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Economic policy motion

You may have seen in the media that it has been confirmed that the party will debate a motion on economic policy at conference in Glasgow.

Unfortunately the motion selected for debate is not the one submitted by members of Liberal Reform.

However, the motion, backed by Nick Clegg and Vince Cable, is a very good one, and we intend to give it our full support (it is reproduced in full below).

We will also be looking to submit amendments to the motion on issues such as planning reform, monetary policy and free trade that we think can make it even better.

We will be in touch about these amendments soon.

Strengthening the UK Economy

Conference believes we should pursue a bold and imaginative economic strategy to stimulate jobs, growth and investment within a strong framework for fiscal consolidation.

Conference welcomes recent improvements in the UK economy, specifically:

1. That faced with the highest budget deficit in post war history in 2010, as a consequence of the banking crisis and Labour’s mismanagement the Government has managed to reduce the structural deficit by a third since it came power.
2. That growth is returning to the UK economy, in the first half of 2013 growth was above forecast and forecasts from the Bank of England and the OECD see the UK growing steadily for the rest of 2013, at a faster pace than France, Germany and the Eurozone.
3. That employment levels are close to their highest ever with over a million net new private sector jobs, helped by a strong package of government programmes to keep people in work.
4. Inflation has now fallen to around half its post recession peak, easing the squeeze on household budgets.
5. That interest rates have been kept under control, in stark contrast to various troubled continental economies.
6. That business confidence has been improving steadily in recent business surveys, and with record levels of company start-ups.

Conference notes the UK’s difficult financial position and recognises the dangers of failing to  bring the public finances under control as the Government has set out. It welcomes the flexibility the Government has already shown to promote growth within the fiscal mandate, including:
i.  Allowing the automatic stabilizers to operate.

ii. Helping businesses and households through monetary policy characterised by the IMF as “vigorous and appropriate with substantial easing and policy innovations” including:
a. The use of quantitative easing,
b. The introduction of the Funding for Lending Scheme, recently adapted to encourage more business lending,
c. A new more expansionary remit for the Monetary Policy Committee announced in the 2013 Budget.
iii. Getting companies to invest and builders to build through the introduction of £40bn worth of government guarantees for infrastructure projects and a further £10bn worth of government guarantees for new house building.
iv. Getting credit to good businesses including through the Business Secretary’s introduction of a Business Bank.
v. Supporting private sector growth and jobs through; a £2.4bn Regional Growth Fund, that leverages in over £13bn of private sector investment and supports 500,000 private sector jobs; the Green Investment Bank which has committed £700m of its £3bn investment; a £500m Growing Places Fund to help local authorities and Local Enterprise Partnerships in less prosperous areas to build and improve infrastructure; funding over a million new apprenticeship starts.
vi. Taking a vigorous approach to industrial strategy by; promoting manufacturing, expanding science and innovation spending, boosting capital investment in key future technologies, boosting apprenticeships and building on the success of industries such as civil aerospace, wind and automotives through the creation of sector strategies to strengthen key growth industries in the UK.

Conference however notes that the UK’s economic recovery remains fragile, particularly:

a. Despite significant progress since 2010, the UK budget deficit is still forecast be amongst the largest in the EU in 2013.
b. Youth unemployment remains stubbornly high, with close to 1 million young people classified as unemployed.
c. House building remains well below historical averages with less than 30,000 house building starts in the first quarter of 2013.
d. Businesses continue to report severe difficulties in accessing finance from the banks.

Conference reaffirms its support for the Government’s fiscal mandate as it did at Autumn Conference 2012 (Generating jobs and growth in a time of austerity). However within the fiscal envelope conference calls on the Coalition Government to:

1. Take radical action to tackle stubbornly high youth unemployment by developing a comprehensive strategy for 16 – 24 year olds ensuring that all young people have access to the skills, advice and opportunities necessary to find sustainable employment.
2. Dramatically increase the number of houses being built by pooling council borrowing limits, so that councils who want to build more houses but are at their borrowing limits are able to do so. Further to examine urgently whether PSND could be brought into line with definitions of other EU countries so that the liabilities of trading corporations (such as council housing operations) are off balance-sheet, thereby enabling councils with a sustainable business model to borrow to invest in building more homes for rent.
3. Boost lending to good British businesses by expanding the Business Bank so that it can directly support the establishment of a new challenger banks creating more competition and a banking system that is more regionally diverse.
4. Use continued public ownership of the Royal Bank of Scotland to keep its leadership focussed on increasing business lending, and support structural changes and branch sales that increase banking competition
5. Invest further in the UK Green Investment Bank and act now to make it a fully independent institution that can borrow to invest in its own right without impacting on government fiscal totals.
6. To continue to invest in the UK infrastructure by prioritising investment spending in areas such as housing, science and innovation, transport and renewable energy
7. Monitor closely the progress of the Bank of England against its refocused mandate in order to ensure that monetary policy is focussed on aiding growth.