In 1997 labour inherited a balanced budget from the Tories and for well over the 10 years we had Gordon Brown telling us that he had got rid of the boom and bust cycle. From 2009 the deficit had ballooned to £171b. This deficit was higher than the recessions of the 80’s, the 90’s and even when the Labour party went to IMF cap in hand in ’76 (another fine mess they got us into).
Economic orthodoxy maintained by labour and Tories for the 40 odd years ensures: – the same economic models, over reliance on an unbalanced economy, poor regulation and over reliance on financial and service sector. Failure to manage the housing stock massively increased personal debt.
Labour and Tories ignored manufacturing which meant it dwindled over the decades. Rarely have we seen from the mid-1980s ‘made in Britain’; we have increasingly relied on imports that further unbalanced the economy. All this failed spectacularly in 2007, the fact the British economy is still contracting is a clear evidence of this failure.
This was followed by under capitalised banks that stopped lending to SME who have always fuelled true growth in the British economy. Today we have poor exports, high unemployment, negativity equity, high personal debt and a lingering unbalanced economy which all badly hits the Treasurer. That is why the government is borrowing more than ever and why we are still in a debt crisis.
Other than Tony Blair no Labour Government has ever reduced unemployment in their term in office. Eventually they revert to high borrowing and high taxes to pay for it. This is Labour’s orthodoxy.
The Tories are no better. Their answer seems to be to cut against market led recovery. Tories in this coalition are locked into this mind-set; they can ignore Labour the opposition but we are part of a coalition and we can’t be so easily ignored. I believe that we signed up to this coalition to help the British people and get the country out of the mess labour left us in, in 5 year (which is now not going to happen). We didn’t sign on to help the Tories toddle along pushing old Thatcherite policies – their Economic orthodoxy.
We as a party need to be more pragmatic. We are borrowing £1 in £7, there is room to borrow for “good investment” (and this is the time to borrow with such low interest rates). INVESTMENT in infrastructure / manufacturing / housing / transport will generate revenue for the Treasurer, will create jobs (reduce the debt burden), will provide an opportunity for export and will help us to correct this unbalance economy especially if the recovery and investment is pushed regionally.
Investment that gives added value. Genuinely pushing banks to lend to SME’s, tax breaks for new start-ups, help with training, investment in areas and sectors where growth will drive up revenue and unemployment down. These are the area that Government need to push.
To reduce the deficit we need to grow the economy. A growing economy will generate revenues that will pay off the deficit. Once we clear the deficit can we reduce the debt. We as Liberal democrats need to move away from traditional economic orthodoxy and focus on what will work to grow our economy and expand our export base. Our allegiance is not specific to the labelled working or upper classes but to the British public.
Go for Growth
Cllr. Tahir Maher