Why do people, and by definition me, get involved in politics

This week for the ordinary person they’re probably thinking about half term entertainment or what to give up for lent. For the politicos out there, general election fever is slowly coming to the boil, but what makes thousands of activists give up their free time, and those like me, stand for election?

I’ve had to think about it, because it’s something that crosses my mind whenever I ask a volunteer to help with a campaign, a voter asks why they should vote Liberal Democrat, or friends ask me why I am standing for an election. It’s because of the type of society I would like to see in the UK, and the world, and who I think is best to deliver, or campaign for this.

For me, it’s a world where each individual has the opportunity to make the most of how they live their life, a society strong in civil liberties and evidence based policies.

And when I look at the policies the Liberal Democrats, and by definition the coalition Government, have delivered over the past 5 years it makes me realise that there has been a liberal theme. A theme, which resonants with me, and those who give up their time for the party.

On life opportunities helping pupils from the poorest backgrounds so their future is not dependent on their birth; giving an income tax cut for millions of ordinary working people; shared parental leave so families can decide how best to care for their children; ensuring the state pensions are delivering a dignified retirement.

Scrapping ID cards for civil liberty reasons; blocking the Tories “Snoopers Charter” and delivering on same sex marriage. Evidence based policies such as introducing free school meals, as trials showed they improved educational results for all pupils. It’s why the Liberal Democrats want to tackle drug and criminal reform as the current processes aren’t working.

It’s one thing to say what the Lib Dems have done (good and bad), it’s then another to show what a liberal Britain can look like. I will cover more of that in another post, but I truly believe that a strong liberal voice, whether in Government or opposition is essential for the UK, and I will be campaigning over the coming months (and years!) to make that voice heard.

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Coalition – tackling long term issues not playing short term politics.

Lords reform, an issue all the parties believe in and the public believe in, but which the proposed solution, by Nick Clegg, is viewed as not the right type of reform, not allowing enough time for scrutiny or just at the wrong time. I’m being generous to those who are purely playing party politics with this issue!

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Lords reform is a big deal and Liberal Democrats want to see it delivered, not because we benefit, but because it’s the right thing to do. However, if we can’t get support for it, we should not enter into tit for tat politics with the Conservatives.  There are other things we need to get done, so lets do them rather than get bogged down on an issue seen as honourable but not a wider priority.

I want to see the drive to renewable energy, properly supported. As reported in the Guardian, the Treasury and Conservative backbenchers are blocking proposals, despite the promise of this Government being the “greenest government ever”. Increased certainty is needed for companies to invest in green technology, certainty we are not providing.

We can work together with the Conservatives, we have delivered:

  • Increase the income tax threshold to £8,105, taking 2m out of paying tax, and a tax cut of £546 to 21m taxpayers
  • Pupil premium for the poorest primary school children, worth £600 each
  • Driving the agenda for banking reform
  • Green Investment bank with £3bn of initial funding
  • Pension rises of 2.5% guaranteed or the rate of inflation, average wage increases if these are higher
  • Simplifying future pensions, so everyone gets £140 a week, no means testing

Coalition requires compromises, but as Andrew Rawnsley said in the Observer “by and large, it is the Lib Dems who have been the grownups of the coalition and the Tories who have been the juveniles”.Ultimately the Conservatives are behaving and wanting to enact policies of the party of old. In reality they could use the coalition to show that they have modernised, in actions not just words.

The Politics of Economics

Yesterday’s Comprehensive Spending Review will have been well analysed by all the papers and commentators with lots of questions about whether the cuts are “fair” or not and if they are necessary at all.

What was more interesting to me (or dismaying) as an economist (but very much lapsed one) was the extent the political aspects decided the economic decisions. This is never unusual but given the unique financial situation interesting.

2010 Comprehensive Spending Review being delivered

I won’t touch on if the cuts are necessary or not except to say that as Labour were overspending when the economy was in a boom, therefore not saving for a rainy day, when the recession struck our borrowing rocketed and we ended up with the worst structural deficit of the G20, and gave us less room to carry out some of the fiscal expansionary policies of other countries such as Germany and France.

So on the political aspect, the key was the Prime Minister was determined to stick to as much of his electoral promise as possible, this makes sense politically to ensure manifesto promises were being kept. However, this causes a few economic problems:

  • NHS, one of the largest government spenders, was ringfenced
    • This meant other departments cuts had to be increased
  • Universal benefits were not looked at
    • I really felt, as Vince Cable said, that everything must be reviewed (this was in relation to tuition fees) then the idea of the well off receiving Winter Fuel Allowance, free TV licences, free bus passes and even a state pension to be absurd. However, the grey vote are more likely to vote and have strong lobbying powers so this was always a dangerous territory
  • Income tax would not increase, under any party
    • One way to fill to ensure spending could be protected, but seen as deeply unpopular, even though it could pay for Higher Education and protect some of the social housing
  • Due to the above welfare was targeted, which although needs to be reviewed, was taken further than expected
  • The child benefit political hit was in exchange for the Liberal Democrats hit on tuition fees, even though tuition fees was much more symbolic to the Liberal Democrats than child benefit to the Conservatives

So what did I make of it?

