Liberal Vision

The Lib Dems: In search of new voters (part 2)

A couple of weeks ago I suggested here on this blog that the Lib Dems were the natural party of small business (The Lib Dems: In search of new voters…) and that with about 23million people working in small and medium sized businesses, they were a pretty attractive voting sector to pursue.

A study out today provides us with another damn good reason why the Lib Dems really should think about its relationship with small businesses – they disproportionately employ vulnerable people – making them both economically and socially important.

The IEA report Self-employment, Small Firms and Enterprise, by Peter Urwin, says that

“…small businesses provide vital opportunities for those who often struggle to find work in the rest of the labour market – those with no or few qualifications, immigrants, women with domestic responsibilities and those with poor English language skills. There is therefore not only an important economic, but also a social dimension to ensure the government is not holding back this sector.

…11% of employees of small firms had no qualifications, compared with 4% of employees of large firms.

…Only 8% of people working in large companies had a language problem, whereas in companies with less than ten employees this is 18%.”

That’s pretty compelling stuff .

So what to do ?

Well , consider the IEA’s conclusions….

“At a time when Britain’s economy requires thriving businesses, this research shows that complex regulation such as employment protection legislation and costs such as National Insurance prevent the self-employed from taking on employees.

There is therefore an increasing tendency for people to be self-employed without employees or to work for larger companies that are better able to cope with the costs of regulation. In short, there are too many barriers preventing people from moving from self-employment to becoming employers of small numbers of people and this affects vulnerable groups in the labour market.”

My advice to the policy makers within the Liberal Democrats is not only take note of the importance of small business. But to to embrace the IEA’s recommendations to help support this important sector.

I won’t go into all the  IEA’s recommendations here (go read for yourself) but essentially it argues for government  to lift the regulatory burden on businesses that is currently preventing many self-employed people from developing their businesses and employing people.

All of this would not only demonstrate the Liberal Democrat’s commitment to” the small and the local” (see previous post) – but is also a real strategy for growth and employment.

Sounds like a win-win to me.

Tags: growth, IEA, Institute of Economic Affairs, Peter Urwin, Self-employment Small Firms and Enterprise, small business

Media failure that is truly shocking

A new publication was launched earlier this week “Sharper Axes, Lower Taxes: Big steps to a smaller state“,  calling for a radical downsizing of the public sector and giving an indication of the corresponding tax cuts that would be made possible as a result. The media coverage was, as you might expect, mixed. The Guardian headline read “Thinktank advocates abolition of the NHS and slashing overseas aid”  whereas the Daily Mail had a somewhat different take on the issue “You call those ‘savage cuts’? Actually they are dangerously pathetic” . No surprise on the line taken by either of those papers – no change there then.

But the headlines that actually caught my eye – and caused a huge intake of breath – both came from City AM  –  “Public in dark on UK debt” and the editorial “Media is failing public in many ways” . The focus of these two articles was not on the “Sharper Axes, Lower Taxes” publication per se but on the COMRES/IEA survey that ran alongside this story.

That survey suggests a terrifying level of misunderstanding/ignorance about the state of Britain’s finances. One of the most astonishing facts coming out of the survey was that an alarming 70% of those asked believed the government is cutting £350bn from the debt over the course of the parliament – fewer than one in ten people realised that the government is actually adding hundreds of billions of pounds to the national debt.

This is a startling revelation. We are not talking about people “getting the gist” ..but being out by a billion or so. If this survey is correct, then we are talking about the vast majority of the British electorate having completely the wrong idea about where we are financially and what we still have to face.  

How can the public determine which spending policies are right for the country if they are blind to the actual state of the finances? How can democracy be expected to operate when those voting are so ignorant of so many of the essential facts?

Alistair Heath suggests that it is the media must take much of the blame. And he is almost certainly correct. Coverage of the spending cuts has been, if anything excessive. We have all enjoyed ding-dong after ding-dong with politicians facing one another, special interest groups and indeed highly paid journalists to discuss Britain’s finances.

