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Lib Dem Speech: Federation of Small Businesses
Ladies and Gentleman,

Thank you for your warmest of welcomes, it is a true privilege to be here at the Federation of Small Businesses to unveil the Liberal Democrats’ jobs policy in response to the recent economic developments.

This past year has been tough for business, in December of last year the World watched and wept as terrorists flew planes into the World Trade Centre and the Pentagon whilst similar attacks were carried out elsewhere in the World, notably in France. These actions have destabilised the global economy leading to an economic slowdown, and in some cases an actual recession. I believe that it is a great testament to the moderation showed by the Labour Party under Chancellors Brown, Manning, and Thomas that the United Kingdom has avoided recession. The Institute of Directors have got it spot on when they say that had the purse strings been loosened and we had run a deficit as the Tories suggested we would have been in far more dire straits. It is good to see that the Labour Party have truly abandoned the policies of failure that led to the Winter of Discontent and an eighteen year spell of Tory rule, even if the Conservative Party seem dead set on resurrecting that old way of doing things.

We are yet to see a plan from the Government to tackle jobs, I do not doubt that we shall see it in four months when the Budget comes to pass, sadly we have seen the Conservative Plan and it is a truly awful one. When combined with their manifesto commitments the Conservative Party would run a budget deficit of no less than £11bn without cuts to other spending departments or tax rises for the very poorest in our society as in the VAT. Taken independently the Conservative Plan has some good ideas in it, their manifesto commitment to raise the income tax threshold to £10,000 will raise millions out of tax altogether allowing them to focus their finances on other areas such as food, electricity and rent. However even these policies must be handled with care as they represent an enormous drain on the Exchequer that cannot then be used to fund areas like education which will be essential to ensuring that economic growth is sustained and that wealth and income are more equal across the nation. People say that with a bit of hard work anyone can escape the poverty trap and whilst this is true to a degree, education is the key to making a wholesale difference to everyone’s lives, we cannot compromise funding to key Government services as part of a populist giveaway.

But when we get passed the good ideas that could be worked on by all parties we see a Conservative Party plan that is sorely lacking in any kind of thinking. As I said, there is an £11bn deficit in their current spending and taxation plans which represents a solid £35bn worsening of the national finances. But it is not just the deficit that is alarming, what is truly alarming is their response to the jobs crisis which is gripping our nation. The Tory response can be simplified into three basic steps, they want to create a National Investment Bank, they want to reduce the risk when it comes to investment, and they want to increase investment into research and development. None of these plans are costed and none of these plans can be funded without more debt and more deficit which has been stated to cause us even more economic hardship anyway, something the Shadow Chancellor neglected to mention when she spoke to the very people who said it in the first place. A National Investment Bank is a nice theoretical idea, indeed if the Conservatives were not already committed to an £11bn deficit I may even be able to stand here and call it a stroke of genius by the Shadow Chancellor. However sadly we have no idea how much money they will be able to spend, under what conditions and where they will be able to spend it, or indeed when it will actually be set up in the Conservative Plan. If they give it a pittance, or even a couple of billion pounds, it will fail to have any measurable impact unless it is concentrated in one area to the detriment of the rest of the country. Their Risk Reduction Scheme is little more than a subsidy for already rich investors, if they win they win massive returns and if they lose the hypothetical Tory Government would foot the bill, a real return to form for the party of the rich. To put it simply, we cannot trust the Conservatives to deliver good governance and jobs to the UK because we do not know what their plan encompasses for the national finances.

Ladies and Gentlemen where the Conservatives fall short it comes to the Liberal Democrats to provide a visionary alternative and a constructive opposition to the Government, indeed it falls to us again to do this when it comes to jobs. Employment is one of the best ways to escape poverty and for too long entire regions have been neglected and deprived of this very simple idea. The Policy Paper you have no doubt found beneath your chair outlines our policy priorities and crucially how we will get to these objectives, these proposals are fully costed and shall all be included in the next Liberal Democrat Shadow Budget, indeed should the Government not have passed these policies themselves then they shall be in the Manifesto at the next election.

