances to health. “
Meant to say previously- surely a progressive alliance is a much more realistic prospect now that Starmer is Labour leader. Wera Hobhouse deserves credit for suggesting it.
The Lib Dem’s consistently puts forward the most redistributive manifestos and this is something to be proud of, but to realise such an agenda in practice requires co-operation on the centre-left.
@ Joe B,
“Neither I or any of the above have likened government finances to that of a household.”
Of course you have as I previously explained. Your story is that somehow the OBR can calculate how much tax revenue will come in, then you’ll add on how much you’re prepared to borrow to arrive at a figure for what you’ve got to spend. There’s no allowance for meeting an inflation target, or any allowance for preventing too much unemployment, or what the participants in the economy may wish to save. It’s what households should do not currency issuing governments.
” Tax yields are not dependent on government spending they are dependent on economic growth”
Economic growth is dependent on the Government pursuing correct fiscal policies which involves Government spending the right amount.
Yanis Varoufakis puts it like this:
“The economic case against austerity is cut and dried: An economic downturn, by definition, implies shrinking private-sector expenditure. A government that cuts public spending in response to falling tax revenues inadvertently depresses national income (which is the sum of private and public spending) and, inevitably, its own revenues. It thus defeats the original purpose of cutting the deficit. ”
https://www.project-syndicate.org/commentary/three-tribes-of-austerity-by-yanis-varoufakis-2018-08?barrier=accesspaylog
I’d probably put it that the Government’s Debt is equal to Financial assets of everyone else. Therefore the Govt has to be in debt for us to have those assets. Without these we’d have a barter economy. You’d probably argue that we could still have a barter economy and create wealth too. To some extent that might be possible but the next time I’m in need of a loaf of bread I don’t want to have to find someone who needs their lawn mowing in return!
So we want the Government to spend the right amount of money into the economy to create the conditions for a successful economy. If the people involved have no idea how their own economy works we are going to have big problems. In fact, we do have big problems and that’s hardly surprising given the level of misunderstanding.
Lib Dems should stick to running town councils. You are good at that. That’s because the town councils are households in economic terms. They do collect taxes and conduct their spending in the way you think should work for currency issuing governments too.
Peter Martin,
real experience of government is crucial. The kind of experience that Giles Wilkes has.
Public spending in the economy is based on political decisions over time of what services will be provided by the state and what will be provided by the private sector. That varies country by country and is not the determinant of economic growth or prosperity. You can have equally prosperous economies based on high or low levels of taxation and public spending. What determines standards of living is the skill base of the workforce, level of productivity and international competitiveness. That can be enhanced by intelligent industrial strategy and directed state investment but not replaced by either monetary or fiscal policy.
Japan has been running increasing fiscal deficits for decades without generating any economic growth and is unable to raise its tax yields as a consequence.
The whole problem with the macroeconomic austerity argument in the UK is that it is largely based on labour spin. It has no more credibility than the Tory argument that Labour over-spending caused the financial crisis, Both arguments are equally fallacious. Overall spending was not cut during the coalition. It increased. The mistakes were in cutting investment spending and local authority services that were needed to develop productivity in the regions. There was no cut in overall state spending into the economy. That only fell proportionally as the economy grew, generating corresponding increases in tax yields.
https://www.birminghammail.co.uk/news/news-opinion/cant-end-austerity-because-weve-13286519 “Politicians of all stripes have to be more honest with voters about the need to accept a lower standard of service or to pay significantly more in tax”. Liberal Democrats are honest enough to point out the latter.
It is not a question of the government spending the right amount of money. The BofE will ensure there is sufficient money in the economy to meet the needs of firms and households. It is what the government spends money on that makes the difference.
Keynes precept was right “the time for austerity is in the boom not the slump”. Now is the time for fiscal expansion, just as it was in the first years of the financial crisis. The tax increases will come later when the recovery is well established and borrowing is directed at investment in addressing the structural weaknesses in the UK economy, rather than financing current spending deficits.
@ JoeB,
“Japan has been running increasing fiscal deficits for decades without generating any economic growth and is unable to raise its tax yields as a consequence.”
Of course. What do you expect?
If the Government handed out £1000 cheques to everyone to try to stimulate the economy but we all saved the money, the effect on the economy would be zero. However, the Govt would be increasing its deficit spending to a considerable extent. So deficit spending per se is economically neutral. It’s just a sign that the non Govt sector wants to save.
Just for a change why don’t you engage on an intelligent basis and either make some detailed argument why I’m wrong, on just this particular point, or admit that I’m right?
Peter Martin,
This former governor of the Bank of Japan offers some advice as to the lessons to be learned from Japan’s experience https://asia.nikkei.com/Opinion/World-has-learned-wrong-lessons-from-Japanification
“Aggressive monetary policy has led to perpetually low interest rates because of the very mechanism of monetary easing itself. Its effectiveness derives from bringing forward future demand of private economic agents to the present. If the economy is faced with a temporary shortfall in demand, this policy works.
