What a contrast from a year ago when England’s cities burned in a week of riots. When the images beamed to the world were not of athletes running for the finishing line, but the mob, running at police lines. When the flames climbed, not from the Olympic torch in east London, but a furniture shop in south London. A 140 year-old family-run business, which had survived two world wars and countless recessions, razed to the ground. Of course, even then, amid the smoke and embers, we saw our country’s true character when residents came out onto the streets to clear up the mess.
And we saw it again this summer when the Reeves furniture shop in Croydon re-opened in new premises, the walls decked with photos of young people holding up messages of hope. And who put those pictures up? Young volunteers from Croydon and an 81 year-old man called Maurice Reeves, who, like three generations before him, ran the shop before handing it over to his son. Maurice, your example should inspire a generation.
You see, what Maurice has shown – what our Olympians and Paralympians have reminded us of – is that, for most people, success doesn’t come easy or quick. That’s what our culture of instant celebrity obscures: that real achievement in the real world takes time, effort, perseverance, resilience. The war veteran: a victim of a roadside bomb in Afghanistan, competing at the Paralympics. The businessman: a victim of an arson attack in south London, serving his customers again. The millions of people up and down the country, who, no matter how heroic or mundane their battles, keep going, keep trying, keep working, whatever life throws at them.
These are the qualities that will see our country through these tough times. And these are the qualities that will guide our party through tough times too. So let us take our example from the British people as together we embark on the journey ahead. Our party: from the comforts of opposition to the hard realities of government. Our country: from the sacrifices of austerity to the rewards of shared prosperity. Two journeys linked; the success of each depending on the success of the other. Neither will be easy and neither will be quick, but it will be worth it. And be in no doubt. If we secure our country’s future, we will secure our own.
We live at a time of profound change, almost revolutionary in its pace and scale. Here in Britain, we are faced with the gargantuan task of building a new economy from the rubble of the old. And of doing so at a time when our main export market – the Eurozone – is facing its biggest crisis since it was formed. And while the European economy has stalled, countries like Indonesia, Malaysia, India and China continue to grow, and at a phenomenal rate.
The potential consequences of this shift in power, should we in the West fail to respond, cannot be overstated. Our influence in the world, our standard of living, our ability to fund our public services and maintain our culture of openness and tolerance – all are in the balance. For power would move not only away from the liberal and democratic world, but within it too; from moderates to hard liners, from internationalists to isolationists, from those committed to the politics of cooperation to those hell-bent on confrontation. If history has taught us anything, it is that extremists thrive in tough times.
So yes, if we fail to deal with our debts and tackle the weaknesses in our economy, our country will pay a heavy political price. But the human cost would be higher still. Not only would we fall behind internationally, we would leave a trail of victims at home too.
So to those who ask, incredulously, what we – the Liberal Democrats – are doing cutting public spending, I simply say this: Who suffers most when governments go bust? When they can no longer pay salaries, benefits and pensions? Not the bankers and the hedge fund managers, that’s for sure. No, it would be the poor, the old, the infirm; those with the least to fall back on.
Labour may have thought it was funny, after crashing the economy and racking up record debts, to leave a note on David Laws’ desk saying: “there’s no money left”. But it’s no joke for the most vulnerable in our society; the people Labour claim to represent but let down the most. So let’s take no more lectures about betrayal. It was Labour who plunged us into austerity and it is we, the Liberal Democrats, who will get us out.
It’s easy to forget sometimes that the debate we’re having in this country is playing out across our continent. It’s a debate between those who understand how much the world has changed, and those who do not. And between those who understand the need to adapt to those changes, and those who baulk at the size of the challenge. And the fate of every European country – ours included – will depend on the outcome.
In the coming years, some countries will get their own house in order. But some will not. Those that do will continue to write their own budgets, set their own priorities and shape their own futures. But those that do not will find their right to self-determination withdrawn by the markets, and new rules imposed by their creditors, without warning or clemency. That that will never happen to us is often just blithely assumed; the comparisons with Greece, breezily dismissed. Yet it is the decisions we take – as a government, as a party – that will determine whether we succeed or fail. For the first time, the future is ours to make.
Our journey from austerity to prosperity starts, of course, with economic rescue; dealing with our debts and delivering growth. If you listen to Labour, you could be forgiven for thinking that austerity is a choice; that the sacrifices it involves can be avoided; that if we only enacted Ed Balls’ latest press release we’d be instantly transported to that fantasy world where there is no “boom and bust” and the money never runs out.
