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No fault dismissal – whose fault is this incompetent idea?
Workers in companies are at heart of business value, and they need protection by the employers. Without a longterm workforce, businesses cannot maintain a sustainable strategy, and thus ultimately will become unprofitable and fail. The UK’s economy is not dead because of the fact it is massively deregulated. The flexibility in job market indeed has helped to drive some unemployment statistics into part-time work. The UK’s economy is in fact flat because of the direct impact of the Government’s policies which have led to the death of consumer demand.
So, in a tour de force of competence in keeping with the impressively unimpressive Tory-led government, Adam Beecroft opined,
“Yet much of employment law and regulation impedes the search for efficiency and competitiveness. It deters small businesses in particular from wanting to take on more employees: as a result they grow more slowly than they otherwise might. Many regulations, conceived in an era of full employment, are designed to make employment more attractive to potential employees. That was addressing yesterday’s problem. In today’s era of a lack of jobs those regulations simply exacerbate the national problem of high unemployment. ”
This report can be downloaded from the BIS website here. In fact, regulation is not intrinsically ‘evil’ per se, and indeed if applied intelligently in business strategy can lead to considerable competitive advantage. In fact, one would hope that the government might lead by example in upholding the rule of law, except this impression is hard to sustain when the UK government tries to get round European law on fundamental issues such as prisoner voting. According to recent reports, David Cameron believes he will be able to resist implementing a ruling from the European Court of Human Rights (ECHR) that prisoners must be granted the right to vote during his time in Downing Street. In fact, the ECHR has given the British government six months to comply with its ruling, but government sources said they would use a provision to embark on a continuous delay.
Jonathan Portes, director of the National Institute of Economic and Social Research, recently argued:
“[This] also suggests that those who argue that employment deregulation would lead to rapid job creation are wrong. The OECD already rates our labour market as being very flexible, and this analysis supports that. There is no evidence to suggest the gains from further deregulation would be large. Spain and Italy need radical labour market reform; we don’t. There is much more to gain from supply-side reforms in other areas, like education and planning. The government does however need to worry about welfare-to-work programmes. Successful reforms, like the introduction of Jobcentre Plus, improved labour market flexibility. But there has been a recent very sharp rise in the number of people on jobseekers’ allowance for more than a year; for those under 25, it has more than tripled in the last year. Since this is the very group the government’s flagship work programme is supposed to help, they need urgently to address what’s going wrong.”
Cary Cooper, professor of organisational psychology and health at Lancaster University, considered the Beechcroft Report’s recommendations on addressing employee underperformance.
“Rather than whipping up a culture of fear and insecurity, businesses need to focus on how best to improve the productivity of their employees. The introduction of no-fault dismissals is not the answer. It is well known that increasing job insecurity will encourage employees to engage in unproductive behaviour, with health and performance directly affected. There are also increasing examples of presenteeism in the current economic climate that are counterproductive to what businesses want to achieve.”
In June 2012, the CIPD responded to the Department for Business, Innovation and Skills’ consultation on reforming dismissal rules and introducing Compensating No-Fault Dismissal for micro-businesses. They reported as follows:
“We do not believe that a ‘deregulation drive’ will lead to employers creating more jobs, thus stimulating economic growth. The UK is already the third least-regulated labour market in the OECD. It is important to maintain that labour market flexibility to ensure we remain competitive on the global stage, but this does not amount to the need for a wholesale stripping of employment rights and protections. We believe that employment regulation should be a last resort and applied in as light-touch a way as possible, in order to meet its stated aims at minimum administrative cost.”
At worst, it could even give rise to a ‘second wind’ in discrimination claims. As Stefan Stern describes,
“This would be the ultimate “hire and fire” charter, freedom to sack people almost instantaneously and for no valid reason. For a workforce that is already experiencing job insecurity and is struggling to raise its productivity, the “no fault dismissal” could only make matters worse. If your face didn’t fit, if it was the wrong colour, if you belonged to the wrong gender – none of these things would prevent the tap on the shoulder and the walk to the door. Coming at a time of budget cuts to the Equalities and Human Rights Commission, this move could really not be better designed to increase discrimination and inequality at work.”
