Lord Browne’s review – what now?

So Lord Browne’s review has been published and thrown a potential grenade into the coalition. However, his proposals do not have to be implemented, they are merely an indepedent recommendation. I’m not willing to comment until a Government proposal has been put forward, but I obviously want the Lib Dem MPs to stick to the NUS pledge which they, and I, signed at the general election.

Although all this presure on the government is forgetting one thing as “Liesandstats” commented on the Guardian today….

“In the interest of fairness it might be worth pointing out that the last government in the shape on Mandelson commissioned this report which at the time was reported as a ruse to kick the subject of university funding into the long grass until after the election. It was also Labour that introduced tuition fees in the first place in England. University education was free in England up to 1998 when labour introduced a £1000 charge and then upped that to £3000 in 2003.

Its simple you need to decide your finding priorties and make sure your MP knows them. We can waste billions on Afghanistan, Trident but you can’t educate your children.

I suggest you either move to Scotland or go abroad to take a degree it will be a lot cheaper in the long run.

The worrying thing in Scotland is if Labour get in next May we will be in the same boat as you couldn’t really put a fag paper between their policies and the Tory/Lib coalition if they had been returned to power.”

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What would I / the Liberal Democrats have done differently with the Budget?

An emergency budget for tough times. Overall, although I was uncomfortable with some of the budget announcements there were few things in there I didn’t expect or which Labour would have done vastly differently. Cuts are needed, although timing is always questionable and to some degree it has been driven by the financial markets / ratings agencies (yes the same ones which thought Lehman Brothers was sound…).

I won’t cover what’s in there and how the Liberal Democrats have managed to get a few of our policies in the budget announcements, but rather to highlight the distinction between my party and the Conservatives I want to highlight what I would have done differently: 

  • I’m still uncomfortable with the £6bn cuts this year, given the need for public demand to fill the lack of private sector demand, this is a concern shared by the US, fuelled by the 1930s depression and the problems faced by Japan since the 1990s.
  • I would have kept child benefits rising year on year, but I would have withdrawn it from better off families via taxing of the benefit.
  • Invested more in capital projects such as green technology to kickstart the growth in the private sector which the Government is relying on.
  • Announced the renewal of trident to be included in the Strategic Defence Review to understand the potential for cost reduction.
  • Examined the case for road pricing along with investment in public transport (have the environmental costs fully accounted for).
  • Although I don’t want council tax increases, I would allow local authorities the ability to increase council tax if it’s needed to protect local services, many of the cuts will be at the local level due to tight budgets.
  • Look to increase the incentives to work via a greater personal allowance rather than just cutting back on benefits.
  • Not enforced the rule stating single parents must work when their child begins school, too broad brush and ignores the poverty trap.
  • Remove the winter fuel payments for pensioners.

 

Yougov shows the Lib Dems ahead by 3%

A Yougov poll out today show the Liberal Democrats on 34%, Conservatives on 31% and Labour on 26%.  Yougov also found:

“Just under half the country (49%) would vote for the Liberal Democrats if they were seen to have a reasonable chance of winning. Only 25% would vote for the Conservative party in these circumstances; a comparatively meagre 19% would vote for Labour.”

We’re not far off that situation to be honest! We’ll be there if we can get to 36-38% in the polls.

Despite days of scrutiny the political opponents are unable to find severe weaknesses in our policies. Just today in the Times several Generals  have said that Trident should be examined.

They “express ‘deep concern’  that the future of Trident has been excluded from the Strategic Defence Review that will follow the election. They caution that suppressing discussion of the issue or dismissing alternatives would be ‘a major strategic blunder’ “.

The key here is “alternatives” as the Liberal Democrats are not saying have no nuclear deterrent, we’re saying are there cheaper forms of nuclear deterrents?

“It’s the economy, stupid”

In continued recognition of Liberal Democrat’s economic competence, The Financial Times and Economist in the last few days has criticised both Conservative and Labour’s honesty and openness on the necessary actions to control the budget deficit whilst commending our plans and approach.

George Osborne get’s a particularly strong attack from the Economist

“One explicit difference between Mr Brown’s plans and Mr Cameron’s is that the latter wants to start cutting this year, despite the risk of stalling the crawl out of recession. In that, he is probably mistaken, just as he was wrong to oppose Mr Brown’s fiscal stimulus. In both cases, the Tories may have subordinated sensible economic thinking to political positioning.”

The Liberal Democrats have been explicit in some of the actions necessary to cut the deficit identifying areas like Trident, ID cards, scrapping child trust funds and a 10% tax on banks profits. However, unlike the Conservatives, the cuts will be made at the right time when the recovery is clearly happening, rather than straight away and derail the recovery.

As I’ve said in the first Focus of 2010, do we want Vince Cable, with experience in industry and a PhD in Economics to run the economy or George Osborne with his lack of expertise and experience and would be learning his trade at the country’s expense…

Pre-Budget Report – highly anticipated but didn’t really say a lot…

The Pre-Budget Report (PBR) didn’t really say a lot and did not change the economic landscape at all. The two major stories will be National Insurance (NI) increasing by 1% and the tax on banks who choose to pay bonuses over £25k to employees before April 2010. My take on the two are:

  1. NI tax increase is hardly helping hardworking individuals, The average salary in the UK is £24k, and according to the PBR, those earning under £20k will not pay more NI, so this is hardly fair.
  2. The tax on bank bonuses is actually quite clever as it is on the banks who must choose to either pay out bonuses, and hence tax to the Treasury or keep more of their profit to rebuild balance sheets. Also if bonuses are deferred to next year the new higher rate of tax (50% on those earning £150k+) will come in so the Treasury will get increased taxes then too.

It was a shame that Labour chose not to reveal more about how they would look to balance the books in the long term. The Lib Dems have already stated they would scrap spending on Trident, maximum public sector pay increases of £400, tax on banks profits (as they are artificially making high profits from implicit government guarantees and benign cost of money)  as well as scrap the Regional Development Agency.

The Tories have done a lot of attacking on the UK’s fiscal deficit but have not spelt out what they would cut. Although more importantly for me is their persistence calls for cuts to be made NOW even though the timing of reduction in fiscal support for the economy is critical, too soon and we lurch back into recession or a Japan style growth (i.e. none) for 15 years or more, too late and we will have a massive debt problem.

Personally it is too soon to cut Government spending and indeed none of the other G7 economies are proposing cuts in fiscal stimulus in 2010/11 unlike the Tories.