But the truth is this: there is no silver bullet that will instantly solve all our economic problems. Some of our problems are structural, others international. All will take time to overcome. We are dealing with an on-going surge in global energy, food and commodity prices. An existential crisis in the Eurozone. And a banking collapse which, more than four years on, is still blocking the arteries of our entire economic system.
Ranged against these forces, the idea that if government just deregulated a bit more as Liam Fox proposes, or borrowed and spent a bit more as Ed Balls proposes, we would, at a stroke, achieve strong and lasting growth, is just not credible. In my experience, if you’re being attacked by Liam Fox from one side, and Ed Balls from the other, you’re in the right place.
You see, what is needed – and what we’re delivering – is a plan that is tough enough to keep the bond markets off our backs, yet flexible enough to support demand. A plan that allowed us, when the forecast worsened last year, to reject calls for further spending cuts or tax rises and balance the budget over a longer timescale. A plan that, even at the end of this parliament, will see public spending account for 42 per cent of GDP – higher than at any point between 1995 and 2008 when the banks collapsed. And a plan that, because it commands the confidence of the markets, has given us the room to create a Business Bank, provide billions of pounds of infrastructure and house building guarantees and an £80 billion Funding for Lending scheme – the biggest of its kind anywhere in the world.
Of course so much of this is about perception. People keep telling me we should be doing what Barack Obama did with his fiscal stimulus. What they don’t tell you is that much of what the President had to legislate for, we are already doing automatically. So let’s not allow the caricature of what we are doing go unchallenged. If Plan A really was as rigid and dogmatic as our critics claim, I’d be demanding a Plan B, and getting Danny and Vince to design it. But it isn’t. Which is why you were right, earlier this week, to overwhelmingly reject the call for us to change our economic course. We have taken big and bold steps to support demand and boost growth. And we stand ready to do so again and again and again until self-sustaining growth returns.
Of course, arguments about economic theory are of no interest to the millions of people just struggling to get by right now. The home-help whose earnings barely cover the cost of childcare. The builder who knows the company will be laying people off, but doesn’t yet know if he’ll be one of them. The couple who want to buy their first home but can’t raise the money for a deposit. To them and to all the other hard working families just trying to stay afloat, I say this: the Liberal Democrats are on your side. You are the ones we are in government to serve. Not with empty rhetoric but real practical help. That is why we promised to cut your income tax bills by raising the personal allowance to £10,000. So you can keep more of the money you have worked for. So your effort will be properly rewarded. So the task of making ends meet is made that little bit easier.
At the last budget, we made two big announcements: that we were spending three thousand million pounds increasing the tax-free allowance, and just fifty million pounds reducing the top rate of tax while recouping five times that amount in additional taxes on the wealthiest. I insisted on the first. I conceded the second. But I stand by the package as a whole. Why? Because as liberals, we want to see the tax on work reduced, the tax on unearned wealth increased, and the system as a whole tilted in favour of those on low and middle incomes. The budget delivered all three.
But let me make one thing clear: Now that we have brought the top rate of tax down to 45p – a level, let’s not forget, that is still higher than throughout Labour’s 13 years in office – there can be no question of reducing it further in this Parliament. All future cuts in personal taxation must pass one clear test: do they help people on low and middle incomes get by and get on? It’s as simple as that.
At the next election, all parties will have to acknowledge the need for further belt tightening. That much is inescapable. But the key question we will all have to answer is who will have to tighten their belts the most?
Our position is clear. If we have to ask people to take less out or pay more in, we’ll start with the richest and work our way down, not the other way around. We won’t waver in our determination to deal with our debts. But we will do it in our own way, according to our own plans, based on our own values. So we will not tether ourselves to detailed spending plans with the Conservatives through the next Parliament.
Colleagues, we should be proud of the fact we have delivered fairer taxes in tough times. We should be proud of the fact that we’re taking 2m people out of income tax altogether and delivering a £700 tax cut for more than 20m others, and should never miss an opportunity to tell people about it. But as we do so, remember this: our tax cuts, like our extra support for childcare, for schools, for pensioners – these are not stand-alone consumer offers. They are part of a broader agenda of economic and social reform to reward work, enhance social mobility and secure Britain’s position in a fast changing world. In short, national renewal. That is our mission. Our policies either serve that purpose, or they serve none at all.
One of the things about governing is it forces you to confront the inconvenient truths oppositions choose to ignore. Like the fact that, over the last 50 years, our economy has grown threefold, but our welfare spending is up sevenfold. Or the fact that, to sustain our spending, we are still borrowing a billion pounds every three days. Or that, as a result of that borrowing, we now spend more servicing the national debt than we do on our schools. In combination, these three facts present us with a fundamental challenge: to not only regain control of public spending, but to completely redirect it so that it promotes, rather than undermines, prosperity.
