Firstly it is a pleasure to celebrate with Alistair Carmichael and the rest of the Scottish team after our successful cross-party campaign to keep the United Kingdom united.
British politics owes a lot to Scotland: some of our greatest political leaders. There were few greater than Gladstone – born in Liverpool but a Scottish MP. His feats of oratory were legendary. Not least was his speech on the Bulgarian Atrocities. He is said to have spoken for five and a half hours, without notes, from memory. As far as we know, he didn’t have to issue a statement the following day apologising for forgetting to mention Bulgaria or the Atrocities.
Others have sought to emulate him. You may remember the Prime Minister’s feat, which won him the Tory leadership, of memorising a 45 minute speech. He talked about the things he cared passionately about: embracing the underclass and saving the planet. You might recall the hoodies and the huskies.
Which raises an interesting question: is it worse for politicians to forget what to say or to remember what to say but forget to do anything about it.
The last two party conferences have helped us to understand our opponents better. The Tories are reinventing themselves as UKIP but without the beer, while the Labour party is offering us French Socialism, but without the sex.
But today I want to talk about us, not them. What we have actually done in government. What we have delivered.
I vividly remember a bumpy Conference five years ago, when we were the first party to confront the need for cuts and tax rises after the budget was shot to pieces by the banking crisis. I also remember how we undertook, if we found ourselves in government, to prioritise cutting income tax for the low paid. We have delivered BOTH in office.
Let us remember why we are in government. That we joined the coalition because there was a national economic emergency. That we worked with the Tories because voters chose them as the largest party, not because we like them or because we ARE like them. That we have been a major engine of reform, not just a brake on their extremes. We are accused of abandoning progressive politics. We haven’t. What we have abandoned is the politics of perpetual protest. Nick Clegg’s biggest achievement as party leader has been to make that transformation.
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We have followed President Clinton’s mantra that ‘It’s The Economy, Stupid’ and now have a record of contributing to a recovery with strong growth, jobs and investor confidence. Given where we started from in 2010 in the aftermath of the biggest economic crisis in a generation, that is a major success.
But nobody should be complacent. The economy is still dangerously dependent on the drug of cheap money. Some of the stress factors which preceded the crisis – like serious housing inflation, a mountain of mortgage debt, and weak trade performance – are still with us.
One of the lingering legacies is the budget deficit and yes the DEFICIT has to be dealt with. But the need for budget discipline mustn’t become an obsession with ever deeper cuts in public spending. Key public services have already been cut to the bone from legal aid and local government, to policing and defence. The Tories are ideologically obsessed by cuts because they see it as a way of destroying public service and the welfare state, which they detest.
Let us be clear. The Tories’ proposal to take another £25 billion or more out of welfare and unprotected Government departments will do great harm to valuable services: to imagine otherwise is fantasy. I will categorically not go along with this.
So you might ask what is the alternative? The truth is more taxes will be needed. To contribute to deficit reduction and also to address unacceptable inequalities. Any politician who tells you that the next Government can balance the budget and avoid tax increases is lying to you.
There is a role too for more public borrowing by central and local government to finance productive investment in transport, housing and innovation. When interest rates are so low, borrowing for investment is a no brainer and is nothing to do with deficit reduction. Of course we need to protect the next generation from too much public (as well as private) debt, but the next generation would certainly not thank us for a legacy of underinvestment, over-stretched infrastructure and unaffordable homes.
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We must also communicate to the country our long term vision of what we want the economy to look like: knowledge-based, outward looking and green. A key step is the industrial strategy which I have put in place and has the support of key business sectors from the creative industries and life sciences to aerospace and cars. The Tories – not to be outdone – call it a ‘long term economic plan’ (that phrase is a bit Soviet for my taste – but we agree, essentially).
An industrial strategy is not about going back to discredited ideas from the past. The government does not know better than business where to invest and what to produce. But we have also moved on from the discredited notion of laissez-faire. We can’t just sit back and let it all happen. Markets are necessary but they also fail. The state is also necessary. To build business confidence. To create certainty around regulation. To promote competition. To sponsor research and innovation and to ensure that the workforce has the necessary skills. To protect consumers, workers and the environment. The industrial strategy is a public-private partnership, writ large.
It is also long term, while our business culture is far too often dominated by short term shareholder returns. In reality it needs a decade, or several, to develop the next generation of energy efficient vehicle engines; to produce new cancer drugs; to develop off-shore wind or gas fields; to create new railways or design and build new aircraft. The industrial strategy helps to make these things possible and it is working.
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Which takes me to finance. Six years after the banking crisis, banks are still taking more money out of small and medium sized companies than they are putting in.