Well I really felt the Conservative need to protect the NHS and universal benefits restricted the options available. I would have:

  • Ringfenced no department except International Development (peanuts in the grand scheme of things)
  • Scrapped universal benefits for well off pensioners
  • Put a little bit more money into capital investment projects
  • Ensured a coherent plan on housing, both private and social, as the new proposals are clever in encouraging more housing associations to build property at commercially viable rates, there is no proposal to ensure enough housing does get built. One of the key problems of the past 30 years.
  • Probably would not have brought forward the rise in pension age for everyone to 2020, fundamentally wrong for women in their 50s.

I was a little surprised that more was not made of the fact:

  • Total government expenditure is still rising to 2014/5
  • The rate of growth is declining
  • Total public sector expenditure as a % of GDP will be at the same level as 2006/7.

The problem with all the above points is the NHS is growing in real terms so everyone else gets less of the pie. What I can’t work out now is how we’ll get enough money to increase the income tax threshold again, although it is in the coalition agreement so should happen.

The dynamic and static analysis of the impact of the Budget

If you’re still with me, I’m referring to the report today by the IFS which is saying that the last Government Budget was “regressive”. However, the government (of which my party is part of) are arguing that the budget is “progressive” and the analysis by the IFS was “impartial”.

So who’s right?

Actually – as in statistics, both are.

The IFS is right to point out that there are benefit cuts and housing rule changes which will have a bigger impact for low income families, especially if they don’t work. They are also looking at the full impact up to 2014.

The Treasury’s work is looking only at the impact up to 2012, but more importantly it includes the dynamic impact of tax changes (increased income tax allowance, economic growth) to change the poverty trap so it makes it more worthwhile for those not working to work, which will improve income.

So comparing the two analysis is rather like comparing apples with pears. The IFS doesn’t assume any dynamic changes  and is over a longer period, but the Treasury does assume dynamic changes and over a shorter time frame.

For my previous comments on the Budget click here

Politics like life involves compromises

I must admit I never expected a coalition, but at the end of the day it is probably the least worst alternative.

We could not have done nothing. There is a country to be run.

Supporting a Conservative minority government would have been possible but it would have been fragile, most Liberal Democrat policies would not have been enacted and there was the consdierable risk of another election within 12 months.

A coalition with Labour would have been ideal for many supporters but was never practical due to the parliamentary numbers and lack of support from the Labour party itself. A coalition with the Conservatives, although difficult should lead to many Liberal Democrat policies introduced (such as the £10k income tax threshold) and Conservative policies curbed (marriage tax allowance and inheritance tax threshold increase). All the details have still to be announced but this is what coalition government gives you compromise, hopefully of the important and best things for the country.

It’s also why voting for what you want, can make a difference. Although the electoral system is still against the Liberal Democrats, we can point to the 23% of people who voted for our policies when we were negotiating with the Conservatives, it gave us weight to get what our supporters wanted.

I don’t know what the road ahead will be like but at the very least we can say Liberal Democrat policies will have been delivered, we have experience of government and that coalition government can work (hopefully…).

A fair tax system – income tax threshold increased to £10k

Nick Clegg on Monday outlined Liberal Democrat reform of the tax system to increase the income tax threshold to £10k a year, meaning that 3.6m people will be taken out of taxation and a tax cut of up to £700 a year for most working people and £100 for pensioners.

The proposals will make a huge difference to many people, especially those on low incomes, our proposals will make a bigger difference to ordinary hardworking people than the Conservative scrapping of the National Insurance increase and their marriage tax allowance. The Conservative proposals would give c. £300 back a year, or £450 a year per couple, compared to £1,400 per couple under the Liberal Democrats (married or not).

The change to the tax system will help to remove the poverty trap (which can be removed further in the long run with a local income tax to replace the council tax) encouraging people to work, as well as a great assistance to young people first starting work. The £10k income tax threshold has been welcomed by Lord Digby Jones and Norman Tebbit, not usual Lib Dem supporters, but policies which get cross party support is always good. 

The policy will cost £17bn a year, but will be funded by a mansion tax on properties over £2m, aviation tax on flights not per passenger, changes to the pensions tax relief for higher rate tax payers, aligning Capital Gains Tax with Income Tax to reduce the rich from tax avoidance and anti-avoidance measures.

Tories broken society more like a broken record…

At least that’s the verdict by the Economist who disagree with the notion that Britain is in a mess and getting worse.

I have spoken to many public sector and charity workers in Bromsgrove who deal with the people the Tories describe as part of the “Broken Society” and they don’t recognise the term. Sure the country isn’t perfect, but it’s not “broken” and if it was what are the Conservatives doing to help the few who need help the most?

Almost all their policies are aimed at the middle class voters. Marriage tax allowance; inheritance tax threshold increase; allowing parents to run schools (only those with time will do this) and focus on only imprisoning criminals.

The Lib Dems, however, are focusing on helping those most in need to create a better society for all:

  • Increase income tax threshold to £10k to help break the poverty trap and improve the incentives for individuals on low incomes
  • Extra £2.5bn in education for schools with pupils on free school meals. This resource can be used as headteachers deem appropriate, whether smaller classes or one on one tuition. Many classes can only proceed as the slowest pupil so this will benefit all pupils.
  • Scrap tuition fees, to break the psychological barrier of debt for many people going to university. There is enough student debt and c. £10k less would make a big difference to many future graduates
  • 67% of prisoners will re-offend when they are released, why? Because some have no alternative of employment, they may be illiterate, don’t know what to do. We would do more for rehabilitation and give these people skills and the ability to become a part of society.