Vince Cable LibDem Liverpool Conference 2008 Speech
Full text of Liberal Democrat Shadow Chancellor, Vincent Cable’s speech to the LibDem Spring Conference in Liverpool, 2008
I don’t want to overdo my Stalin joke. But I did, I think, capture the pathos of Gordon Brown’s sad decline: from ruthless to rudderless: bully to bumbler; from Brezhnev to Blackadder.
He genuinely saddens me. After Blair was obsessed by image and positioning. We hoped Brown would be a serious man with serious ideas and a serous commitment to social justice. No chance.
Within weeks he was dressing up in a Penguin suit to grovel to a Saudi king who presides over the execution of women for immorality and corruption which makes the late President Mobutu look like a small time pick pocket.
The nuclear power lobby, the airport expansion lobby, the arms dealers all know they have a true friend in Downing Street.
And, as for social justice, he stands ready to copy whatever regressive, badly thought out wheeze the Tories dream up on a boozy night out at the Bullingdon Club.
But the real issue is competence. Gordon Brown’s list of disasters is becoming as long as the list of Don Giovanni’s lovers: Northern Rock; lost data on 15 million families; mismanaged reforms to CGT and non-dom taxation;
Metronet and the disastrous London Underground PPP; tax credit overpayments; the QinetiQ sale; Railtrack; IT mismanagement in HMRC; the collapse of occupational pensions; Equitable Life; Individual Learning Accounts; Film Tax Credit: U-turns on SIPPs and Company Incorporation and Operating and Financial Reviews.
That’s just for starters. In fact, the Conservatives should be benefiting more than they are from the government’s serial incompetence. They have a problem. Their own history. Black Monday. 15% interest rates. 3 million unemployed. Record repossessions. All that.
Cameron and Osborne have an Alzheimer’s strategy: a fervent hope that the country will lose its collective memory of Conservative government.
These days the Tories simply don’t seem to know what they stand for. They don’t even seem to believe in tax cutting any more.
Or perhaps I am being a little unfair. They do have a programme of targeted tax cuts. Top priority target is a further inheritance tax cuts designed to favour dead millionaires. Dead millionaires are clearly at the heart of the Tory core vote strategy.
We, on the other hand, have been consistent and right in our analysis of the UK economy.
I warned Gordon Brown almost 5 years ago that there was a growing problem of personal debt, much of it secured against a dangerous bubble in the housing market.
Since then, inflation and house prices have reached levels, in relation to income, unsurpassed in our history and the highest in the western World.
The truth is that just as binge drinking has become one of Britain’s main recreational activities, binge lending has now become the mainstay of the economy.
Banks have become the financial equivalents of a Wetherspoons pub – but with even less of a sense of responsibility.
They make their money by getting people to borrow more than they can handle. The mess afterwards is someone else’s problem.
The binge in lending has fuelled the house price boom. Housing has become unaffordable for millions of young first time buyers. Borrowers are struggling to maintain their debts.
Too much unsustainably cheap credit created an unsustainable ratcheting up of house prices.
People have been duped into believing that acquiring property is better than saving and a more reliable store of value than a bank account, shares or a pension.
Yet this is a market that is, and always has been, dangerously volatile. After the binge, there is inevitably a hangover. It is just starting. House prices are now falling month by month across the country.
Debt arrears are mounting. Repossession orders and repossessions are rising rapidly back towards levels last seen in the mid 1990’s. Negative equity is back.
Serious economic analysts worry that our home grown problem of asset deflation will interact lethally with the global credit crunch. And also global inflation in energy and food prices could combine to create a perfect economic storm.
If there is an economic storm the public will want to know that the ship is being steered by people who know what they are doing.
During the Northern Rock crisis the boat was drifting listlessly. Captain Brown was hiding in his cabin. And Midshipman Osborne was jumping excitedly in and out of a lifeboat. We knew what had to be done.
But the Government only finally listened after months of indecision. The delay caused untold damage to Britain’s reputation and cost a fortune in legal and accountancy fees.
Now the Government has seen the benefits of listening to the Liberal Democrats perhaps they can make it a habit – to tackle the dangers of our slowing economy.