But if the weak economy is not caused simply by the lack of demand — if there are bigger structural issues suppressing it — the very act of monetary easing will make the “natural rate of interest” fall faster, and eventually it will get stuck.
What is crucial is the correct diagnosis of the fundamental cause of low growth. Was the problem facing Japan over the decades a temporary demand shock? The answer is clearly no. The challenge was how to boost the potential growth rate when you have a rapidly aging population and fast-advancing technology and globalization.
You need, somehow, to increase the workforce and their productivity. These problems could not be solved by just shifting the timing of expenditure. You can only front-load or buy time to a certain extent. This should have been a lesson we came to learn from Japanese monetary policy experience.
What is worse is that prolonged monetary easing tends to lower productivity growth by keeping inefficient businesses alive. In essence, Japanification is the logical consequence of the wrong application of mainstream macroeconomics.
Interestingly, economists and some policymakers are now calling for the more active use of fiscal policy — that is, through government expenditure rather than further monetary easing. This is an irony, since its effectiveness also derives from the front-loading of future demand.
The difference with monetary easing is that fiscal front-loading is more direct and the resulting debt increase is mainly a public one, rather than in the private sector.
However, regardless of which macroeconomic policy is deployed, how much you can front-load future demand is ultimately constrained by how much you can grow.
Unfortunately, mistaken lessons concluded deflation was the most important challenge, rather than anything else, and Japan was slow in addressing the issue of raising productivity. If we are to talk of Japanification, it is this phenomenon that is worthy of its name. Sadly, we are now observing it outside Japan.”
@ JoeB,
You’re totally incapable of sticking to the point, aren’t you?
I explain, in the simplest of ways, why increased fiscal deficits (an argument made by yourself) don’t necessarily create a stimulus and you reply with what the governor of the BoJ thinks about past monetary policy!
There’s really no point to all this.
Peter Martin,
I am reminded of the old Tommy Cooper joke about a man who goes to the doctor complaining of a pain when he raises his arm. The doctor’s advice – stop doing it. Comedy aside – It is good advice for fiscal policy that doesn’t work as intended . It hasn’t worked in Japan for the reasons explained by the former governor of thr Bank of Japan.
“regardless of which macroeconomic policy (monetary or fiscal) is deployed, how much you can front-load future demand is ultimately constrained by how much you can grow.”
“Unfortunately, mistaken lessons concluded deflation was the most important challenge, rather than anything else, and Japan was slow in addressing the issue of raising productivity. If we are to talk of Japanification, it is this phenomenon that is worthy of its name. Sadly, we are now observing it outside Japan.”
This is the real-world experience of a man who has been actually engaged in addessing the issues faced by an advanced economy of 126 million people.
If you mean by big ticket issues, whatever that is, more privatisation of public services which he so often alludes to in speeches then it’s a big no from me. We can only hope Layla or Wera will usher in the new social liberal era so many of us desire. Every party is more or less talking about the green economy and Labour have been talking about carers since the start.
@ Joseph Bourke,
To understand what is happening in Japan you need to look at the sectoral balances. Japan is running an external surplus of something like 3 or 4% of GDP pa. Th Government is running a budget deficit of about 4% too.
So we have the foreign sector and Govt both putting money into the Japanese economy so it must mean the domestic sector is saving on an annual basis of around 7 or 8%. In other words the Japanese Govt is owing increasing amounts to the Japanese people . There’s an issue too that if the money is coming in in say US dollars the Japanese central bank will have to create Yen to satisfy Japanese exporters which adds to the National Debt. So the big exporters tend to have bigger National Debts than many would imagine. Japan has something like 240% of GDP , Singapore has 120% Even Norway has 37%. Many people would expect Norway to have no debt at all. Why, with all its oil money, would it need to borrow at all?
So if the Japanese people are wanting to save big time it really doesn’t follow that a Govt budget deficit represents any form of stimulus at all. If the Japanese govt wants its economy to expand it simply needs to spend more and keep on spending until inflation starts to be a problem.
Everyone agrees that if Government spends too much it can generate higher levels of inflation than is desirable. The Japanese govt is no exception. They are worried about deflation, inflation is about 0.5%, and they can’t meet their inflation target of 2%.
They should stop pushing all the responsibility onto the BoJ and just spend more! It’s a great problem to have -except it’s not really a problem at all.
Peter Martin,
this is a 2019 article analysing the components of Japan’s sectoral balances https://www.jcer.or.jp/english/household-savings-rate-going-up-or-down
The household savings rate has been around 2% in recent years. Net lending by the domestic sectors to overseas, was almost equivalent to current account surplus in the balance of payments statistics at 4.1 percent of GDP in 2017.
