As my poster on what the Liberal Democrats believe indicates, economic policy has long been a difficult area for the party in terms of coming up with a distinctive liberal approach which isn’t just not quite red, not quite blue.
So it is good to see Tim Farron’s first speech dedicated to the economy since becoming leader trying to do just that, especially in his section on backing entrepreneurs.
The key elements of his speech to the IPPR today, including that section, are:
10 word summary
So today I intend to set out the three principles that will govern Liberal Democrat economic policy for the next five years. They are:
Invest now in infrastructure
Take the long view
It’s a clear prospectus – just ten words – but it sums up very simply where we need to take this country and how my vision for the future differs from those of George Osborne and Jeremy Corbyn.
Comprehensive Spending Review
Next Wednesday, the Chancellor will deliver the results of his Comprehensive Spending Review. In it he will set out £52 billion of new cuts to public spending over the course of the Parliament.
George would prefer you not to think about what that actually means. Certainly, he was very coy about it during the election. He’d like you to think about public spending in a vague, esoteric way: a civil servant here, a feckless scrounger there, nothing terribly important.
But of course public spending pays for the things which matter to us all and to our daily lives: the schools our children go to, the hospitals and doctors we visit when we are sick, the police and security services who keep us safe. It is the roads and railways that get us to work the carers who will look after us when we are older and who care for our loved ones now, the new affordable homes which give us somewhere to live.
And here’s the thing: the vast majority of these cuts are nothing to do with the job that the Coalition Government started in 2010 to balance the books.
You know, the phrase “hard working families” has become a terrible political cliché. But in the case of those that will be most hit by the removal of tax credits, it turns out to be spot on.
Those families that rely most on tax credits are those that have to work really hard – often holding down multiple jobs – to get by.
So the Chancellor’s plans aren’t just unfair, they are also self-defeating and that’s why the Liberal Democrats will oppose them every step of the way…
And I want to take this opportunity again to invite the Labour Party to join us, because transitional protection is not enough…
So I say to Labour: when we oppose the cuts to tax credits again, this time join us. With your support, and that of the many Conservative MPs who have also expressed concern, we can stop George Osborne’s tax credit cuts.
We need to start direct Government spending on house-building, including finally cutting ground on new Garden Cities to provide new communities with decent jobs and infrastructure, for the next generation.
Support for small business
One, we would give real teeth to the Small Business Commissioner, such as the power to fine large companies who regularly fail to pay their bills on time.
Two, we will press the Government to renew the review of Business Rates that Danny Alexander initiated when he was in the Treasury and which George Osborne has quietly dropped.
And, three, we will be passionate champions of local banking.
The liberal spirit is the entrepreneurial spirit and entrepreneurs are natural liberals.
What does it mean to be an entrepreneur?
It means believing that no-one owes us a living, but nor should government get in the way of us making a living for ourselves – like liberals.
It means, given the opportunity, believing we can make a difference through our own individual talents and vision – like liberals…
That’s why I want the Liberal Democrats to become the champions of long term, high value Venture Capital in the UK.
What does that mean? Well for starters we could look at doing four things.
First, British investors in British companies need to be able to move their money around more easily. That may mean, for example, allowing investors to keep more of the money they would receive upon exiting an investment, providing they move on to the next investment rather than taking their profits.
Second, we need to encourage large companies to act as venture capital investors. We could start by allowing companies that invest in Venture Capitalist Trusts to claim a significant rebate on the cost of investment in small businesses, or include such investment within the remit of Research and Development Tax Credits.
Third, we should look towards the success surrounding Stanford University in encouraging Venture Capitalists to set up shop around our Universities, on the lookout for the next great idea. Cambridge is already having some success in this area but we need to go further, for example, giving local authorities powers to tempt those who may be able to fund new business ventures, or support the scaling up of existing projects via tax incentives.
And fourth, we need to do everything we can to encourage diversity within the financial industry, to further support peer-to-peer lenders, and other alternative finance providers.
Does this all amount to a distinctive, vote winning economic policy? Not yet, but that of course is far too high a bar for one speech alone. It is, however, a promising step in the right direction.