Apart from anything else, ‘no fault dismissal’ again might mean the UK flouting European law. Many British citizens, despite their views about Europe, may not wish a repeated pattern of behaviour whereby their Government repeatedly flouts the law. This thankfully is not lost on all parts of government, as the Huffington Post recently reported:
“Mr Cable has called for more evidence on controversial elements of the package, including the no-fault dismissal scheme, with submissions due to be completed by 8 June. In a statement as the 16-page report was published, he made clear he regarded the hire-and-fire plan as “counter-productive”. He said: “At a time when workers are proving to be flexible in difficult economic conditions, it would almost certainly be counter-productive to increase fear of dismissal. “In my daily conversations with businesses, this has very rarely been raised with me as a barrier to growth. Businesses are much more concerned about access to finance or weak demand than they are about this issue.” Other proposals in the report which are under consideration by the Business Department include watering down the TUPE protections for workers transferred from the public to private sector, and reducing the consultation period on collective redundancies from 90 to 30 days. But the department said it will not proceed with Mr Beecroft’s suggestion that small businesses should be exempted from various employment laws, including flexible parental leave, the ban on unfair dismissal and the right to ask for flexible working. A spokesman also said the report’s proposal to cap awards in discrimination cases would be illegal under EU law, while the government will not proceed with Mr Beecroft’s recommendations that it should be made easier to recruit workers from abroad and that the immigration system should be simplified.”
As a smokescreen for complete incompetence in economic mismanagement, it’s not a bad attempt by the Tories or the Conservative-sympathetic press though.
[This post does not represent the views of BPP, or of the BPP Legal Awareness Society, a society to promote law in the business strategy.]
The paradox of thrift and bankers' bonuses
Over the last decade, pay at the top of the UK’s largest listed companies ballooned up to £4.2 on average on average for FTSE 100 chief executives from £1 m between 1998 and 2010, while salaries for workers barely kept place with inflation. Jeremy Bentham (1748-1832) had a huge impact on the world of philosophy, proposing utilitarian value as, ‘the greatest happiness for the greatest number of people works well as a way of doing justice’. This encapsulates why so many members of the general public appear to have a fundamental problem with excessive bonuses for bankers. Whilst people on the left politics-wise do not necessary deny the contribution of bankers to ‘wealth creation’ of the UK economy, many such citizens resent that they appear, along with Premier League footballers, to have levels of pay which represent an excessive contribution to the social value of society. The utilitarian could in fact stress that growth, wealth and GDP contribute much to the happiness of all. These depend upon a functioning banking system. Likewise, banks, in turn, need investment bankers to turn a profit. If those bankers are best incentivised by the promise of large bonuses, then so be it. Indirectly, that makes everyone happier.
Earlier this year, Downing Street appeared to concede defeat in its battle to stop banks paying huge bonuses to their staff; dictating the size of individual bankers’ payments or overall bonus pools was not possible. Instead bank bosses and ministers tried to thrash out a deal that would publicise details of payouts that could reach £7billion this year. The climbdown on bonuses has been a huge embarrassment for Government ministers who had threatened much tougher measures. The impression conveyed in the UK media that bankers have not been adversely affected by #gfc, and indeed some feel that the bankers have profited. This has been against a whirlpool of accusations and counter-accusations that the taxation policy has been indeed been ‘regressive’. Whilst politicians and economists have latterly been at each other’s necks, both are aware that there is enormous voting capital in ‘getting this right’. Equally in the USA the Obama administration have immersed themselves in a populist attack on wealthy US citizens including corporations.
Rumbling along in the background is a subplot ignited by John Maynard Keynes, an outstanding Cambridge academic, and a Liberal. There has been much discussion about whether Vince Cable, a Cambridge graduate, and a Liberal Democrat, follows in the tradition of Keynes, to some extent fuelled by Cable himelf. Robert Skidelsky, Keynes’ official biographer, has made his concerns patently clear. Cable has extensively studied Keynes for his Doctoral studies. Perhaps playing to the Keynesians last week at the Liberal Democrats’ 2011 Summer Conference, Cable opined that, “Keynes talked about a ‘paradox of thrift’; everyone and every country being individually wise but collectively foolish – leading to a downward spiral”.
