Now I am living in Somerset not far from Hadspen, I am reminded of the family tensions and tragedy that fell on to my Hobhouse grandfather and his three brothers.
Stephen was a Quaker and conscientious objector, Arthur and my grandfather Jack fought at the front and survived, and Paul was killed. Paul died in the German offensive later in the war and his body was never recovered. Stephen’s memoir to his mother records the frantic search for his whereabouts and the vain hope that he had been captured rather than killed.
The generation that survived WW1 – and I particularly remember Harold Macmillan’s memoir – was a generation that said ‘never again’. Of course, a European war did happen again 20 years later, caused to some degree by the harsh 1919 settlement.
The French and the Germans first understood how Europe needed to change. They wanted to build a permanent peace. And the result is the EU.
In Britain, there is a hostility to the concept and practice of a connected, interlinked, collaborative and peaceful Europe. Many British people don’t want to be part of it. They want out.
It seems to me that this British approach to other European countries is very similar to the approach taken by our predecessors leading up to WW1. Themes like Balance of Power, Divide and Rule come back in a new form. It is the politics of how an imperial power retains power by dividing and weakening its rivals.
Going back in Britain to this Us and Them approach – to see Europe not as collaborative but as divisive – might have two consequences:
First, the marginalisation of Britain as the rest of Europe continues to collaborate.
Second, the success of this return to the competing nation state, the disintegration of the EU and, probably, the return to war.
To remember WW1 is to remember and learn, not to remember and repeat the mistakes one hundred years later.
Tackling Climate Change isn’t a new political idea. But it still doesn’t have support from the right of the political spectrum in the UK.
When difficult decisions have to be made about our future energy generation, issues of zero carbon or sustainability become, for some, unimportant. But, for others, me included, zero carbon and sustainability are key criteria for the choices we make on energy.
In making choices, we need to distinguish between how we generate electricity and the other direct uses of energy – for example vehicle fuel and gas for heating and cooking. With some exceptions, there are few current alternatives to petrol and diesel for vehicles, and the same is the case for gas in the home. But the choices for electricity generation are real, and these are choices about investment, price and sustainability.
I argue that the greatest political priority for energy is to generate all our electricity as carbon-neutral. We are a long way off this, but if it can be achieved, then all sorts of other technology doors open. Cars powered by sustainable electricity have, for example, a totally different environmental footprint to cars powered by petrol or diesel. In contrast, an electric car now which uses electricity made from fossil fuels is only different from a petrol or diesel car in terms of efficiency.
The UK has a poor record in generating electricity sustainably. The dash for gas for the last 20 years has been investment-easy and, in its favour, preferable to coal (without carbon capture). However, it should be seen as temporary and all efforts should focus on renewables. These now account for about 15% of UK electricity. The priority is to increase this percentage dramatically over the next decade.
Renewables need government investment to get them going. Solar received a big boost in the early part of this government. Offshore Wind technology is being supported within the Industrial Strategy, as is Nuclear. Tidal technology is being developed within the Catapult Programme (part of the Industrial Strategy). Without strategic government investment to develop renewable technologies, the technologies won’t be developed. The UK, as a windy island with long coastlines, bays and estuaries, should be a world leader in these technologies. The arguments in favour are environmental, the arguments against are development costs, uncertainty over technological success and a higher starting price.
In contrast, fracking is developed by big business as a way of developing new product to sell in the future. The arguments for UK fracking are for energy supply continuity and price. The downside is environmental.
In weighing up the options, therefore, it depends on the importance you place on tackling climate change. As Lib Dems we are convinced that tackling climate change is a top political necessity of our age. So the policies should reflect that. We should prioritise renewables and carbon-neutral technologies. Fracking should be considered only if we cannot square the circle without it.
Going into the 2010 General Election, the Lib Dems – particularly Vince Cable – had a reputation for economic competence. However, as a 3rd party that had been out of government for a century, the Lib Dems lacked a credibility or track record on managing the economy. For decades it has been the Conservative Party that the electorate has turned to when the economy turns bad. The shocking deficits racked up by Labour in the good years from 1997 to 2008 have reinforced the view that Labour cannot be trusted on the economy.
With hindsight, the 2010 Coalition Government has disturbed this easy contrast between the two major parties. Government no longer oscillates from one to the other. The Lib Dems are in the frame and in government, with a different approach and some different priorities.
This article sets out how the Lib Dems can usurp the Conservatives on what is normally their own territory. To make the case first requires an understanding of what the Conservatives do well, and how the Lib Dems have supported them. The second part of the case deals with the policies that deliver better economic growth, and how the Conservatives and Lib Dems differ.
Dealing first with what the Conservatives do well. They are well linked into the financial markets, and understand how governments reassure markets and get the markets to support the government. This has been no easy feat in the UK since 2010, and the Conservatives must take credit for low borrowing costs for the massive UK debt, which in turn has created flexibility for other policies and has helped to avoid a much deeper recession.