The Bank of England has to be freed up to use interest rates more aggressively by making sure that its inflation target reflects the fluctuations in house prices.
We cannot and should not try to stop lenders adjusting to higher standards of risk management. But the binge lenders have to accept some of the pain they happily inflict on their borrowers.
There will have to be a check on repossessions so that we do not have a massive fire sale of homes and a pandemic of homelessness.
No one should face repossession until there has been an opportunity for independent financial advice.
The bank must be required to offer a range of alternative properly regulated options, including shared ownership.
The vultures who are exploiting the situation must be brought within mortgage regulation. These are, necessarily, palliatives.
We also need to think ahead to a different model of growth. It should not depend on a debt financed, unsustainable, short term splurge in consumer spending.
It should instead draw on long term investment in this country’s human resources of skill and science, respecting environmental limits and repairing a fractured sense of social solidarity.
But the truth is that in the immediate future there are hard times ahead.
There will be financial casualties. Neither I nor anyone else can offer a pain free solution as the excesses of the last few years are purged from the system.
What we must insist on however is that everyone contributes according to their means. We cannot tolerate a two nation society divided between the tax payers and the tax dodgers.
The extent of tax avoidance amongst many rich people has become a national scandal. The super rich are complaining because our spineless government decided to tinker with capital gains tax.
But they will still pay far less than their cleaners – 18% versus 20% plus 10% NICs. They will still pay less than half the tax rate they paid under Mrs Thatcher and Nigel Lawson. But all we hear is a whine of self pity.
Let me be clear. I have no problem with people making serious money through hard work building businesses and creating jobs. There have to be realistic incentives in a market economy.
But the idea that the super rich should be elevated above taxation is immoral and deeply insulting to those on modest incomes who pay their full whack of tax.
Then we have the so called non-doms. These are people who, on the strength of having no more overseas connection that a foreign father, can choose not to pay any tax on their overseas income and capital.
And they can avail themselves of a battery of off-shore tax loopholes which enable them to avoid tax on UK income and capital. Probably 5 million people – many in this room – are eligible.
Growing numbers are taking advantage. After ten years of dithering Gordon Brown has decided to act.
As a veteran of the struggle against Mrs Thatcher’s poll tax, he has decided – you’ve guessed already – to introduce a poll tax. Billionaire Lakshmi Mittal is to pay the same tax as a non-dom shopkeeper.
Not surprisingly, the Tories agree that this is fair, indeed, they claim to have thought of it first.
Yet there has been an almost hysterical reaction from the City. How dare British politicians query the tax privileges of the rich? If we are not careful, they say, Russian and Ukrainian oligarchs living in £80 million houses will no longer feel welcome.
They might go somewhere else. That’s tough. Let them go. We say that foreign expatriates are welcome to live and work in Britain. But when they have been here seven years, they pay British tax like the rest of us.
Pay up or pack up. And it isn’t just rich individuals who dodge tax. Companies are at it as well. There are only two reasons for British companies to operate from Caribbean tax havens: secrecy and tax.
I salute the journalists who are running the gauntlet of libel lawyers by exposing the tax affairs of leading British companies who use Caribbean bolt holes to avoid tax.
Tesco admitted last week that it had organised itself to avoid £250 million in stamp duty this way, £10 for every UK taxpayer.
While the super rich and corporate Britain uses every dodge in the book to avoid paying tax, those on low pay face higher taxes.
The one certainty about next week’s Budget – because a commitment was made last year – is that 23 million workers and pensioners will pay 20% on their first slab of taxable income, instead of 10%. 5.3 million people will pay more tax.
The Lib Dems don’t want higher overall levels of tax. We want to see fairer taxes making sure that the tax dodgers are brought to book.
It means that the very well off pay a bit more in capital gains and income tax so that low and middle income families get a tax cut – 4p in the pound of national income tax.
We also believe that tax can be used, albeit carefully, to change behaviour.
That is why we argue for green taxes, particularly on polluting aircraft, raising revenue for our package of tax cuts elsewhere. The evidence, from the Government’s Climate Change Levy, is that environmental taxes do change behaviour.