The paradox of thrift is a very famous paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees, and similar sentiments date to antiquity. The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total “savings” in the population because of the decrease in consumption and economic growth. However, there have many inward attacks of Keynes’ well-known paradox, not least because of the unwitting conflation of the terms “capital” and “savings”. It is mooted that the classical theory of growth in macroeconomic did not presume that every saver was the ultimate investor of goods, especially in relation to the earlier work of another great economist, Ricardo. Economists have recently been quick to point out that Keynes uses the term “savings” to embrace a ‘hoarding behaviour’, which leads Keynes to his direct proposition of a ‘paradox of poverty in the midst of plenty’. Again, there is a problem with definition, as bankers bonuses might constitute ‘plenty’, but not the growth in the UK economy called ‘pitiful’ by Prof. David Blanchflower, himself a pupil of Keynes.
Should the alleged ‘excessive profits of bankers’ be clawed back by the State for its benefit? David Ricardo is credited with the first clear and comprehensive analysis of differential land rent and the associated economic relationships (Law of Rent). In schools of economic thought including neoclassical economics, land is recognized as an inelastic factor of production. Rent is the distribution paid to freeholders for “allowing” production on the land they control. Of course, corn and money, and farmers and bankers, are not necessarily synonymous.
“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land ..”
There has been a wider issue about whether the ‘differential theory of rent’ is due to strong emotions concerning ‘private property’, but prominent liberals such as JS Mill have proven words and deeds on the issue, through for example the Land Tenure Act. Adopting a populist stance has always been easy for Vince Cable, and most Liberal Democrats heavily tout that St Vince The Cable was apparently one of the first to predict the banking crisis (as indeed objectively evidenced in Hansard). Whilst a synthesis of the economics is undoubtedly interesting to economist, both new and old, people will want to know what Cable can do about it. The answer is ‘not much’, as the FSA’s code on renumeration is considered ‘good practice’ (but relatively ‘toothless’). Cable wishes also to address the ‘disconnect’ between the excessive pay of top Directors and the performance of these companies, where Cable feels that a schism has developed. Many believe that many senior bankers seem virtually unsackable, which makes an analysis of what level of pay is appropriate for bankers from the “wage curve”. Blanchflower and Oswald (1994) how the existence of a wage curve for a dozen countries, defining the wage curve thus: “A worker who is employed In an area of high unemployment earns le than an identical individual who works in a region of low joblessness”. It would be interesting to know what the views of 31-year old trader, Kweku Adoboli, are towards that. Or indeed, what Oswald Grübel thinks: according to the Wall Street Journal this morning, “Oswald Grübel resigned as chief executive of embattled Swiss bank UBS AG in the wake of a trading loss that cost the bank more than $2 billion and now has cut short the career of a giant of Switzerland’s business community.”
Vince Cable's speech to the Liberal Democrats conference 2011 : the paradox of thrift
By Dr Vince Cable, 19th September 2011
These are dangerous times for our economy.
There is much uncertainty.
But I am absolutely certain that, at such a moment, the country is stronger for having two parties in coalition working in the national interest.
When I joined up I had very mixed feelings about this coalition, like many of you.
I looked for good precedents.
I thought of Attlee and Bevin working with their Tory opponents – Churchill and Beaverbrook – setting aside their political differences in a common cause.
That coalition unleashed the great Liberal reformers; Beveridge and Keynes.
Now, you could say: that was war; that’s different.
Yes, it is different.
But we now face a crisis that is the economic equivalent of war.
This is not a time for business as usual; or politics as usual.
The financial crisis is still with us.
It never went away.
And we can see that recovery has stalled in the US and the position in the Eurozone is dire.
But it is wishful thinking to imagine that we have a healthy economy being infected by a dangerous foreign virus.
Many of our problems are home-grown.
Gordon Brown regularly advised the rest of the world to follow his British model of growth.
But the model was flawed.
It led to the highest level of household debt in relation to income in the world.
It produced a dangerously inflated property bubble.
It encouraged a bloated, banking sector while manufacturing declined at an unprecedented rate.
Then, they socialised the costs of the crash though a massive budget deficit, the biggest of any major economy.
His disciple, Ed Balls, has – sort of – apologised but advocates policies that would repeat the disaster.