And yet the sum total of all that “shouty television” is a population which thinks this government is doing the precise opposite of what it is actually doing. That is truly shocking.

If the state of affairs is truly as the COMRES/IEA poll suggests, the BBC, whose remit is to educate and inform, must be sitting very uncomfortably today. Not only are we, the people, paying for the BBC to educate and inform us – but BBC is the dominant news provider in the UK. (Figures below from Conservative Home – click here for information on BBC’s dominance of other media).

The BBC must surely move, and move fast, to assuage our fears concerning the ignorance of the nation or, if COMRES/IEA survey is correct, to put this woeful state of affairs to rights. If it does, then the IEA may well  “extend the frontiers of the very limited debate we have on public expenditure” in more fundamental ways than even it may have intended.

Tags: Alistair Heath, BBC news, City AM, Daily Mail, finanacial crisis, Guardian, IEA, Institute of Economic Affairs, Sharper Axes Lower Taxes, UK debt

Fair Trade without the Froth

Today, the Institute of Economic Affairs has released a new research paper “Fair Trade without the Froth: A Dispassionate Economic Analysis of “Fair Trade” by Sushil Mohan.

It concludes that claims by the Fair Trade movement are seriously exaggerated. The IEA says that “.. It is likely that producers end up with only a small fraction of the extra margin consumers pay“ , that “Fair Trade doesn’t benefit the poorest producers due to heavy administration requirements and fees involved” and that “Fair Trade does not focus on the poorest countries”.

We agree with all those sentiments.

Buying Fair Trade eases the middle class conscience and little more.

If you really want to help the developing world, fight loud and hard for the removal of trade barriers.

Back in summer of 2009 a guest contibutor to Liberal Vision – Franklin Cudjoe – made many of the points the IEA makes today and having re-read his post this morning I thought it worthy of a second outing…. so here it is….

GUEST POST for Liberal Vision by Franklin Cudjoe 10th July 2009

In the New Statesman’s “Observations on Fairtrade” I was quoted as saying that free trade, not Fairtrade, is the key to developing countries like my own. Here are a few reasons why this is so.

Most of the Fairtrade premium charged by supermarkets does not make it to the poor in developing countries. It has been estimated that only ten per cent filters down, most of it consumed by Western retailers. No wonder that many people suspect that supermarkets are granting monopolies to their own-brand Fairtrade-approved goods for the sake of their own profits. They convince consumers that they are morally obliged to buy Fairtrade stock, offer no alternative, then pocket the difference.

But more importantly, even the amounts that do trickle down will not help economies to develop. Any subsidies provide perverse incentives that can delay development. Increasing prices artificially causes an increase in supply which results in too much produce being grown. As Fairtrade growers only pass on about 20 per cent of their stock to the Fairtrade scheme, the results are quite dangerous, and can result in the market price actually coming down (due to surpluses).

Instead, people in less developed countries need to be able to follow price signals and adapt to changing demands – both from our own markets and those in the West.

Sadly both of these markets are blocked from us by trade barriers. Your governments are partially to blame for this – but even more culpable are our own self-interested politicians.

Trade barriers between African countries are an extreme impediment to our economic development. Shipping a car from Japan to Abidjan, Côte d’Ivoire, costs $1,500 – yet shipping the same car from Abidjan to Addis Ababa, Ethiopia, costs over three times as much – $5,000!

According to the World Bank, removing regional trade barriers would earn Africa an extra $1.2bn a year.

So what can concerned people in wealthier countries do to help? For a start, you can lobby your governments to stop setting a bad example by imposing trade barriers themselves. Many people in poor countries say “rich governments protect their industries, why shouldn’t we?”. The result is that we all lose – but poor countries suffer the most.

We now have a global trade war, arguably prompted by President Obama’s “Buy American” policies in the USA. Ministers at the G8 preach free trade while building up barriers back at home.