But thanks to interventions led by Lib Dems in government things are getting better. Legislation has now effectively separated risky ‘casino’ banking from mainstream banking. The British Business Bank, which I announced at our Conference two years ago, is now growing rapidly, providing new finance to small and medium sized companies, including 32,000 start-ups which could not get loans from high street banks. The Regional Growth Fund has allocated £3 billion which will create and safeguard over half a million jobs. The Green Investment Bank, based down the road in Edinburgh, has committed over £1.4 billion to green projects, like new street lighting here in Glasgow.
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Nowhere is a long term perspective more necessary than in educating our population for a competitive, knowledge economy.
That is why I was determined from Day 1 of our government to breathe life back into apprenticeships and into adult education. I drew on the inspiration of my parents who left school at 15 to work in factories and who got on in life through vocational education and adult learning. In Government we have launched almost 2 million apprenticeships – a quantum leap in ambition – and we are now reforming them to improve quality and employability. And I want to see apprenticeships properly valued. So today I am proposing a £1 an hour increase in the minimum wage for all first year apprentices and I am writing to the Low Pay Commission to put this in place.
Beyond that I want to see a big expansion in degree level advanced apprenticeships which end the false apartheid between academic and vocational education; and a big expansion of community adult education including helping the mentally ill to be properly integrated back into society.
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We need these skills because the rest of the world isn’t standing still. Globalisation proceeds apace. We need a well-educated, well-trained population that is adaptable, creative – and outward looking. That isn’t politically easy. Many voters feel financially squeezed and insecure and want governments to ‘look after their own’ resulting in defensive, inward looking policies. The Politics of Identity is on the march in many parts of the world. We see it here in the debates around Scottish independence, the questioning of our open trading system, membership of the EU and – above all – immigration. Our party has a massive responsibility: to be the voice of sanity, seriousness and sense; standing up to the purveyors of panic, prejudice and pessimism.
The Tories for their part are horribly torn between open economic liberalism and their inward looking, UKIP-facing grassroots, who probably see Clacton-on-Sea as the new Constantinople – holding out against the alien hordes. So they say they want Britain to be ‘open for business’, ‘to win the global race’; then, they try to close the borders to skills and talents that Britain needs, by pursuing an absurd net migration target – plucked out of the air and totally unenforceable. Overseas students, whose fees subsidise British students and earn £9bn a year for the UK, are discouraged and so go to the US or Australia instead. Firms who need specialist skills from Japan, India or the US have to climb piles of red tape (far bigger than anything generated by Eurocrats in Brussels). We then train Chinese engineers and insist they go home just when British industry can make good use of them. But, of course, there is always a warm welcome isn’t there for dodgy billionaires willing to make a large party donation for a game of tennis with Boris and Dave.
Now our responsibility as Liberal Democrats is to tell the uncomfortable truth: that the vast majority of migrants coming to the UK from inside or outside the EU have brought tangible benefits to the economy, importing valuable skills and strengthening our civic culture. Of course immigration does have to be controlled at the point of entry AND exit. And we must deal with abuse and crack down on ‘benefit tourism’. But not at the expense of the EU Single Market, and its free movement of workers.
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But just as the free movement of labour attracts ‘benefit tourism’, the free movement of capital attracts ‘tax tourism’. I strongly agree with George Osborne that we have to stop the Amazons and Googles operating tax avoidance dodges. There is no future for Britain freelancing as a tax haven: Liechtenstein on Thames, or Cayman on the Clyde.
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I believe the British public still support an open market economy if they feel it is fair. That is what lies behind our mantra of a “stronger economy and fairer society”. Thanks to Lib Dems in Government there is now a right to shared parental leave and for all employees to request flexible working. Company bosses’ pay is now transparent and subject to a binding vote by shareholders. We have created the largest worker share ownership scheme. And we have modernised and protected the country’s 11,000 post offices.
We are successfully promoting diversity in the boardroom – every FTSE company now has a woman on its board and we are going to do the same for ethnic minorities. We have also strengthened minimum wage enforcement and I have overseen the first above inflation increase in the minimum wage since the financial crisis. We are outlawing abuses of zero hour contracts. We are supporting farmers and local pubs against unfair use of corporate power by supermarkets and large brewers. But we have stopped the Tories bringing in ruthless ‘hire and fire’ legislation. We have always understood that a successful economy needs a flexible labour market: but not so flexible that workers live in fear.
I believe we should be pro-business but we should also be pro-worker. Which is why today I am launching a wide ranging enquiry into the conditions of large number of workers – up to a million- who fall through the cracks and don’t currently have full employment rights. The current bureaucratic system enforcing these rights has failed them and also needs reform.
There is, of course, much, much more to be done. But we have a real record of achievement in Government. In very difficult circumstances we have brought compassion, common sense and competence into Government: we have maintained our liberal and social democratic values in doing so; and we have stood up to the born-to-rule arrogance of our coalition partners as well as the narrow tribalism of the Labour opposition.
There is a LOT to proud of: and we MUST be proud of it.
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