What this period of crisis should have taught us, above all, is humility.
And humility in politics means accepting that one party doesn’t have all the answers; recognising that working in partnership is progress not treachery.
It has been hard.
It has required courage from our Party to withstand the tribalism which is British politics at its worst.
And it has not been possible for the Party to get its own way on everything.
I regret this year is that we did not secure tighter control on bank pay and bonuses.
A bad message was sent: that unrestrained greed is acceptable.
We now know where that leads.
But we have real achievements.
My team in the Business Department (and I want to acknowledge David Willetts and Ed Davey’s role in particular) has not only made a major contribution to deficit reduction but is now helping recovery.
We have greatly expanded apprenticeships.
Giving respect and recognition to the 60% of young people who do not pursue academic study in universities.
We protected our science budget and we have launched a chain of Technology Innovation Centres promoting the technologies of the future.
We have established a Green Investment Bank to benefit major green projects.
Nick Clegg has driven our Regional Growth Fund, investing in businesses and jobs up and down the country not just the South East
We, and Ed in particular, have done what Conservative and Labour governments failed to do: legislate for a necessary reform of the Royal Mail with worker shares and provide a stable future for the Post Office Network.
And then – after a generation of manufacturing decline we have brought jobs back to Britain in steel at Redcar; in motor vehicle supply chains and electric vehicles; and in aerospace through Rolls Royce Airbus and Augusta Westland.
This morning Jaguar Land Rover has announced that they are to build a new engine plant in the West Midlands – that is a massive boost for British manufacturing, and the region.
That’s what I mean by a business recovery, cars not casinos.
The work is just beginning.
To turn Britain round we need much more.
Three priorities: Stability, stimulus, solidarity.
Stability in the government’s finances – the deficit problem – and in our banks.
Stimulus to support growth; sustainable growth based on business investment, exports, green technology and manufacturing.
Solidarity to give people a sense of a shared society, reducing our appalling inequalities of income and wealth, and creating a responsible capitalism.
STABILITY
As for stability, the last government promised an end to boom and bust but gave us both – and left us a dangerous, unsustainable budget deficit.
Cutting it is a thankless and unpopular task, but unavoidable if our country and party are to be taken seriously.
The Government’s tough approach to deficit reduction is often attacked as ideological, as right wing.
Financial discipline is not ideological; it is a necessary precondition for effective government.
I see us following in the footsteps of Stafford Cripps and Roy Jenkins in Britain and, abroad, the Canadian Liberals, Scandinavian Social Democrats and Clinton Democrats in the USA.
They understood, unlike today’s Labour Party – that the progressive agenda of centre left parties cannot be delivered by bankrupt Governments.
I think most of the British public do get it.
But there are politicians on both left and right who don’t.
Some of them believe government is Father Christmas.
They draw up lists of tax cuts and giveaways and assume that Santa will pop down the chimney and leave presents under the tree.
This is childish fantasy.
Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear.
I think their reasoning is this: all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt hole will rush back to pay more tax but at a lower rate.
Pull the other one!
Financial stability doesn’t just involve the Government budget.
Massive potential instability is caused by UK-based global banks whose combined assets are over 400% of GDP, by far the largest of any major country.
At present, banks are offered a one way bet.
If they gamble and win; they fill up the bonus pool.
But when they lose, the taxpayer pays.
The Independent Banking Commission provides a means to stop this dangerous nonsense.
The Commission’s key findings – to separate retail and casino banking – must be put in place.
Legislation will start soon and be completed in this parliament.
If there were any doubts about the need for radical reform the UBS rogue trader has dispelled them.
We simply cannot have rogue institutions exposing taxpayers to the risk of exploding financial weapons of mass destruction.
The banks must also perform their basic economic function of channeling our savings into productive investment.
They are not doing so.
Productive British business and banking are currently at odds.
Banks operate like a man who either wears his trousers round his chest, stifling breathing, as now, or round his ankles, exposing his assets.
We want their trousers tied round their middle: steady lending growth; particularly to productive British business, especially small scale enterprise.
No more feast and famine in bank lending.
STIMULUS
The big economic policy question now is how to progress from financial stability to growth.
With business and consumer confidence so low, there is a special responsibility on government.