Buying Fairtrade is a feel-good scam. It does not help. Those who really want to help should urge their politicians and the G8 to bring down trade barriers – and make a lot of noise about it.

This post was first published on Liberal Vision 10th July 2009. Franklin Cudjoe is the founder and Executive Director of IMANI Center for Policy & Education, a think tank based in Ghana. His work has been cited in House of Commons debates on aid and development in Africa.

Tags: Fair Trade, Franklin Cudjoe, free trade, IEA, Institute of Economic Affairs, Sushil Mohan

Review of conference by Mark Littlewood

Well said Mark Littlewood of the IEA  (founder of Liberal Vision)… written for LDV….   

“What a strange few months it’s been for the Liberal Democrats. In Bournemouth a year ago, few LibDems would have truly believed that this was to be their last annual conference in opposition.

My sense of the mood in Liverpool this year was that it matched the political and economic times we live in. Serious, but somewhat apprehensive. There seemed a lot of quiet satisfaction – although never smugness – that there were Liberal Democrats in government, but a nervousness about what the “end game” might be.

A few things truly surprised me. Support for the principle of entering Coalition with the Conservatives was close to unanimous. A straw poll at the IEA’s fringe meeting showed about 95% felt that Nick Clegg had made the right decision in those tense few days after the General Election. The national media were, of course, on the look out for any sign of coalition-fatigue, but seemed initially disappointed – and then rather impressed – about the absence of much strategic dissent.

But looking through the tea leaves of Liverpool, there are some longer term issues which the party will have to address. The first is the status – or lack of it – of the policy-making machinery. The passage of a motion critical of free schools may have caused just a few jitters in the leader’s entourage, but pretty much everybody else shrugged their shoulders. Not only was the government going to completely ignore the decision of conference, but LibDem MPs would do so too. And rightly so. What then is the real point of Liberal Democrat party policy? Sure, conference reps can point at a piece of paper and insist “that is our official policy”, but so what?

Secondly, Nick Clegg has a fight on his hands to try and reframe a Liberal Democrat approach to “fairness”. I wish him well in doing so, but he will need to try harder than he did in Liverpool. Many Liberal Democrats – or at least the most vocal ones – still take a “bar chart” approach to fairness. A policy which has the effect of improving the immediate financial position of the relatively poor at the expense of the relatively affluent is deemed “fair”. Little or no attention is given to dynamic effects. Nick Clegg – and the Coalition as a whole – are surely right to argue that the challenge for government is not simply to shift someone’s income from £9,000 to £10,000 per annum through redistributive mechanisms, but to provide such people with the opportunities and incentives to rapidly ascend the income ladder. Liberal Democrat activists, however, have yet to fully buy in to this approach.

Finally, no one seems to have fully addressed the question of how the Liberal Democrats can maintain a separate and distinct political identity as junior Coalition partners. Or whether it’s even possible to do so. Vince Cable may have stretched Cabinet collective responsibility to the limits with his rather off-piste and ill-judged broadside against capitalist “spivs”, but that hardly amounts to a distinct identity – let alone a liberal one. This is going to be the real challenge – and the largest area of disagreement – at Liberal Democrat conferences in years to come”..

Tags: IEA, Lib Dem Conference, Liberal Vision, Mark Littlewood

Coalition,Cuts and Conservatives…post match report

“Coalition,Cuts and Conservatives” was, when I looked it up ahead of conference, reckoned to be the 5th most popular fringe at conference. And popular it certainly was. Apologies to the hundreds that were turned away as ‘ealth and safety forced us to close the doors.

We had a hairy moment or two in the preceding half hour..not least the fact that conference registration “opening hours” (or closing hours to be more precise) meant that one of our speakers – Lembit Opik – could not actually not get in to conference! Yes, the steward knew who Lembit was (even my mum knows who Lembit is!) and no he was not considered a security threat (though he sounded less certain of this to be honest), but Lembit could not be allowed entry without his pass. The computer said no. All was thankfully resolved when a brilliant conference organiser  re-opened the registration desk so that Lembit could indeed prove he was Lembit. Our thanks to the organisers for that, but how ironic (as the chairman remarked at the time) that the Lib Dems have only been in power a few weeks and have seemingly embraced ID cards so wholeheartedly.