How we do that – how we reshape the British state for the economic challenges of the 21st century – is a debate I want our party to lead. For there are only two ways of doing politics: by following opinion, to get yourself on the populist side of each issue, or by leading opinion, and standing on the future side of each issue. The first brings short-term rewards, of course it does. But the big prizes are for those with the courage and vision to get out in front, set the agenda and point the way.
So let us take the lead in building a new economy for the new century. An open, outward looking economy in the world’s biggest single market. A strong, balanced economy built on productive investment, not debt-fuelled consumption. An innovative, inventive economy driven by advances in science and research. And yes, a clean, green economy too, powered by the new low-carbon technologies. Britain leading the world.
But I have to tell you, we will not succeed in this last task unless we can see off that most short-sighted of arguments: that we have to choose between going green and going for growth. Decarbonising our economy isn’t just the right thing to do; it’s a fantastic economic opportunity. The green economy in Britain is growing strongly right now, bringing in billions of pounds and creating thousands of jobs – in wind, solar and tidal energy; the technologies that will power our economy in the decades to come. Going green means going for growth. But more than that, it means going for more energy that we produce ourselves and which never runs out; it means going for clear air and clean water and a planet we can proudly hand over to our children. Going green means going forward.
So let the Conservatives be in no doubt. We will hold them to their promises on the environment. Of course, there was a time when it looked like they got it. It seems a long time ago now. When the Tories were going through their naturalist phase. The windmills gently turning; the sun shining in. As a PR exercise, it was actually quite brilliant. Until, at last year’s party conference, they went and ruined it all, admitting that you can’t in fact “vote blue and go green”. Well of course you can’t. To make blue go green you have to add yellow, and that’s exactly what we’re doing.
As we plot our path from austerity to prosperity, we need to remember that nothing we do will make a decisive difference if we don’t make the most important investment of all: in the education and training of our young people. For we will only fulfil our collective economic potential, if we fulfil our individual human potential. Yet the legacy of educational inequality in Britain is an economy operating at half power, with far too many young people never getting the qualifications they could get, never doing the jobs they could do, never earning the wages they could earn.
The true cost of this cannot be counted in pounds and pence. Yes it’s a huge drag on our economy, but more than that, it is an affront to natural justice and to everything we Liberal Democrats stand for. Because if you strip away all the outer layers to expose this party’s philosophical core, what do you find? An unshakeable belief in freedom. Not the tinny sound of the Libertarian’s freedom – still less the dead thud of the Socialist’s – but the rich sound of Liberal freedom, amplified and sustained by the thing that gives it real meaning: opportunity. The freedom to be who you are. The opportunity to be who you could be. That, in essence, is the Liberal promise.
And that is why this party has always been – and must always be – the party of education. Because just as there can be no real freedom without opportunity, so there can be no real opportunity without education.
Every parent knows how it feels when you leave your child on their first day at school. That last look they give you before the door closes behind them. The instinct to go with them, to protect them, to help them every step of the way. That’s how we should feel about every child. That’s the responsibility we have to every parent. To support them at every stage: from nursery to primary, from primary to secondary and from secondary to college, university or work.
That’s why we’re providing more money so the poorest two-year-olds, as well as every three and four-year-old, can now benefit from pre-school education. Delivering our Pupil Premium – £900 per child next year – so the most disadvantaged children get the more intensive, more personalised support they need. And why, when they leave school, we’re providing scholarships, bursaries, grants, loans, apprenticeships and wage subsidies, to help them go on learning or start earning.
But extra resources won’t make a difference unless matched by greater ambition. Which is why money must be accompanied by reform. Reform to ensure all children can read and write. To make schools focus on the performance of every child. To turn around failing schools, and put more pressure on coasting schools. And yes, reform to replace GCSEs, not with an O Level, but with a new more rigorous qualification that virtually every child will be able to take, and every well taught child will be able to pass.
And to ensure they do, I can announce that from this year, we will provide a new ‘catch-up premium’ – an additional £500 for every child who leaves primary school below the expected level in English or maths. If you’re a parent whose child has fallen behind; who fears they might get lost in that daunting leap from primary to secondary school; and who is worried by talk about making exams tougher, let me reassure you. We will do whatever it takes to make sure your child is not left behind. A place in a summer school; catch-up classes; one-to-one tuition; we are providing the help they need. So yes, we’re raising the bar. But we’re ensuring every child can clear it too.
