After the Crisis: Now is the Time For Reform

Robert Brown and Nigel Lindsay

Foreword

Coronavirus has changed the world - leaving many challenges but also huge opportunities. There will come a time when the crisis recedes. There will then be political traction for major reforms – economic, social, political and personal - for a short window. Now is the time to seize the moment and build a new world based on Liberal values.

There is a parallel to the middle of the last war when great minds produced the Beveridge Plan, the concept of the United Nations, plans for the welfare state, Keynes’ work that led to full employment and the Bretton Woods system and even the ECHR. Beveridge in particular proposed that all working people should pay a weekly contribution to the state in return for benefits be paid to the unemployed, the sick, the retired and the widowed, and was designed to create a socially just system, a comprehensive system of social insurance 'from cradle to grave'.

The questions and, even more so, the programme and ideas must be informed by Liberal values and analysis; some of our well-developed policy platform will continue to be relevant – but it is clear too that the old policies by themselves are likely to be too timid, too inadequate and too parsimonious to meet the needs of the changed world. New radical, innovatory ideas are required.

We now need a new generation of heavy thinkers to develop plans for a new, better society after this crisis. After the 2008 crash there was a widespread feeling that things must change – but they didn’t. This time, we need a clear plan of action to make sure they do. Recently, at the Federal Board, interim Liberal Democrat leader Ed Davey MP suggested that we ought to be thinking about this in a high level, “blue skies” way.

Is there scope now, while the crisis lasts, for setting up a high-powered group (or groups) of top Liberal-minded academics to do the same as Beveridge and Keynes? It may be that some of them are not able to do their normal job and have unaccustomed time available. Discussion amongst the right people might produce more focused and innovatory questions than we are posing here.

This is a summary of a paper based on work by Robert Brown and Nigel Lindsay, augmented by suggestions from Julie Cafferkey, Dave Gorman and Mark McGeever. It sets out our concerns, the potential for building a better Scotland and a better Britain from the chaos of crisis, and the questions we want to ask sympathetic academics and other experts to answer.



Summary of Recommendations - a Liberal Democrat Ten Point Plan

1. Recognise that the coronavirus crisis has changed the world

There will be a one-off political opportunity to make radical changes in political and public thinking, to restore confidence in democratic politics, to abandon the old issues of identity and selfish nationalism and to create a new domestic and international order based on partnership, the equitable and sustainable sharing of wealth and resources, human rights and civic commitment.

2. Establish an “After the Crisis” expert panel

Set up a group of Liberal-minded academics and politicians to “blue sky” the economic, political and social landscape likely to emerge after the crisis, build on the emerging public mood of greater civic commitment and develop practical policies to deliver a more Liberal, more equitable, more sustainable society – a world where basic rights to food, shelter, medicine, basic income and full opportunity in life are guaranteed - a new “Beveridge Social Charter” for people.

3. Establish a panel of “insurgent” economists

Recognising that orthodox economists have failed to foresee or remedy the damage caused by the 2008 banking crisis, identify non-orthodox, liberal-minded economists to advise how the country’s resources can best be harnessed, the economy restarted, the coronavirus crisis paid for, personal life debt commitments organised and investment in the future “opportunity country” delivered, without unduly burdening the current or future generations – perhaps a new Marshall Plan!

4. Establish a panel of epidemiologists, health planners and other appropriate experts – to advise the Liberal Democrat leadership team on the implications of the coronavirus crisis for the NHS and health planning, and the changes necessary to produce a flexible, responsive, comprehensive and properly funded National Health & Wellbeing Service

5. Identify Research Capacity

A suitable group of researchers or a Thinktank resource will be needed to develop proposals emerging from the three Panels.

6. Hold a series of online discussions within the Party

These should bring together key Party thinkers and strategists to consider the overall strategy and the proposals emerging from the Panels and from other work

7. Examine the Emergency Response processes

We need to identify improvements in planning, the challenge function and procurement, based on a more effective national response linked with more vigorous and independent local and regional planning and procurement.