We are not bystanders.
My job is to support businesses, that means promoting British commerce in the big emerging markets that have been neglected in the past.
It means keeping Britain open to inward investors, trade and skilled workers.
It means cutting red tape which is suffocating growing companies which create jobs.
What I will not do though is provide cover for ideological descendents of those who sent children up chimneys.
Panic in financial markets won’t be stopped by scrapping maternity rights.
But the immediate threat is lack of demand – with consumers, companies and governments cutting spending.
Keynes talked about a ‘paradox of thrift’; everyone and every country being individually wise but collectively foolish – leading to a downward spiral.
A lot of responsibility rests on the Bank of England to relax monetary policy further linked to small business lending.
But Government can act:
• Use Chris Huhne’s Green Deal to generate an estimated 100,000 jobs in energy conservation;
• Leverage in private investment through the Regional Growth Fund and the Green Investment Bank
• Adopt the Liberal Democrat policy to allow councils to auction land with planning permission using the proceeds for social housing;
• Step up investment in our clapped out infrastructure.
There are tens of billions of pounds of British savings in pension funds and insurance companies ready to invest in transport, energy.
Broadband and housing if regulators can ensure a reasonable, moderate return.
And as Danny announced yesterday the government is putting serious money behind local projects.
SOLIDARITY
Even with a stimulus to support recovery the next few years will be difficult.
Living standards are being squeezed by continued high imported inflation.
And the painful truth is that Britain is a poorer country as a result of the financial crash.
The public will only accept continuing austerity if it is seen to be fair.
Yet there is currently a great sense of grievance that workers and pensioners are paying the penalty for a crisis they did not create.
I want a real sense of solidarity.
That does not mean that we go round in blue boiler suits carrying little red books, though I suspect that some on the right believe that is my agenda.
It does mean a narrowing of inequalities.
We have, as a Party, made clear our priorities for continuing to lift low and average earners out of tax.
And the wealthy must pay their share.
What Liberal Democrats should focus on are the vast disparities in wealth – much of it in inflated property and land prices artificially generated by the boom of the last decade.
A few weeks ago a house changed hands for £140 million.
And one newspaper headline said, without irony, “Oligarchs priced out of central London.
Yet the owners of these mansions pay no more tax than many occupants of a family semi.
When some critics attack our Party policy of a tax on properties over
£2 million by saying it is an attack on ordinary middle class owners, you wonder what part of the solar system they live in.
Let me be clear, there is absolutely nothing wrong with generous rewards for those who build up successful businesses and create wealth and jobs.
People accept capitalism, but they want responsible capitalism.
As for irresponsible capitalism, some of you may have noticed that one of the big media companies has recently had a spot of bother.
(I think you know who I mean)
The Labour Party, the Conservatives and even the Scottish Nationalists spent years queuing up to pay them homage to them.
What makes me proud of our Party is that we never compromised ourselves in that company.
What I want to do is to strengthen the best of British business.
I have taken two initiatives in particular:
• I have asked Professor John Kay, together with Sir John Rose, formerly CEO of Rolls Royce – whose company embodies responsible capitalism in its commitment to long term investment in training and R&D – to look at how we get stock markets and institutional investors out of their short term, speculative mindset.
• I am separately consulting on how best to tackle the escalation of executive pay which, in many cases, has lost any connection with the value of shares, let alone average employee pay.
It is hard to explain why shareholders can vote to cut top pay but the managers can ignore the vote.
And surely pay should be transparent; not hidden from shareholders, and the public.
I want to call time on pay outs for failure.
CONCLUSION
Let me say in conclusion that when my staff saw my draft of this speech they said; we can see the grey skies where are the sunny uplands? I am sorry, I can only tell it as I see it.
People aren’t thinking about 10 years ahead when they are worrying about how to survive the next 10 days to payday.
But I do sense a deeper truth: that the public is tired of being lied to by politicians; promised what cannot be delivered.
The truth is that there are difficult times ahead, that Britain’s post war pattern of ever rising living standards has been broken by the financial collapse.
But we can turn the economy around.
In the Coalition Agreement we promised to put fairness at the heart of all we do as we rebuild our broken economy from the rubble.
Liberal Democrats know that you can’t do one without the other.
