Today it has been revealed that for the second quarter of this year, the British economy has shrunk and failed to grow. I for one have never been very enthusiastic about austerity and I personally think it can only ever be enacted alongside strong policies to ensure economic growth. We should aim to balance growth and austerity. The policy of outright austerity in Britain has seemingly failed to work and our economy is now continuing to decline, while being in recession. and unemployment remains stubbornly high. The political and economic discourse in our country should turn towards growth.
As a member of Liberal Democrats, I believe we need to start promoting strong policies to create economic growth alongside austerity. We cannot ignore the changing political reality across Europe with the election of Francois Hollande in France, the continuing crisis in Greece and the potential of a bailout being needed for Spain. Labour often sight their “five point plan” hence I have created a Liberal Democrat equivalent. This is a five point plan that covers Lib Dem policies that are desperately needed in order to get growth and stability back into our economy.
1. Regulate and immediately break-up the banks
We must remember that the current economic crisis initially began as a crisis of confidence in the banking system as a result of a decade of under-regulated by the last Labour government. The financial risk-taking and rampant speculation in the big banks destabilised the global economy and threatened to bring the whole banking system down. As a result taxpayers around the world had to bail out the banks to prevent people losing their life savings. This must never be allowed to happen again. The banks, as recommended by the Vickers Report must be immediately split up between their risky financial investment arm and their retail arm creating an economic firewall in case of a future banking crisis. Furthermore sufficient checks must be put in place to ensure that the aggressive speculation and rampant risk-taking of the banks never again leaves the taxpayer and our country exposed. This will free the government from the fear of having to use public expenditure to bailout the banks in the future. The government must also get the banks lending again to small and medium sized businesses.
2. Ensure Fairer Taxes
The richest in our society must always pay their fair share especially during times of economic difficulty. This means that a fully fledged mansions tax must be introduced at a rate of 1% on houses worth over £2 million. We should also seriously consider introducing a land-value tax to ensure that wealthy landowners make their necessary contribution. Furthermore the highest rate of income tax should be raised back up to 50p in the pound and should apply to everyone earning over £150,000. The extra revenue raised through these taxes should be re-invested into the economy to help achieve points 3 and 4.
3. Build More Houses
Four years after the housing property bubble burst, houses remain ruinously expensive and far out of the price range of first-time buyers. We should seek to build 100,000 more homes a year, as suggested by Lord Oakeshott. This would stimulate the construction industry which is in much need of growth. It would also provide houses for thousands of people who need them and as supply catches up to the demand, house prices will become more affordable.
4. Invest in a Green People’s Budget
Liberal Democrats have always been passionate about the environment and tackling climate change. Also it is 103 years since David Lloyd George’s famous “People’s Budget.” It is time for a “Green People’s Budget” to advance a green Keynesian strategy for a green stimulus plan. This would be a nationwide plan to ensure green project spending, green jobs and ultimately green growth. This would include constructing both onshore and offshore wind turbines as well as developing and building other forms of non-carbon and renewable energy sources such as solar, geothermal, tidal, HEP, kinetic and possibly nuclear. This will stimulate the construction sector and the science and technology industry. The aim of the plan should be rapidly reduce out carbon emissions to meet a target of 30% reductions by 2020, as once suggested by Chris Huhne. We are going to have to invest in these technologies sooner or later and when it comes to tackling climate change, time is of the essence. The green investment bank and the green deal are a great start in this direction. The plan would create jobs for thousands of people and ensure that while tackling climate change would also be tackling our economic difficulties as well.
5. Do not renew Trident
Finally for one of the most unique and popular policies of the entire Liberal Democrat political platform. The Trident nuclear weapons system would cost £100 billion over the course of its lifetime and is unaffordable in the current economic climate. It is a Cold War weapon system that no longer has any place in a world that is no longer dominated by two ideological opposed superpowers. We must find a much cheaper alternative to Trident. The extra revenue raised by not renewing Trident would be used to help achieve points 3 and 4 and to directly reduce the structural deficit.
1. Regulate and immediately break-up the Banks to get them lending again.
2. Ensure Fairer Taxes: a mansion tax, a land-value tax and a 50p top rate of income tax.
3. Build 100,000 more houses per year.
4. Invest in a Green People’s Budget to reduce carbon emissions by 30% by 2020, by ensuring green growth and green jobs.
5. Do not renew Trident.