And they raise revenue – which we would use to cut taxes in a progressive way. We should also be using taxes to discourage binge drinking. There is massive evidence of the damaging effects of alcohol on health and crime.
Yet the Government has cut taxes in real terms on highly alcoholic beverages. Many will wonder why a government which has raised income taxes on the low paid and Council Tax on pensioners is helping to promote cut price Bacardi Breezers and vodka shots.
Tax should be raised on drinks with high alcohol content – raising £225 million. We would use the money to cut VAT on healthy, 100% fruit juice from 17.5% to 5%.
This will complete the transformation of the Lib Dems from being the party of beards and sandals to the party of Smoothies.
If I were to be self critical, I would say that we haven’t been radical enough. I would like to see a much stronger commitment to cutting the taxes of low and middle income families.
And I would like to see a much tougher approach to the windfalls on property and land values enjoyed by the super rich.
Liberal Democrats represent the millions of families ignored by this Government. Yes we believe in enterprise. Yes we believe in an open economy. But we don’t have to go down on our knees to the rich and powerful.
We will stand up for fair taxes. We will stand up for green taxes.
And we will fight for a more equal Britain.
UK Establishment: Stupid Buggers
You know that the government’s obsession with collecting data, controlling people and ensuring that New Britain is the most surveilled upon state in the world has gone too far when it leads to the possibility of terrorists and rapists and paedophiles being put back on the streets.
It has happened before, of course, when Charles Clarke was Home Secretary and thousands of prisoners were released to continue their crime sprees in Britain because it was too much bother to deport them, even though that was a condition of their release. John Reid failed to correct this government sponsored crime licence, but these were essentially errors of incompetence. The machinery of state grinding to a halt because nobody could be bothered to fill in the forms and post the letters.
In comparison, the apparatus of New Britain’s banana republic junta of politicians, police and any other penpushing jobsworths is a well-oiled machine.
To put you in the picture of how lowly in the establishment’s administrative food chain you can be and still have the authority to spy on other citizens, The Guardian offers this:
The commissioner’s [interception of communications commissioner Sir Paul Kennedy] report is as loud a wake-up call as this country has ever had about the creeping growth of modern big brother methods. He details how surveillance powers have been handed not just to MI5, GCHQ and the police but also to Revenue and Customs, the fire service, the prisons, the food standards authorities, the environment agency, health service trusts, the Post Office and councils. In all, he says, nearly 800 different bodies have access powers of some sort over our communications. More than 250,000 requests were made in the first nine months of 2007: an astonishing thousand new snoops every day of the year.
So, if you thought it was just mighty ministers and senior police who could open your letters and listen to your telephone calls and then only if you were a seriously suspicious terrorist suspect, forget it. The trolley collector at Tesco is probably scanning your emails this minute.
All of which might be fine if you subscribe to the view that this is needed to fight The War on Terror and you are convinced that any threat the government concocts is worth losing your freedoms over, but would you be happy if it meant real criminal being released from jail?
After it emerged that counter-terrorism officers probably secretly recorded MP Sadiq Khan’s conversations with a constituent - terrorist suspect Babar Ahmad - in the Buckinghamshire prison of Woodhill in 2005 and 2006, it has been claimed that prisoners’ conversations, perhaps with their legal representatives, are routinely bugged.
The problem is, this obsession with monitoring everything everyone does, whether they are still wandering the streets apparently freely or when they are imprisoned, could have severe legal implications, always assuming that New Briatin will remain governed by the due process of recognisable laws for a year or two yet.
Justice Secretary Jack Straw has so far mumbled and bluffed and obfuscated his way through this minefield with all the adroitness of a bull in a china shop.
The BBC has this:
Shadow home secretary David Davis said he was writing to the Justice Secretary Jack Straw demanding a full-scale investigation and said ministers must have been aware.
“It is inconceivable that this action has taken place without ministerial approval,” he said.
“Whilst there can be reasons for eavesdropping on legal meetings, it is such a serious infringement of people’s rights that there has to be a very good reason.
“It can put the trial at risk which means that serious crimes may go unpunished.”