8. A New Sunrise Deal for Communities

After the lockdown, local communities should be rewarded and enlivened by investment in construction, parks, libraries, and brightening up local environments. There may be scope for the investment made possible by quantitative easing to be directed to useful community-focused purposes like these, rather than into share support and other such schemes.

9. A new start for Britain – the time for Federalism has come

Sterile debates over nationalism and independence have been overtaken by the crisis. We need to identify the structures of government that will best harness the new sense of national unity and simultaneously recognize cultural and linguistic differences by assigning power to the most appropriate level. A federal Britain is likely to be the best framework within which to achieve this.,

10. Invest in a “future opportunity” country

We shall only succeed if we can deliver a more balanced, more equitable society. There must be true opportunity for everyone, not just those born with wealth or educated at Eton.


The Core Issues

People now think differently about all sorts of issues - and all sorts of things previously said to be impossible have been done:
 People have been guaranteed income, food, shelter and jobs by the State and homeless people have been taken off the street and housed in hotels
 The Government has provided enormous billions of pounds to prop up business and society
 Society has recognised that the NHS, care workers, bin men, front-line service staff are more valuable than hedge fund moguls or financial services whizz-kids
 The value of public services provided by public authorities has been rediscovered
 The Climate Change crisis has been given an unasked but beneficial pause in the over-exploitation of resources and damaging processes
 IT, home working, and home education are making major leaps forward

But the crisis has thrown up major challenges too:
 The ability of the UK to procure urgent items like PPE and virus testing has been shown to be woefully lacking
 Exit from the EU and national competition has got clear and damaging downsides
 Financial markets are still failing to support society’s needs and build savings
 The growing gap between obscene wealth and grinding poverty remains unchallenged while many families operate with little or no margin of security - in food, finance or wellbeing
 Third world countries have had huge problems in delivering lockdown without causing starvation and disease

This all needs proper scoping from a political angle; this paper is intended to start the process.

And the top ten challenges:

1. Paying for it
2. Re- starting and re-engineering the economy
3. Tackling Climate Change
4. A new Social Contract guaranteeing home, food, basic income and opportunity for all, and building a more equal and equitable society
5. A new democracy in which we all have a stake - overcoming the identity divisions, modernising the constitution, recognising pluralism and subsidiarity, community re-empowerment, citizenship
6. Lifestyles for the 21st Century - building communities on a new basis, re-planning town centres, encouraging wellbeing,
7. Recalibrating work, wealth and reward
8. Revaluing the public interest and the public realm
9. Reforming the response to crisis
10. Recreating international partnerships and reinvigorating international organisations; ending international lawlessness; a new deal for the peoples of the Third World

Paying for it

The bill for the costs of the crisis and the shutdown has to be paid and the economy restarted (and redesigned) whilst requiring the banking system to function for the common good, rather than the good of financiers and executives. We would in addition like to deliver a new social contract for our country, deal better with personal life debt commitments (childcare, mortgages, university tuition, pensions and elderly care), invest in the “future opportunity” country and deliver a “Sunrise” programme for brightening up our communities.

It is becoming clearer by the day that this is a huge and unprecedented challenge with a shock to the economy that vastly exceeds the great Depression. There will be major changes in demand for different economic sectors - and potentially some environmental benefits.

The people, businesses, assets, expertise and demands are still there, albeit burdened by changing needs and sometimes by crippling debts created by the lockdown. The Government has in effect taken much of this cost/debt onto the public balance sheet as a national liability.

Can the economic support costs of the crisis and its aftermath be quarantined in some way to enable businesses to restart with a bang and without the burden of “crisis” debt?

One obstacle to doing this equitably is the huge imbalance and weakness built into our economy by asset-stripping and malfeasance by hugely overpaid executives which has helped to destroy long-established sustainable enterprises (of which the banking collapse was only the most obvious consequence).