The majority of Lib Dems have understood and supported the need for the Coalition to have a robust fiscal policy and to bring the budget deficit down. From the beginning of this government, targets have been set to balance the books. It is this policy that must be hard-wired into Lib Dem thinking. Without this commitment to budget responsibility, the Lib Dems could never claim to be the best party for economic growth.
I now turn to how UK plc builds a stronger economy. And I want to start by ignoring all the ups and downs that come from temporary changes in demand. These ups and down often reflect the sentiment of the moment, a readiness or unwillingness to borrow money and a surge or drop in demand that can be reversed a year later. Building a stronger economy is about businesses having more customers, about new ideas, about new exports and about new jobs.
I will identify here four important elements for successful business, and contrast the approaches of the Conservatives and the Lib Dems.
1. Encouraging the entrepreneur
A country that values and promotes new ideas and new business will have more entrepreneurial activity. Government can help in small ways like having light touch regulation for small businesses, and helping to keep costs down. Business rate relief for businesses in small premises has been a good example of this. The Conservatives have the edge on this agenda.
2. A motivated and fired up workforce
Successful businesses get the most out of their employees, and that means a happy business environment with long term employment and a culture of debate and discussion. The Lib Dems naturally reflect this sentiment – ‘enabling everyone to get on in life’. The Conservatives can take a more brutal view with a greater readiness to get rid of people. It harks back to an ‘us and them’ attitude, somewhat out of line with modern thinking.
An excellent example of businesses valuing their employees is apprenticeships. They are enjoying a renaissance under this government, and the imprint is a Lib Dem one.
3. Government support to make businesses better, and to support key sectors.
Vince Cable is doing some radical stuff at the Department for Business, Innovation and Skills. He believes in government helping business. He’s not talking about government supporting individual businesses, he’s supporting business sectors. For example, he spends a great deal of time supporting the UK Automotive Industry and helping these companies source more of their supply chain in the UK. He’s doing the same for the aerospace industry, and government is helping to build a stronger UK renewables industry.
This contrasts quite starkly with the Conservative view which is to leave things to the free market. This has been a disaster for British manufacturing.
George Osborne’s visit to China neatly illustrates the different approaches. The Conservatives want Chinese money and want the Chinese to buy into British business. The Lib Dems want UK businesses that are already here to get better and grow organically. The first is a quick fix, a transfer of finance and ownership. The second is long term growth of UK manufacturing.
The example of the potential new nuclear power station at Hinckley Point is revealing. The Conservatives are busy getting in foreign technology. Lib Dems are, through the Industrial Strategy for Nuclear, supporting the development of technology needed for a UK nuclear industry.
The Lib Dems have the better long term vision here. Their vision creates long term jobs.
4. World Trade and the EU
The Liberal Party is historically the party of free trade. This policy evolved out of the campaign against the Corn Laws. The case for free trade – in contrast to protection – was and is that it makes for a better standard of living, more trade in imports and exports, more innovation, more jobs and a more dynamic business environment. The counter argument is an interest based policy which protects the interests of the existing established business.
Liberal Democrats see free trade as a facilitator of prosperity. Conservatives see free trade more pragmatically, a policy that can be supported or discarded depending on the political winds. This is well illustrated at the present time with Euroscepticism, which is a sentiment threaded through with nationalism and protection. Similar arguments existed one hundred years ago.
Modern trade is increasingly collaborative rather than exploitative, and Lib Dems should be proud of that – it reflects a modern free liberal world. Business is about working with other peoples in other countries, working together and all taking the benefit. Too often the Conservative philosophy is making money out of people,
In conclusion, across many of the building blocks of a successful economy, the Lib Dems have the better ideas and are implementing them in government. However, for the Lib Dems to build the reputation for economic competence requires us to recognise and absorb what the Conservatives do well, and to build it into our political narrative.
Fast forward to 2015, and the upcoming General Election.
The Conservatives are telling the country how much better they will govern if they weren’t held back by the Lib Dems. Labour will be telling us that they will save the NHS and have the answers to getting Britain out of stagnation. The Lib Dems will not feature in either of these plans. In fact, the Tories and Labour both hope that the Lib Dems are wiped out.
So what will the Lib Dems be saying to the electorate. We’ll be telling them what we’ve achieved in government, and what we’re aiming to do. If that’s all, we’ll get out our core vote of 10%, pick up another 5% here and there, and lose the remaining protest vote that has worked so well for us in the past.
This is why the Lib Dems need another narrative, and that narrative is about how coalition government is better. Good coalition government brings the best out of each coalition partner, it means policy is the best bits of each party. There’s a more open debate, an emphasis on the need to persuade, and the policy results are grounded in a wider consensus.