So to the session. I have been asked to precis what was said by the many who could not get in. Always a tough task, and I have kept it to “top line” messages ..but here goes…..

Jeremy Browne MP kicked off. He asked the audience three questions – which (being a minister) he then answered.”Should we cut the deficit?” – Yes he said. He was completely signed up to the fiscal cuts of this government. The sooner  the better.”Should we go into coalition”– Yes he said. There was no other option. The Lib Dems found themselves immediately post election on a desert island with the Tories.  Labour were on a boat, going away from the island and sinking fast . It was NOT an option to sit on the sidelines with the economy teetering on the brink of disaster. “Where next”? Jeremy asked Lib Dems to “hold your nerve”.  Using a football analogy (is he a footie fan ?), we are, he said, in the 7th minute of a football game and there was no need for a change in formation, or start considering substitutes just yet. In a wrap up he made the point that it was important to keep the Lib Dem identity within the coalition – but stressed  that not all aspects of Lib Dems identity were good. E.g. he was eager to change the view that “Lib Dems were not capable of governing”..and the view that “hung parliaments equal chaos”. So, we should hold our nerve …the positive aspects of the Lib Dem’s identity will grow through this parliamentary session and we would NOT be seen as a glorified pressure group but a serious party capable of governing.

Professor Richard Grayson came up next, telling us of  his personal experiences campaigning on the doorstep at the last election and that  government spending cuts was far and away the biggest issue raised. He said that the Lib Dems had campaigned on  the same scale and timescale of cuts as Labour (the Tories deeper and sooner) which made it hard to explain the Lib Dem change within coalition. He did not accept that a Tory minority government was an impossible option at the time and suggested that is was an “ideological drift towards the centre right, by the top echelons of the party” that explained the decision to go with the Tories.  He considered it appropriate for Lib Dem MPs and ministers to voice dissent publicly with coalition government policy (mentioned Vince Cable’s interventions on immigration), saying it was helpful to illustrate to the electorate how coalitions work. People need to witness discussion/debate within the coalition to understand the value and role of the Lib Dems in that government.

Next up was Professor Stephen Haseler (founder member of the Social Democratic Party). He opened by raising concern that the coalition premise to get out of this economic crisis was growth- but that with banks lending much less and the collapse of the global economy meaning little prospect of exports how could there be growth? When there is no growth in the private sector he believed that it was aggravating the situation by cutting public spending. The consequence of this would be economic hardship and unemployment. The coalition government was going to become very unpopular and the Lib Dems would take the brunt of the criticism – we the Lib Dems will be blamed for the crisis. His view  was that it would have been better to have gone down the route of supporting  the Conservative government on a policy by policy basis – that WAS an option – and that the Lib Dem leadership chose power instead and they would have to live with it.

Guido (Paul Staines) came next. Gleefully (and he really did look very happy – though that might have just have been unbounded joy at being at Lib Dem conference) he told us that it had been a 20 year ambition of his to see a Lib/Con coalition and that he (and the chair Mark Littlewood)  had been two of the most prominent people calling for just that during those mad meeting-filled days, post election. Turning to the future, he said that if there was not a double dip (and pointed out that  UK growth was certainly evident currently), we could enjoy an economic bounce in 2013/2014 that would get the Lib Dems re-elected. He expressed a desire for the the Lib Dems to become the second largest party in the country and believed that was attainable – and, controversially for the assembled audience, he thought that some form of electoral pact with the Conservatives would be necessary (oh how the audience hissed at this). He finished by saying that the prize of keeping the Labour party out of power was worth fighting for.

