Most people have mixed feelings on the coalition, but what is not in doubt is that the Liberal Democrats entered a coalition with the Conservatives for the good of the country. This ensured a political consensus for strong and necessary action to the economy.
Compare that to the inability of the Democrats and Republicans in the US to compromise to avoid the fiscal cliff which could drive the economy into another recession. Yes a last ditch effort meant that tax decisions were decided, but spending decisions have merely been delayed by a couple of months.
Mervyn King said in 2010 that “…whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.” I’m more optimistic than Mervyn on the election prospects, but it was no secret that there were tough decisions which needed to be made after May 2010. Sometimes what is right is not the most popular decision…
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Inspired by the 2012 Sports Personality of the Year, Bradley Wiggins, I took to cycling around his old stomping ground of Kilburn (and Brondesbury) whilst delivering and speaking to local members.
More importantly, his background, a child of a single mother, shows that as long as opportunities are provided for, anyone can succeed in life. The Conservatives are determined to back an old fashioned nuclear family view of life. In the process vilifying many single parents with children on welfare, when (like with Bradley’s mother) their partner is no longer there.
The welfare system must be there to support those in need. The Liberal Democrats are ensuring that it is there for those who need it; whilst at the same time supporting reform so that it is better to be in work than on benefits and easier for recipients to understand.
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Yesterday I was delivering in Rowley Way, Kilburn, an award winning and Grade II listed architectural estate. Hearing more about it, and speaking to a former resident of the place, it made me think is this the kind of innovative architecture we need more of in the UK?
Yes, the estate has its problems and the concrete façade is not what many would now choose, but it has the following:
- Fantastic use of living space inside the flats
- Flats designed to maximise the natural light
- Pedestrianised streeting, which encourages children to play on the streets
- Balcony space for all flats
I’m not suggesting replica estates / designs, but it’s an example of trying to use space more creatively that could tackle the housing problem in Hampstead and Kilburn as well as the UK.
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After the ward I’m working in, Dundonald, won the award for most canvassed ward in London at London Lib Dems Regional Conference, I wrote a short article on canvassing for Lib Dem Voice – enjoy and get out there on the doorsteps!
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Yesterday I mentioned the use of aiming Quantitative Easing (QE) direct to the people through funding tax cuts or even personal cheques. This in itself will not aid a global recovery. Another necessary step is for the entire world to do this at the same time – globally co-ordinated action.
Effectively the recession is a global crisis and to solve this it requires a global solution. The reasoning is that at the moment most Governments are cutting back on public spending, this is taking demand out of the economy as private investors are not filling the void. Beggar thy neighbour tactics are appearing with more protectionism and greater focus on “national” interests, understandable in the current climate, but economically futile.
Instead the international community must work together and economic policy changes co-ordinated. As Franklin Roosevelt said at the opening of the Bretton Woods summit in 1944
“The economic health of every country is a proper matter of concern to all its neighbours, near and far.”
But what do I mean? Obviously co-ordinated attempts have been attempted before in trying to save financial markets and individual country credit ratings with loan guarantees. These have generally not worked as they are designed purely to appease the lending markets. I personally see three things the international community can do together.
- If there is to be QE, all countries should do it at the same time, in the same way and the same proportion so that relative to each country, there is impact on currency values, or inflation. The markets will be less likely to threaten one country than another.
- Common sharing of risk is needed to tackle the markets so a “Euro bond” or even a “World bond” should be introduced. This will mean one interest rate on debt, so the UK will have the same interest rate as Iceland or Germany and Greece on its borrowing. Without the sharing of risk, I struggle to see how countries can stand up to market forces (countries get picked off as we have seen in the Eurozone).
- Accelerated regulation and approval of new (and green) technology. We all know that the world is changing environmentally, that fossil fuels are harder to find, there is no lack of rhetoric but the lack of action is depressing. There should be international agreement on areas such as air emissions, carbon capture technology, renewable energy targets enforced, environmental standards brought in for construction, focus on sustainable farming; support in all these areas for developing countries. All this backed up with regulation and firm investment commitment. If a world standard is set, enforced and developing countries supported, all countries will be better off in the short run (increased investment, new industries started) and in the long run (environmentally and lower cost of intervention). There will be a need to for more investment, and certainty provided for investors, something that is sorely lacking in the current green technology space globally.
The EU, UN, IMF, World Bank and, more importantly, individual Governments must act decisively and together to get the world economy back to full health. It means taking unorthodox measures, but extraordinary times require an extraordinary response. John Maynard Keynes understood this in the 1930s and 40s and we need today’s policy makers to have the same vision.
Posted in Uncategorized | Tagged bonds, Co-operation, EU, Governments, green technology, IMF, John Maynard Keynes, Quantitative Easing, renewable technology, UN, World Bank | 1 Comment »
It has long become clear that the financial crisis has been on a scale deeper and larger than many people have suspected. It has also been exacerbated by muddled policy responses from all Governments and policy makers. Whilst the need to control debt is not in doubt, capital expenditure projects should be pursued and tighter bank regulations need introducing (with much clearer splits between retail and investment banks); all economies are still struggling.
Quantitative Easing (QE) – effectively the printing of money to buy up Government debt, and shore up the banking sector, helping banks’ balance sheets. It has not really got money flowing through the economy. A bolder step, which Australia tried in 2009 (and avoided recession), is to direct QE, not at the banks, but directly at the taxpayer. This can be in the form of temporary tax cuts or even just a cheque from the Government. This BBC article explains the concept in more detail.
Why do I think it could work? Well at the end of the day I see nothing to suggest that additional money from the Bank of England is moving its way into the real economy. Giving the money direct to the people, may or may not work, but it’s no worse than the current method. Some people will use it to pay off debt – in which case the banks still get the money. Some people will spend it, which should help drive demand in the economy and create a multiplier effect. The proposed solution would be monetary policy financing fiscal policy.
There are inflationary risks, and we can’t print our way out of trouble (although by definition you’d be against QE in general then), but in an economic downturn, the inflationary risks are low. There is also the problem that this doesn’t solve the global problem. This is where Step 2 comes into play – to be discussed tomorrow…
Posted in Uncategorized | Tagged Bank of England, financial crisis, fiscal policy, inflation, monetary policy, Quantitative Easing | 1 Comment »
After a few days to recover, assess and dry off from a wet and windy Brighton, here are my thoughts on this years’ Liberal Democrats Conference.
- The mood was much more business like than prior conferences. 2010 was one of great excitement from being in Government. 2011 was gritted teeth and determination in the face of protests. 2012 felt a case of “let’s deliver and get on with being in Government”.
- Outside of the conference bubble there was much less interest than in the past few years from the media, partly this was because there were few stories to tell. There was no anti-Clegg, anti-coalition sentiment, however hard the press tried to find one. Also the Andrew Mitchell “Pleb” story took over and dominated the political news.
- The Liberal Democrats have achieved a lot in Government and it’s up to us, as a party, to tell the voters what we’ve done, as the media definitely won’t.
- As a party we must carefully consider all policy decisions and the long term ramifications, these will be driven by our core values of liberalism, fairness and localism. We cannot return to being a party of protest, which is easy in opposition. Just look at Labour now and continued opposition to almost all Government policies, especially spending, despite the economic situation.
The next 18 months will be critical, so time to get the walking boots on, waterproofs on and clipboards out, get talking to people and drive the Lib Dem achievements and message home.
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