When considering how best to fix the UK’s labour market we have to first identify what is actually causing the imbalances to begin with. The Institute of Directors believe it is a high rate of tax, the Conservatives believe we have too high a Corporation Tax rate, and the CPI believe it is because we are being outcompeted by other nations with a less than stellar human rights record. The Liberal Democrats believe that to fix the jobs crisis in our nation we must rectify the issue of competition with other less developed nations, able to undercut our labourers through lack of a minimum wage and other regulations; we must re-emphasise education and training at every level, including vocational education; and we must tackle regional imbalances that have been present since the premiership of Margaret Thatcher. These are the aims of our policies. To deal with these aims we have undertaken to pursue four policy priorities: improving investment in our education and skills system, increasing demand for skills that boost productivity, increasing the availability of vocational education and skills based training, and industrial support through grants and infrastructure spending. To compete with nations that have no minimum wage and exploit their workforce we do not need to stoop to their level, we must instead rise higher and find better ways to cut costs and better ways to increase the quality of our output to ensure that we win on price and on quality every time.

So now we move on to examining the policies that we shall undertake to achieve these policy priorities, if you will bear with me I would like to address each priority in turn. The first priority is to improve investment in our education and skills provision, to achieve this aim the Lib Dems have two new policies. Firstly we shall build upon Chancellor Manning’s ‘Apprenticeship Levy’ with an additional two tiered system called the ‘Productivity Levy’. The rate of this levy shall be set at 0.5% for companies with a payroll of 50 staff or more, and 1% for companies with a payroll of 250 staff or more. This levy shall raise an estimated £3.1bn, a fund which shall stay available to all firms wishing to invest in productivity training for their existing staff, teaching them new techniques that will enable them to cut costs. To offset this new cost to business the Liberal Democrats propose a 5% cut to the Main Rate of Corporation Tax (new rate: 25%), an 8% cut to the Small Companies Rate of Corporation Tax (new rate: 10%), and abolishing the starting rate of Corporation Tax altogether. This policy would cost the Exchequer £8bn, leaving a net hole in the national finances of £5bn, or reducing the surplus before investment to £19bn, an option left available to us because the Government sensibly elected to ignore the Conservative Party’s plea for deficit financing in the last Budget. Secondly we shall create the Personal Training Credit, a £700 annual payment to enable unemployed and low-earning individuals the chance to enter training schemes to boost productivity, learn new skills, or simply make themselves more employable to business. A further £300 a year shall be made available to those who are unemployed bringing their annual tax credit up to £1000. This policy shall cost £4bn and shall be funded again by the surplus so sensibly maintained by the Government.

The second policy priority for the Liberal Democrats is to ensure that we improve employer demand and usage of skills to boost productivity. To do this we would create a new Productivity Commission to support employers to drive up workplace performance in the UK. This Commission would advise companies on how best to deploy their resources to get the best returns for their investments in people. We don’t need to give millionaires handouts worth many more millions to safeguard their precious investments like the Tories want to, we need to persuade businesses to invest in their employees current and future. If the least of us succeed, from the very bottom of companies, that success will rise us and build a company that can compete with the rest of the World. We don’t need Tory trickle down economics, we need Lib Dem trickle up economics to ensure that nobody is left behind and to ensure that nobody suffers from under-employment when they are capable of doing so much more.

The third policy priority for the Liberal Democrats is increasing the availability of specialist vocational training provision. To achieve this we would create Local Enterprise and Productivity Partnerships (LEPPs) and continue investment in Regional Development Agencies (RDAs). Regional Development Agencies do a great deal of good when they give Central Government money to provide incentives for employers to move to regions, which is why we are keeping and growing them, but they are still centrally run. The Government decides what constitutes the East Midlands or the North West, and these regions are substantially bigger than the area of a local government such as a county council. By creating a concurrent organisation such as the Local Enterprise and Productivity Fund we can keep using Central Government funds to build macroeconomic partnerships in entire regions, but we can also allow local areas such as counties the freedom to create more bespoke arrangements with enterprise and any other interested parties they may wish to deal with. The twin focus of the LEPPs will be to entice businesses into their area by providing advice and funding to local projects and entrepreneurs whilst then working with existing enterprises to establish outcome agreements between bodies, such as trades unions, on issues such as productivity and pay.