I am proud of the resolve we Liberal Democrats have shown over the last two and a half years. We’ve had some real disappointments: tough election results, a bruising referendum. But through it all, we have remained focused, determined, disciplined. It hasn’t always been easy, and, when we’ve made mistakes, we’ve put our hands up. But we’ve stuck to our task – and to the Coalition Agreement – even as others have wavered. The received wisdom, prior to the election, was that we wouldn’t be capable of making the transition from opposition to government. The choices would be too sharp, the decisions too hard.
The Liberal Democrats, it was said, are a party of protest, not power. Well two years on, the critics have been confounded. Our mettle has been tested in the toughest of circumstances, and we haven’t been found wanting. We have taken the difficult decisions to reduce the deficit by a quarter and have laid the foundations for a stronger, more balanced economy capable of delivering real and lasting growth. But conference, our task is far from complete, our party’s journey far from over.
I know that there are some in the party – some in this hall even – who, faced with several more years of spending restraint, would rather turn back than press on. Break our deal with the Conservatives, give up on the Coalition, and present ourselves to the electorate in 2015 as a party unchanged. It’s an alluring prospect in some ways. Gone would be the difficult choices, the hard decisions, the necessary compromises. And gone too would be the vitriol and abuse, from Right and Left, as we work every day to keep this Government anchored in the centre ground.
But conference, I tell you this. The choice between the party we were, and the party we are becoming, is a false one. The past is gone and it isn’t coming back. If voters want a party of opposition – a “stop the world I want to get off” party – they’ve got plenty of options, but we are not one of them. There’s a better, more meaningful future waiting for us. Not as the third party, but as one of three parties of government.
There’s been a lot of discussion on the fringe of this conference about our party’s next steps; about our relationship with the other parties; and about what we should do in the event of another hung parliament. It’s the sort of discussion politicians love – full of speculation and rumour. But I have to tell you, it is all based on a false, and deeply illiberal, assumption: that it is we, rather than the people, who get to decide. In a democracy, politicians take their orders from the voters.
So let’s forget all the Westminster gossip and focus on what really matters: not our relationship with the other parties, but our relationship with the British people. Imagine yourself standing on the doorstep in 2015 talking to someone who hasn’t decided who to vote for. This is what you’ll be able to say: we cut taxes for ordinary families and made sure the wealthiest paid their fair share. We put more money into schools to give every child a chance. We did everything possible to get people into work - millions of new jobs and more apprenticeships than ever before. And we did the right thing by our older people too - the biggest ever cash rise in the state pension. But most importantly, we brought our country back from the brink and put it on the right path.
Then ask them: are you ready to trust Labour with your money again? And do you really think the Tories will make Britain fairer? Because the truth is, only the Liberal Democrats can be trusted on the economy and relied upon to deliver a fairer society too. And to help get that message out there, I can announce today that Paddy Ashdown has agreed to front up our campaign as chair of the 2015 General Election team. I must admit, I’m not quite sure I’m ready for all those urgent e-mails and 5am phone calls. But I can’t think of anyone I’d rather have by my side. Paddy, it’s great to have you back.
Fifty, sixty years ago, before I was born, small groups of Liberal activists would meet up to talk politics and plan their campaigns. Stubborn and principled, they ignored the cynics who mocked them. They simply refused to give up on their dreams. They refused to accept that Liberals would never again be in government. And they refused to accept that Liberalism, that most decent, enlightened and British of creeds, which did so much to shape our past, would not shape our future. We think we’ve got it tough now. But it was much, much tougher in their day. It was only their resolve, their resilience and their unwavering determination that kept the flickering flame of Liberalism alive through our party’s darkest days.
At our last conference in Gateshead, I urged you to stop looking in the rear view mirror as we journey from the party of opposition that we were, to the party of government we are becoming. But before we head off on the next stage of our journey, I want you to take one last look in that mirror to see how far we’ve come. I tell you what I see.
I see generations of Liberals marching towards the sound of gunfire. And yes, I see them going back to their constituencies to prepare for government. It took us a while but we got there in the end. These are the people on whose shoulders we stand. They never flinched, and nor should we. We owe it to them to seize the opportunity they gave us, but which they never had. Taking on the vested interests. Refusing to be bullied. Refusing to give up. Always overturning the odds. Fighting for what we believe in, because we know that nothing worthwhile can be won without a battle. A fair, free and open society. That’s the prize. It’s within our grasp. So let’s go for it.
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