The data on domestic savings shows a falling trend (Figure 5). While the fall in household savings is somewhat offset by the rise in corporate savings, negative savings by the general government contributed to the fall in domestic savings.
However, domestic investment did not remain the same; rather, it fell. It explains why the net lending by the domestic sector does not show a falling trend.
“Whether household saving rate is going to fall again, and whether current account surplus is going to vanish is an issue which has important implications for policies. In particular, for a country like Japan with high government debt, it is of vital importance whether we have to depend more on foreign savings or not. The earlier current account turns into deficit, the quicker we need to achieve fiscal consolidation. The development of household savings will need a closer scrutiny.”
Japan like other countries will need to support its economy through the pandemic and beyond in the short-run, However, its fiscal spending until recently has ended up on company balance sheets and sits there without being invested in productive assets doing little good (unless it is applied to debt reduction to repair balance sheets). Its spending needs to be directed to a more useful purpose e.g. investments to reduce reliance on fossil fuels and providing subsidised childcare and active family policies to support maternity leave that would allow for greater participation in the workforce by women. Such investments can increase demand in the short-run and ease fiscal pressure in the long-run as the sustainability of social security depends on fertility rates and future population growth.
Joe,
The household savings rate is just a part of the savings of the domestic private sector. The savings of the PDS has to equal the sum of the Government budget deficit (which the deficit being expresses as a positive number) and the overseas surplus. So as I was saying previously you shouldn’t be at all surprised that an economy can be under-performing and in state of permanent semi recession at the same time that Govt spending seems to be high on the basis they are running a budget deficit.
It’s just that the spending isn’t high enough. Or, if you are of a more rightward persuasion, taxes are too high. Ironically, the right will argue for lowering of taxes with the argument that lowering the rate will bring in higher yields. The so-called Laffer effect.
And that can produced a positive outcome. But not for anything to with the Laffer effect.
I am still chuckling at the idea of Scotland adopting the Vietnamese Dong after independence.
@ Paul Reynolds Paul, very gently, has it ever occurred to you that that sort of comment is exactly what raises hackles and stimulates nationalism north of the border ? Somewhat reminiscent of Churchill talking about India in the 1930’s.
No doubt the SNP will still be chuckling about a party that could only poll 2.7% in a London constituency not so many years ago.
More than half the countries in the world, today, have some kind of fixed-value system — they link the value of their currency to some external standard, typically the dollar, euro, or some other international currency. An Independent Scotland might link to the pound (as Ireland did after Independence) or the Euro on the basis that they would rejoin the EU in time.
There was a large gold nugget found in a Scottish river last year https://www.bbc.co.uk/news/uk-scotland-50645322 and commercial mining has just started. If there is enough of the stuff in the highlands an Independent Scotland could mint their own gold sovereigns and issue gold-backed currency.
In the end, a gold standard system is just another fixed-value system like a pegged exchange rate or currency board. We might all end up using currency issued by the Bank of Scotland and bitcoins if sterling keeps tanking in the way it has done since the financial crisis.
@ JoeB,
The pound isn’t “tanking”. Inflation is about 0.5%. That’s all that should matter. It’s value to other currencies isn’t for us to decide. Just why “the markets” valued the pound at over €1.60 in 2000 then down to €1.08 in 2008 and up slightly to €1.11 now is a mystery to me. I know Lib Dems like to put everything bar the weather down to Brexit, but the first change was clearly nothing to do with it.
In the early 00’s the Barmy Army in Australia, between chants of “balls and chains” used to boast of “three dollars (Aussie) to the pound”. They could well afford to drown their sorrows in Aussie bars. Over successive tours that dipped to “two dollars to the pound” and then it was the Aussies turn to chant “we’ve got loads of money” (yes they’ve watched Harry Enfield too) as the pound dipped to about A$1.50 and the Barmy Army had to settle for a much more sober time as they were priced out of the Aussie beer market.
It’s now about A$1.80 to the pound. So what will it be next year and the years following that. I really don’t know. Anyone who does will be able to make a fortune on the forex market. And if they aren’t doing that they don’t know either.
The AV referendum left us campaigning for something that was not on the ballot paper. We were told at federal conference that many of us supported STV and therefore would not support AV. True, we should campaign for what we believe and not for someone else’s policy.
Gordon Brown was not our leader. He is an avowed socialist. If he wanted this kind of reform he must have considered the interests of the Parliamentary Labour Party after the 2015 general election without a double-act with Tony Blair. A Labour MP with a sufficiently high vote could hope for re-election in the same constituency under first past the post or under AV, but this policy was not passed through the Commons. Labour opposed reform vigorously. Their MP spokesman is now mayor of London, and may have benefited from second preference votes, derived from the actions of a party which likes a duopoly of power. Can they count higher than two? What happened to their vote in Scotland after the 2014 referendum when they seemed to be too close to the Tories?