Finally the fourth policy priority for the Liberal Democrats is that of supporting industries and communities facing decline. We can either manage this decline or we can get them back on their feet and able to compete in the global context again. The first and most basic way to achieve this policy priority, and indeed all of the policy priorities, will be to appoint a Minister for Productivity and Skills in the Treasury. The Liberal Democrat Treasury Team shall be announcing their appointment to this position in the coming week and I look forward to working with him or her on further developments to our jobs policy. In addition to this staffing change at the heart of Government the Liberal Democrats propose that we establish a cross-government framework to identify industries in transition to better allow us to target funds to boost growth and reverse decline. The main focus of this framework will be industries with high levels of employment or low skill requirements as these are the industries most liable to cause economic hardship should they enter decline, low-skilled workers are most at risk of entering long term unemployment and so it is they whom we shall prioritise our help. If an individual remains unemployed for too long then we reach a situation where it is quite conceivable that they begin to lose skills and become unemployable, we are failing as a nation if we allow such a situation to develop.

Ladies and Gentlemen, the jobs crisis is not a new phenomenon, however, unemployment today is far higher than it was under any Government in the mid 20th century. We cannot blame any one party for this issue as they are both equally culpable in creating and sustaining the economic conditions that have led to the decline of manufacturing industries and the decimation of entire communities in certain parts of the country. Whilst the Tories want to play the blame game in opposition and pass out subsidies to their rich investor friends the Liberal Democrats are committed to focusing on the issues that matter, people and their livelihoods. We have a fully costed plan to introduce training tax credits to encourage learning and to establish Government action plans to tackle the productivity problem facing our nation. The Liberal Democrat plan is based on helping people up, avoiding long term unemployment, and providing the skills necessary for people and the country to thrive into the 21st Century. Thank you.

Quote:Jobs and Productivity in the 21st Century

The Issues we face:
  • Competition from less developed nations undercutting the prices of British workers and British business
  • A lack of emphasis on training and education for vocational courses and productivity
  • Regional imbalances that see the peripheries left behind to fuel London and the South East
Our Four Policy Priorities
  • Improving investment in our education and skills system
  • Increasing demand for skills that boost productivity
  • Increasing the availability of vocational education and skills based training
  • Support industries and communities in decline, getting them back on their feet or retraining them for a new job
Improving Investment in our Education and Skills System
  • We would introduce a new two tiered Productivity Levy of 0.5% for companies employing more than 50 workers and 1% for companies with more than 250 employers, creating a fund to facilitate £3.1bn in investment every year for private enterprise
  • We would cut Corporation Tax to 25% for the Main Rate, 10% for the Small Companies Rate, and abolish it for the Starting Rate
  • We would create the Personal Training Credit, £700 for every individual earning less than £7500 to be spent on skills and productivity based learning, a further £300 (£1000 total) to the unemployed for the same goal
Increasing Demand for Skills that boost Productivity
  • We would establish a Productivity Commission to support employers and drive up workplace performance in the UK
  • We would not offer handouts to millionaires by forgiving the debt and covering the risks from their bad investments, the UK is a free market economy and that level of intervention shall have unforeseen consequences
Increasing the Availability of Vocational Education and Skills Based Training
  • We would create Local Enterprise and Productivity Partnerships (LEPPs), these partnerships shall allow local government to incentivise businesses to move to their local area and then allow the local governments to work with the businesses to boost productivity, bringing in business and then allowing it to flourish once it arrives
  • We would continue to invest in Regional Development Agencies (RDAs) allowing less developed regions a chance to catch up by redistributing spending from rich regions to poorer regions, allowing us to boost growth and cut unemployment in some of the least well off parts of the country
Supporting Industries and Communities facing Decline
  • We would appoint a Minister for Productivity and Skills in the Treasury Team, a similar appointment will be made shortly to our existing Shadow Treasury team
  • We would create a cross-government framework to deal with productivity and investment, allowing us to target investments that will benefit multiple areas of Government policy and get entire areas of the country back on their feet with strong financial support. Investments and non-financial support would be prioritised for industries with high levels of employment or low-skill requirements as these are the most at risk of more large scale redundancies

'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded. - Friedrich Hayek
Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Nothing is so permanent as a temporary government program. - Milton Friedman

Mac the Great and Powerful
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This is... a mixed bag. They like a lot of it. The cuts in corporation tax go down well.

But you just told them you were going to whack business with a £3.1 billion tax. You could have done with explaining more about how it won't affect the smallest businesses, or how it will benefit them. As it is they hear the sum and slightly wonder why you chose a business group as a place to launch a new tax on business.

Other than that, a good speech and platform. But that mis-step does hurt I'm afraid.

Lib Dem +6
Will be doing things soon
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