This challenge needs Keynes-Plus remedies and structures if it is not to lead to a generation of national poverty.

Beyond the issue of the huge but short term cost of the crisis, how can we pay for the longer term requirements? Options include growing the economy to produce more revenue, inflating the currency to reduce the real value of the debt, quantitative easing, higher rates of personal tax, taxing spending, borrowing and harnessing private investment effectively.

We should also look at an excess profits tax on those who have done well out of the crisis, at collecting fair tax from those who trade in Britain but declare their profits elsewhere, or taxing wealth both on an equitable basis with income, and in ways which gets at uncovenanted wealth created by community and economic activity. There should be no automatic help for businesses whose owners are tax exiles. If they don’t pay their way here, they should not expect hand-outs from the state.

These are hugely complex issues. Some measures might be justified on equity grounds but might damage economic recovery. Too heavy taxation overall or in the wrong place could inhibit investment and growth. There will be huge pressure to go back to the status quo as against building a new economy. Financial services are very important to the UK economy (and tax take) but are damaging to regional balance, democracy and equality. You can’t take extra taxes off companies which are loss-making. How do you build in an enhanced response to the climate crisis?

Some issues like a new social contract involve redistributing the annual revenue burden; others require long term capital investment; some like life’s major debts (childcare, education, mortgage, pension, care) have inter-generational aspects; yet other initiatives such as greater wellbeing might save both private and public cost.

The New Liberals argued that freedom had to mean more than the freedom to dine at the Ritz. There is a similar argument to be had today about the function and effects of economic policy and economic structures.

Re-Engineering the Economy

The economic orthodoxy of the last 40 years has failed. The ideas of Friedman, Hayek, and other so called “neo-liberal” (actually neo-conservative) economists have brought us the 2008 crash, austerity, sluggish recovery and massive inequality. It is time for Liberals to make a clean break with such thinking and to work out how to re-build our economy so that it works in the interests of an equitable society rather than just in the interest of the super-rich. "Making rich people richer doesn't make the rest of us richer"

We need not just to re-start the economy but to re-shape it. We need to guarantee adequate childcare, protect against sound businesses failing, keep people safe and rebalance the economy to take account of major structural changes. Fortunately there are economists who think beyond the failed orthodoxies. We should take account of thinkers such as Amartya Sen, Ha-Joon Chang, Naomi Klein and Joseph Stiglitz, who can show us new ways of thinking, as Keynes and Beveridge did 80 years ago.

We must also recalibrate work, wealth and reward and build a more equal and equitable society – the public have recognised that the NHS, care workers, bin men, supermarket and front lines service staff are more valuable than hedge fund moguls or financial services whizz-kids. Remuneration needs to be altered accordingly – and fast!

The financial sector needs much tighter regulation, and more effective prosecution of wrong-doing. There is no justice in a system which penalises a fraudulent benefits claim of £1,000 but applies no penalty to those who implement policies which lead to the collapse of a bank to the cost of many millions. How do we put this right?

Quantitative easing in 2008 was a magic money tree used mainly to support the value of investments such as shares and government bonds. Vince Cable has suggested that the resources released by Q.E. could be invested instead in communities, co-operatives, and other uses with a social value. How could this be done?

The government (that is, you and me) have paid huge amounts to businesses to keep them afloat during the crisis - and rightly so. What return shall we see on our investment? How can we avoid the old trap of public risk and private profit?

The UK economy is unbalanced by its reliance on financial services – often linked to money laundering, dodgy money and tax avoidance facilitated by UK “Crown dependency” tax havens. There is an immense trade in illegal drugs and other parts of the dark economy of which we know little. These things are obstacles to secure, long-term growth. They do little for the poorer members of society, inflate London at the cost of the rest of the UK, and militate against the growth of businesses that do useful things and employ numbers of people doing them. How can we build an economy that is more balanced, and rests to a greater extent on productive work?