Liberal Democrat home affairs spokesman Chris Huhne said if the latest allegations were true, fundamental legal procedures have been breached.
“We need an immediate inquiry into exactly what is going on.
“If that confirms these allegations, I think it’s the most astonishing and foolish policy that is going to prove to be totally counterproductive and quite calamitous.”
‘Furious reaction’
Senior British lawyer Geoffrey Robertson QC said if the claims were true, they could lead to violent offenders being released.
“The end result… is that these cases will have to be brought back to court and in my view the courts will react with such fury as a matter of principle, those whose conversations were bugged will have to be let out,” he told BBC Radio 4’s Today programme.
Labour MP Andrew MacKinlay said: “The only surprise I have is that people are surprised.
“I and others have tried to draw attention to the abuse of powers by senior police officers over recent years, often only to be mocked.
“In my view this indefensible situation arises from the cocktail of supine ministers and the total absence of any Parliamentary oversight of the security and intelligence services.”
One of the tricks which Nazi Germany used to keep the people cowed and terrified was to ensure that everyone, from children upwards, was informing on everyone else.
Expect the government and police to set up phone lines for you to do the same.
Oh, that one is already covered, apparently.
Parliamentary Nepotism: The Family-Sized Can Of Worms
Obviously, just because a person or a group of people may be perceived as being dishonest, avaricious, duplicitous, idle, vainglorious, self-serving and criminal does not actually make it true.
After the Derek Conway affair, in which an MP turned his Parliamentary seat into a family money-making machine, David Cameron asked the rest of his team to declare whether they were also using public funds to employ members of their families.
An astonishing 70 plus MPs admitted to doing so, about a third of the Parliamentary Conservative party.
Of course, using taxpayers’ money to pay your spouse or children or sisters or cousins or aunts is not illegal. Most MPs would probably not even consider it to be improper in any way or see that it might look a little suspicious.
That it might appear that you are making sure your family’s, so to speak, mouths are firmly clasped on the teat of the state. That you are making sure that you and yours are getting any handouts that may be going. That you and your family are huddled round the sloshing trough of the gravy train of state.
However normal it may seem at Westminster, it could look somewhat corrupt to an outsider who occupies the normal world, where easy money is a myth and graft simply means having to work your fingers to the bone to make ends meet.
The Times Online has this:
He [David Cameron] said: “As you know, Members of Parliament are responsible for employing their own staff. Earlier this week I asked to be told how many members of my parliamentary party employ family members and there are over 70.
“I believe the public are right to demand more transparency and openness when it comes to MPs staff, pay, allowances and expenses. As a first step I will ensure that from the start of the new financial year (1st April 2008) all Conservative front bench MPs must declare if they employ family members in the Register of Members’ Interests. I hope all other Conservative MPs will follow suit.”
He added that this was “the first in a number of steps we need to take to reassure people that Members of Parliament work hard for their constituents and are honest and open in their spending of public money”.
[...]
It did not take long for Gordon Brown to try to outdo Mr Cameron in the anti-sleaze ‘arms-race’. His political spokesman announced this morning that he expected all Labour MPs to declare publicly any family members. The Prime Minister made clear he expected such transparency in a meeting with the Chief Whip, Geoff Hoon.
Indeed, in The Guardian:
Brown’s official spokesman said today: “The prime minister has already made clear in his discussions with the chief whip that all Labour MPs, not just the frontbenchers, should be open and transparent about the staff who are working for them and, in light of the scandal involving Mr Conway, that includes identifying any family members.
“But the important thing is not just that the staff are registered and identified appropriately but that they are doing the job for which they are funded by the taxpayer.
“That’s what Mr Cameron and his party have previously failed to recognise.”
There might be a slight problem with the need to ensure that: “they are doing the job for which they are funded by the taxpayer”. If that rule was applied to Parliament in general, the place would be deserted.
While you chaps are all looking at whether it is right and proper to spend public money on your wives and girlfriends and boyfriends, try to find time to look at why running the country is never considered important enough to be a full-time job, but always allows you to run second, more lucrative parallel careers.
What was that catchphrase from The A-Team? Sleazeball, slimeball? Whatever.
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