Animation: "Cable's "loose lips" put coalition ship into choppy waters" (non BBC version)
This was the version presented to the table of the British viewing public on Christmas Day.
This was instead the Japanese version:
Vince Cable goes to 'war' with 'The Murdoch Empire'
As one of my bosses used to say, “Things just go from worst to worstest”. Vince Cable’s comments are indeed explosive as he has a very significant quasi-judicial role in this takeover bid from Rupert Murdoch, and he must act in an independent and impartial way, with no conflict of interest.
Dr Cable is right, but the LibDems don't smell of roses.
Could Ben Page’s IPSOS-MORI ‘worm’ could have predicted this?
Ed Miliband sitting on the picket line, whatever the hot-air discussions between Baroness Sayeeda Warsi, John McDonnell, Ed and Rosie Winterton amount to in the end, will achieve relatively little. It certainly won’t ‘topple’ Dave Cameron.
I have, on a matter of principle, not got carried away with the hysteria surrounding, for example, the ULU sit-in protests. More to the point, I think Vince Cable’s is possibly in fact correct, and we have a mechanism for voters to get what they want; they can chuck out members of the legislature at given opportunities, and also the legislature themselves can vote down legislature proposed by the Government. This is even the case if the Government is the major government in a Coalition.
So what can legal riots achieve? Well, actually, quite a lot actually, potentially. The UK Poll Tax Riots were a series of mass disturbances in British cities during protests against the Community Charge (commonly known as the Poll Tax), introduced by the Margaret Thatcher. By far the largest occurred in central London on Saturday March 31, 1990, shortly before the poll tax was due to come into force in England and Wales. The disorder in London arose from a demonstration which began at 11am. The rioting and looting ended at 3am the next morning Interestingly, at the time, response of the London police, the government, the Labour Party and the labour movement and some of the Marxist and Trotskyist left, notably The Militant Tendency, was to condemn the riot as senseless and to blame anarchists. Nonetheless, Thatcher went, and John Major announced in his first parliamentary speech as Prime Minister that the Community Charge was to be replaced by Council Tax, which, unlike Poll Tax, took account of ability to pay. Who can forget those iconic days?
The strength of campus students feeling currently is undoubtedly strong, as they’re the ones who helped to contribute to a Liberal Democrat vote the most. Students are taking part in a day of action in protest at government plans to raise university tuition fees. In my alma mater, Cambridge, around 1,,000 students from universities and sixth-form colleges took part in the protests. A number of students climbed over railings at the university’s Senate House, where onlookers described the scene as “crazy”. Only two students were arrested by Cambridgeshire Police for obstruction, and there were some reports from protesters of police violence. Students from Parkside Community College staged a walkout to show their support.
The demonstrations come ahead of an MPs’ debate later on the proposals and other plans to cut university teaching budgets and support allowances for low-income further education students.
More significantly is that Liberal Democrat MPs are due to decide next week how to vote on the move to cut higher education funding and force students to pay fees of up to £9,000 a year. Vince Cable, who has responsibility for universities, confirmed he would abide by the decision even if it meant he was blocked from voting for a system he supports and helped to create. Having all signed a pledge before the general election to scrap tuition fees altogether, the party’s MPs are under pressure to vote against the hike. This means that the Liberal Democrats, should they choose to use it, have a casting vote in their future, and, more importantly, in a key plank of their policy, which Tim Fallon MP himself admitted that he ‘hadn’t read properly’. Onwards and upwards, this will achieve much more than Ed Miliband sitting on the picket line, but there’s one man who doesn’t come out of this smelling of roses.
Vince's speech at the LibDem conference: Many themes should be a top priority for us too
Vince’s speech, unlike the misreporting of it mainly from the BBC who patently didn’t understand the business or legal issues involved, made for very interesting reading for me as a Labour member with an interest in both business and commercial law. I would like to discuss various intriguing aspects of it for me.
But to hold our own we need to maintain our party’s identity and our authentic voice.
