Tools to make the recovery stronger, fairer

The Social Liberal Forum’s amendments to Nick Clegg’s economy motion – supported by an unprecedented number of voting representatives – seek to ensure that the party retains distinctive, independent economic narrative up to and beyond the next election. The narrative behind Nick’s motion – which, to be clear, has a great deal that Liberal Democrats can be proud of – is clear enough. Here is the rationale behind our amendments.

On housing, the motion highlights government guarantee schemes that are yet to scratch the surface of the housing shortage, and recognises that “house building remains well below historical averages.” The tools it proposes to address the chronic lack of new – and in particular affordable – homes are modest and need to go much further. The SLF proposes that rather than pooling council borrowing limits, they are lifted such that any council with a credible business plan is free to borrow and invest in social housing.

Further, we seek to change the way the Bank of England sets monetary policy. In focussing on inflation, and even with its new ‘forward guidance’ looking at the unemployment rate, the Bank is constrained in what it can do to support investment and growth of incomes – aims that we think should be front and centre in the government’s thinking. So we want the Chancellor to use the power he has under the Bank of England Act 1998 to ask the Bank to tackle weak income growth. This is a key element of a credible economic platform – ensuring that the bank takes the principle of QE and puts real muscle behind measures to invest in long-term growth.

Monetary measures alone will not, however, bring higher wages and greater investment in infrastructure – we need fiscal policy to aid a real recovery we can all benefit from as well. Hence, we seek a rebalanced fiscal mandate, one that focuses on creating more jobs. The flexibility we have called for in fiscal policy matters even more if growth is to return, however slowly – should the deficit be revised downwards in November, Osborne and colleagues might use the slack to close the budget deficit quicker than currently, planned, whereas investing in green jobs would lay the foundations for a more sustainable recovery. To be clear, we acknowledge that the deficit must come down – but that it must do so in a way that supports, rather than undermines, a real rebalancing of the economy and a material boost to living standards.

Ultimately we are calling for an economic strategy independent of the compromise position reached as a necessary result of governing in Coalition with the Tories. Adopting that compromise as our own stance going into a General Election, on such a key matter, is not what a democratic, independent, radical party is for. We have our own values, our own judgement on what a stronger, fairer economy looks like – and where the Coalition’s record is not taking us down that road, we should be bold enough to say so.

This article first appeared on Liberal Democrat Voice on Thursday 12th September

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