I notice tonight that a small number of Liberal Democrats, including colleagues both on the Federal Policy Committee and the Social Liberal Forum Council, are signing up to the ‘Plan B’ being touted by Compass. I am not, and this is why – though I do welcome the debate.
(For more see http://www.guardian.co.uk/politics/2011/oct/31/lib-dems-revolt-economic-policy and http://action.compassonline.org.uk/page/s/plan-b—sign-the-petition – and the one page summary at http://clients.squareeye.net/uploads/compass/planbonepager.pdf )
1. The Compass plan involves a temporary reversal of all cuts. This manages to be both meaningless and incoherent, particularly to public bodies that have to budget for one, two or three years – what are they supposed to do, and for how long? There is a great danger that the forthcoming round of local council budgets will involve some really unpalatable decisions, and I’m far from convinced that they could take place without real pain; but there is at least some certainty among public bodies that they know what pain is coming. There are better ways to damen the impact of the cuts.
2. Greece, or in other words: The deficit is still there, and can’t be forgotten.
3. Cancelling PFI debts will harm investment in the long-term, and let the firms who Labour allowed to leech off the nation off the hook.
Several of the initiatives included in Plan B are not in themselves wrong – but the proposal as a whole smacks of impractical populism, rather than realpolitik and what can actually be done. Take the financial transaction tax proposal. This Government has the opportunity to take a lead by using the UK’s position as the pre-eminent financial centre in Europe to get buy-in from, if not the US, then at least countries such as Switzerland, using the positive momentum supplied by the current situation in the EU to provide a real ‘Green Deal’ of the sort George Osborne and the Treasury still disgracefully oppose. But unilateral imposition of a tax just kicks the UK at a time when the economy is still over-reliant on the City, and runs the serious risk that we just lose jobs and revenue.
There is much that can be done. The Government should be using Liberal Democrat policies to subsidise a new green economy, ending the disgraceful subsidy of the corrupt and failing UK arms trade through ECGD and UKTI. Capital Gains Tax can go higher. A lot more – the report rightly says – can be done to get HMRC to close tax loopholes, though Labour never did it and the Inland Revenge is in a wretched, incompetent and wasteful state at the moment. Proper reform of the banks needs to take place now, not after Osborne’s term of office. Alongside an acceleration of the Government’s plans to take more of the lowest income earners out of paying tax, and a proper land tax, you start to have a real alternative.
So I’m signed up for Plan C, because there are changes to be made. Compass – if you’d bothered to enter into proper dialogue, then you could have probably got consensus among a majority of Liberal Democrats for a very real, deliverable alternative. But you’ve missed the opportunity. You’ve gone for a handful of Lib Dems who are either already (mistakenly in my view) working with Labour on the policy review, or who are not exactly highly engaged with current debate.
More on tax and the economy, soon.
Unusually I’m in complete agreement with you Gareth!
The other issue with a temporary reversal of the cuts is that all the people who have spent the last 18 months wondering if their job will survive, and being more frugal as a result (good for them, bad for the growth it takes to lead us out of recession) spend another 2 or 3 years wondering what will happen when such temporary measures expire.
Er, the Compass document refers to LIMITING the cuts not to reversing all of them. Big difference and says it all about how you are making a straw man of the Compass approach to keep in with the orange wing of your party.
The Orange remark is genuinely funny, as I suspect those who know me will agree!
The summary of the Compass publication clearly says ‘all’ cuts, so you’re wrong.
Read the Social Liberal Forum website (see links) for Plan C which is the way to go.
And hearing Ed Balls say that Greece is right to hold the EU to ransom, I don’t think anyone will be taking Labour solutions seriously any time soon. A pity, because there needs to be a debate around Plans A and C (and indeed B).
As with most summaries it is best to read the actual document to determine where the truth lies. You may not subscribe to the orange wing of your party but you are certainly seeing things through orange tinted glasses.