The mid term Lib Dem approach of differentiation from the Conservatives supports this approach, but only if Lib Dems are prepared to say which bits of policy are shared with the Conservatives, and which bits are part of the compromise between parties with different outlooks. A classic example is the debate on the 50p income tax rate. I don’t find it a problem that Lib Dems state very openly that this was a change that we accepted as part of the Conservative agreement to raising the tax threshold more quickly than expected.
Coalition governments aren’t about two parties coming together for 5 years and acting as one party. Coalitions are about two parties working together in the national interest and bringing in legislation that is a compromise for both parties and for that reason gains wider public support.
Wider public support for government bills is better government. That’s what coalition government can deliver. The benefit of coalition government is our core message to the British people in 2015.
William Hague has updated Norman Tebbitt’s “on your bike” exhortation from the 1980s. The Telegraph reports:
In a blunt message to the country’s bosses, he said they should stop complaining and get on with the business of wealth creation.
His comments, in an interview with The Sunday Telegraph, are a direct riposte to business leaders who criticised the lack of measures for economic growth in the Queen’s Speech.
“There’s only one growth strategy: work hard,” Mr Hague said. “I think they should be getting on with the task of creating more of those jobs and more of those exports, rather than complaining about it.”
Asked if his comments could be compared to Lord Tebbit’s “on your bike” message to the unemployed in the 1980s, Mr Hague said: “It’s more than that. It’s ‘Get on the plane, go and sell things overseas, go and study overseas’.
I think that William Hague is talking directly to UK manufacturers like me. The business I own is a niche market industrial textiles business in Rochdale. We are between the textile and rubber industries, supplying into aerospace, automotive and heat protection.
I have understood a couple of years ago that the UK manufacturing base is now too small for my business to survive long into the future. Turning the business into a European business is my priority.
The bad news is that William Hague’s xenophobia and euroscepticism is making exporting harder. I’ll be exporting to the Eurozone, my customers will be paying in Euros. Being a manufacturer in Britain sometimes feels like being in the mid-Atlantic. Exporting for my business is not about marginal competitiveness when £ Sterling devalues or appreciates against the Euro or Dollar. Manufacturing is a long term business, it is more than anything about trading and competitive stability.
It isn’t easy for manufacturers to build long term technical and supply relationships with Eurozone companies while the Conservative Party is preaching nationalism and cutting constructive links with our European partners. All that will happen, and is happening, is that international companies are moving their manufacturing into the Eurozone and into countries that are better linked into the Eurozone.
William Hague’s hope is that the Euro collapses. Scarcely a day goes by without the shrill doom laden carping from British eurosceptics. But when it doesn’t?
The Liberal Democrat Spring Conference in Gateshead showed a party confident in its ideas and confident in discussing and disagreeing about ideas. This is good news for the party, because coalition government is absolutely about discussing and winning the argument.
There’s no doubt that raising the tax threshold for the low and average paid while raising taxes for the wealthy is Lib Dem, as is the Pupil Premium that allocates education money directly to the children who start life at a disadvantage. While we are still in the midst of the NHS debate, it’s increasingly clear that the Lib Dems are the party who are protecting the NHS against the acquisitive Tory business interests lining up to cream off services and make some serious money on the way.
But it was Vince Cable that really got me thinking. He’s already been thinking about how we rebuild Britain’s manufacturing, and has identified some serious problems. Not least that everything seems to be foreign owned.
However, one sentence sprang out at me from his speech to the conference: ‘Bringing the supply chain back to Britain’.
From a Rochdale manufacturing perspective, the outlook is about slowly reversing the flight of manufacturing out of the country. It will be backed by funding initiatives like the Regional Growth Fund, or the Green Investment Bank. Vince will champion the new industries, like green energy, and will do his best to ensure Britain can manufacture this capital equipment.
This is a good start, but I favour an even more interventionist approach. Government initiatives are targeted at specific deprived areas and at specific product areas. These need to be widened. It won’t be good enough to set up a new bank just for Green investment, what is really needed is banks that invest in new manufacturing plants and processes across the country and across sectors. The publicly owned banks should be the vehicle for this.
There needs to be a fundamental shift of money from the City of London into the wealth creating industries of the whole of Britain. For the last 25 years, financial interests have sucked out wealth from the rest of Britain. It’s now time for the money to move in the opposite direction.
How often have we heard of flagship UK businesses paying little or no UK corporation tax? A lot.
It is not, however, a subject loved by the companies themselves or their shareholders. If tax can be avoided off-shore, then the companies themselves and their shareholders can benefit – and the UK government and UK public services suffer.
There have been some high profile cases in the last few years. Amazon recently has been exposed for registering its UK operation in Luxembourg and gaining a tax-competitive advantage over UK booksellers. Vodafone were exposed for using Luxembourg to avoid tax, then doing a cosy deal with HMRC.
The real question is why the UK should tolerate any tax evasion by companies who are trading and making money within Britain. Trade in Britain and you pay tax in Britain. That should be the expectation and the requirement.