Our new economic system must recognize the inter-connectedness of the world. This means not only a generous and well-focused aid budget, but also trade policies that contribute meaningfully to international development and the welfare of poorer populations.

Some other themes and ideas:

A. Tackling Lifetime costs - people are already sunk under a mountain of lifetime debt commitments. Is there a more sustainable way of organising it all?
B. An unbalanced society - The growing gap between obscene wealth and grinding poverty remains unchallenged. The Party is looking at the case for a basic income guarantee – and there is the interesting alternative of the Minimum Income Guarantee put forward by the New Economics Foundation. Major reforms of Universal Benefit must be delivered. We must deliver a more Liberal, more equitable, more sustainable society – where basic rights to food, shelter, medicine, basic income and full opportunity in life are guaranteed
C. Climate change and globalism - The virus has spread faster partly because millions of people routinely travel round the world. The emergency response has been more complicated because food comes from all over and manufacture is all interconnected. Is globalism a dangerous cul de sac and, if so, is there an alternative? For Liberals, does this mean a change in our approach to free trade and globalism? Can we construct an overarching free trade structure which is nevertheless focused on more local and regional food and economic chains, saving air-miles, making local responses to crises more robust, supporting local industry? Can the economy be rebooted in an anti carbon, pro nature kind of a way?
D. Work and home practices – More teleconferencing, fewer meetings in London or abroad, more mask and glove wearing by the public, concerns about catching infections on the tube or bus, new single use antibacterial wipes and gloves dumped in supermarket carparks; the end perhaps of notes and coins; more self-sufficiency in home food – what is the future shape of work, exchange and personal life?
E. Democracy – new aspects of traditional issues such as lack of effective government accountability, restrictions of civil liberties, the weakening of effective media challenge, the renewed value of the BBC and the greater role of partnership between different levels of government have been thrown up. In particular there is the opportunity for a new start for the United Kingdom on a respectful, federal, partnership basis.
F. Reducing car space in towns and cities – with concepts like the 15 minute city, reallocation of car space on roads to cycles and pedestrians (linked to an expansion of electric bikes)
G. A Wellbeing NHS – Immense changes in public attitudes and health professional practice have occurred overnight – including drastically shrunken attendances at GP practices and A & E, a new emphasis on the local pharmacy, more triage, more focused medical research and more emphasis on personal responsibility for health and wellbeing. Mental health challenges will almost certainly become more acute with a growth in agoraphobia and people reluctant to return to work/school/public transport/shops. There is a clear case now to evaluate what has happened and where it goes in terms of NHS reform – moving to a new innovative Wellbeing NHS for the modern age.
H. New challenges for childcare – A need for social isolation at work and school, the loss of grandparents remaining in isolation and unavailable for childcare, and the demands of transition at the end of the lockdown raise immensely complex issues for personal lifestyle, state policy and the economy.


There is a huge opportunity – and a duty – on Liberal Democrats to rise to these challenges and offer innovative and attractive programmes to meet them, based on timeless Liberal values and analysis brought to bear on the aftermath of the coronavirus crisis. The world has changed and so must we!

Robert Brown & Nigel Lindsay – Liberal Futures (May 2020)

Robert Brown was Liberal Democrat MSP for Glasgow from 1999-2011 and Deputy Minister for Education and Young People from 2005-7. He is now Leader of the Liberal Democrat Group on South Lanarkshire Council. He was a long-standing Convener of the Scottish Liberal Democrat Policy Committee, responsible for several Scottish election manifestos.

Nigel Lindsay was a Liberal member of Aberdeen City Council for 13 years, for some of which he was also a member of the Scottish party executive. Together, they edited and co-authored The Little Yellow Book 2012 and Unlocking Liberalism: Life after the Coalition 2014, both published by Liberal Futures.

 


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