Julian Harris (Liberal Vision) followed Guido.  He started by quoting Hislop…. that the good thing about coalition was that it kept out (or at least at bay) the loonies of bothparties. He believed the coalition was a good thing but that the Tories he had spoken to (and urged us to believe that they are really not as bad as you think) were  NOT happy with the coalition and expected it to end. His analysis was that this was because Conservatives by their very nature do not believe in coalition. They just want to be in power. That is why they don’t like AV. Looking forward he said that the challenge for the Liberals was to ensure that liberalism was a guiding influence on government. He too called for liberals to keep their identity and push the things they believe in (eg localism) . He finished by saying that in order to reduce the deficit we need to REFORM the state not just trim it a bit and he preferred to have liberals involved in that process, rather than sitting on the sidelines.

As Lembit had yet to break through the ring of steel, the chairman (Mark Littlewood) asked Jeremy Browne (who was being so efficient he was quitting our session early to squeeze in another fringe event) whether it was possible for ministers in a coalition government to get out their own distinct liberal message?  Jeremy has obviously honed his interviewing technique across the summer and in true ministerial style chose to address another issue. He stated very boldly that forming a coalition with the Conservatives had been a fantastic achievement. He said he had grown very tired of sitting on the sidelines seeing the Lib Dems be proved right time and again to no avail. This was an opportunity to show that the Lib Dems should be in power – that Lib Dems CAN do government. He also pointed out that had we gone down the “minority Conservative government route” and Osborne had been voted down on his deficit-cutting package we would now be facing another general election. We would have demonstrated that we could not step up to the plate when needed and would have been punished at the next election with fewer MPs returned. What had we got out of this election? he asked….More than any other election in his lifetime. On that note he left to fulsome applause.

Lembit had by now battled his way through the security cordon and was (also to warm applause) invited to take Jeremy’s seat. How cool was this he said..a few weeks in coalition and he was being invited to take the seat of a minister… Turning to the topic in hand he kicked off by asking what on earthwas the point of being in the business of winning elections and then running away from power when it was offered? He reminded us all that he had in fact lost his seat to a Conservative and that people might assume that he was against a Lib/Con coalition (yep I assumed he was)..But no! he said that the ONLY numerical option was to go with the Tories. He believed that there was no alternative; that this was a test of courage – and had demonstrated that we do care more about the country that the selfish short term interests of the party. He finished by saying we should hold our nerve and be proud of the decision to take the brave and correct option.

Mark Littlewood (chair) then took a straw poll – “Were liberals right to join in coalition with the Conservatives?”. I was surprised to see that the overwhelming majority put their hands up (I was at the back of the room but estimate 95% put up their hands. Just a handful (and I mean a very small handful – one, maybe two?) raised their hands to the counter question of whether this was a bad thing.

Questions (and one or two rather long speeches) followed. I had writers cramp by then and gave up note-taking at that point – apologies.

The chairman did run a couple of other straw polls across the Q&A that I did note. “Who believes that MP’s were honest during the election about spending cuts?” (few hands)… “Who believed that there was obfuscation?” (vast majority raised their hands…no shit!). Hmm said Mr Littlewood this is a stored up problem for the coalition. You betcha. 

The final straw poll… “Will the coalition last a full five years?” Yes was the resounding majority reply.

And that was that. It was then off for food, wine and cigarettes (in varying proportions) and talking into the the wee small hours.

Our grateful thanks to our co-organisers IEA  (Insitute of Economic Affairs) and ASI (Adam Smith Institute), the chairman Mark Littlewood, our brilliant speakers, a truly marvelous organiser who got Lembit through the men in black, and of course the audience which participated so enthusiastically  (apologies not recording your comments/questions) and tolerated a superheated room without complaint.

Tags: adam smith institute, Coalition Cuts and Conservatives, fringe event, Guido Fawkes, IEA, Institute of Economic Affairs, Jeremy Browne MP, Julian Harris, lembit opik, Lib Dem Conference, lib/con coalition, Mark Littlewood, Paul Staines, Professoer Richard Grayson, Professor Stephen Haseler