The Federal Policy Committee (FPC) motion on the economy proposes, among other measures:
“Balancing the cyclically-adjusted current budget by 2017/18, on time and fairly, protecting the economic recovery and bringing down Britain’s debt as a share of national income." (F6, 1 a)
The FPC’s present stance is that 60% of this balancing should be achieved by further cuts in expenditure and 40% by tax increases. SLF is supporting an an amendment by Mark Pack that says the ratio of cuts to tax increases should be 50/50.
No Liberal, least of all SLF members, should be supporting this at all, even if the 50/50 amendment is accepted. To compare it to rearranging the deckchairs on the Titanic is too weak a comparison: arguing about the rules for marbles as the ship sinks would be closer.
The deficit is not an immediate problem. Accepting that it is is cravenly swallowing, alas along with Labour and most of the media, the very successful Tory PR spin. Frankly, it never was our most urgent problem, even in 2010. The comparison with Greece is and was ludicrous: their debt was mostly short-term and held abroad - ours is mostly long term and mostly held within our own economy, and our DEBT/GDP ratio was and is relatively modest. The deficit is certainly not our most urgent problem now.
It is increasingly recognised that the Tories used and are still using the deficit as an excuse for their real aim of rolling back the state. As William Keegan write in the Observer (22/02 15):
"The truth is that the only long-term plan they have had is to seize the excuse of the putative need for “austerity” to shrink the state, in the process imparting serious social damage to the poor."
SNP leader Nicola Sturgeon also recognises in her splendid address on the economy to UCL that the obsession with the deficit could be nothing to do with reducing it, but "an ideological war to shrink the state." With the exception of her advocacy of complete independence rather than home rule (and, in my view, her misguided enthusiasm of HS2) she is saying exactly what I believe Liberal Democrats should be saying. Liberal Democrats who have not heard the speech will recognise that a genuinely Liberal Democrat economic policy is feasible if they listen to her - please do.
Not only should Liberal Democrats move on from deficit obsession, we should also stop trying to claim credit for alleged economic “success” of which the Tories boast. On their own terms (retaining the AAA rating, eliminating the deficit in one parliament) their policy has failed, and such “green shoots” as can be discerned do not bear serious scrutiny (increasing employment largely dependent of low skilled work and zero-hour contracts; still unbalanced growth fuelled by consumer debt encouraged by yet another housing boom .)
“When you’re in a hole, stop digging” is a useful maxim at this stage.
As Liberal Democrats, heirs to the party of Keynes and Beveridge, we should recognise that Britain’s urgent and present problems are unemployment, in particular youth unemployment, under-employment, zero-hours contracts, low paid casual and part-time work when full time work at decent salaries and conditions are what is needed, plus an end to the cruel removal of social security payments which causes unnecessary misery and makes food banks a common feature of our wealthy society.
Unfortunately we cannot deny our complicity on the economic policies the coalition has pursued. We could however make it clear that the so-called Plan A was effectively abandoned, and the recovery, actually in process when the George Osborne took office, resumed only after two years of “flat lining” through modest Keynesian expansion introduced, possibly largely at the instigation of Vince Cable, in 2012/13.
To be true to our principles the “Balancing the Budget” clause should not be subjected to minor tinkering but replaced by one which promises no further cuts, calls for modest Keynesian expansion (easily affordable whilst interest rates are at rock bottom; indeed we are culpable if we miss the opportunity), and relies on the consequent increases in government revenue and fall in social security payments to balance the budget in the long run. As Keynes argued, “look after the unemployment, and the budget will look after itself.” There is no need for a date.
This approach may be embarrassing for some of our leaders, who have appeared at times almost to welcome the misguided Tory policies rather than argue that they have over 300 MPs and we have only 57, and that were the figures reversed we should be doing things differently.
But better embarrassment and some tricky explanations to interviewers hoodwinked into believing that austerity is the only answer than continued dishonesty.
We have plenty of achievements of which we can be proud in our period of coalition: the fixed term parliament (we should shout much more loudly about this), shared parental leave, the pupil premium, the green investment bank, etc (I have a list of 23). We should be campaigning on these rather than trying to defend, let alone continue, an economic policy which betrays our heritage and principles.
Nick Clegg promised more honest politics: let’s give it to them, and give the voters in England and Wales a genuine alternative economic policy, as is offered to the voters in Scotland.
Peter Wrigley blogs at: keynesianliberal.blogspot.com