This is now being an increasingly difficult problem for the Liberal Democrats. There has to be by necessity an alignment of the beliefs and values of the leadership of the Party and its grassroot members. It was interesting to eavesdrop on the discussion that the Party had earlier this week on brand strategy, as it was clear from the floor that there is much confusion about the brand identity and brand equity of the members of the Party. Of course, the position on the rate of cuts which ultimately emerged from Vince Cable and Nick Clegg remains for many quite unfathomable, and certain issues are pretty straightforward by the Liberal Democrats, for example strong Liberal (anti-statist) values in civil liberties. However, certain grey areas see problems for the leadership and activists alike; for example, free schools is an incredibly perplexing area for the Liberal Democrats to embrace in a way so enthusiastically as Michael Gove’s fervour.
We will fight the next general elections as an independent force with our options open. Just like 2010. But coalition is the future of politics. It is good for government and good for Britain. We must make sure it is good for the Lib Dems as well.
Yes, indeed. It is now ‘do-or-die’ for the Liberal Democrats. There won’t be an end of ‘boom-and-bust’ in this context, unfortunately, because if the Liberal Democrats get the economic recovery and cuts wrong, even if the recession ends, they will be unelectable for a decade. However, it is argued that if the Liberal Democrats make a success of their new Coalition policy, the Coalition politics of pluralism could become accepted.
There was, of course, a global financial crisis. But our Labour predecessors left Britain exceptionally vulnerable and damaged: more personal debt than any other major economy; a dangerously inflated property bubble; and a bloated banking sector behaving as masters, not the servants of the people. Their economic model combined the financial lunacies of Ireland and Iceland. They built a house on sand and thought that they were ushering in a new, progressive work of architecture. It has collapsed. They lacked foresight; now they even lack hindsight.
If Cable feels Labour is in denial over the deficit, undeniably he has been slow to come to the conclusion that the crisis was global. I remember him pontificating in the Commons about how it was an academic philosophical issue of where the financial crisis came from, but it was necessary to find a solution for it. Vince Cable’s lack of acceptance that this was a global crisis historically speaks volumes.
We know that if elected Labour planned to raise VAT. They attack this government’s cuts but say not a peep about the £23bn of fiscal tightening Alistair Darling had already introduced. They planned to chop my department’s budget by 20 to 25%, but now they oppose every cut, ranting with synthetic rage, and refuse, point blank, to set out their alternatives. They demand a plan B but don’t have a plan A. The only tough choice they will face is which Miliband.
This statement is totally ridiculous. If Vince Cable is so self-effacing, can he not at least give a suitable explanation for this poster?
But I am not seeking retribution. We have a pressing practical problem: the lack of capital for sound, non property, business. Many firms say they are already being crippled by banks’ charges and restrictions.
This is undoubtedly a sensible line of attack for Vince and George to pursue, as it encompasses the Liberal
Democrats’ values of fairness, and Labour’s lack of engaging with the public about how the bankers, who had largely caused this crisis, were not been punished for their recklessness. If anything, it is perceived that Labour pumped lots of taxpayers’ money in it, whilst the leading CEOs in the investment banks received knighthoods and huge bonuses. Labour’s fundamental error, if there is to be one single one amongst the plethora, is the unforgiveable increase in the rich-poor divide, which will forever be a legacy of Labour. It began in earnest with Thatcher, progressed with Blair, and compounded through Gordon Brown’s long stint as Chancellor. This should be a top priority for Labour too.
And the principle of responsible ownership should apply across the business world. We need successful business. But let me be quite clear. The Government’s agenda is not one of laissez-faire. Markets are often irrational or rigged. So I am shining a harsh light into the murky world of corporate behaviour. Why should good companies be destroyed by short term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors sometimes forget their wider duties when a cheque is waved before them?
This is an incredibly important paragraph in my opinion, as short-termism has been identified by many academics in leadership, including William George at the Harvard Business School, as a major cause of irresponsible leadership in business. This, together with failures in corporate governance and corporate social responsibility in a post-Enron age, remain admirable targets for Vince’s wrath. This should be a top priority for Labour too.
??But the big long term question is: how does the country earn a living in future? Natural resources? The oil money was squandered. Metal bashing? Mostly gone to Asia. Banking? Been there, done that. What is left? Actually quite a lot. People. Skilled and educated people. High tech manufacturing of which we already have a great deal. Creative industries, IT and science based industries and professional services. In my job I meet many outstanding, world class, British based companies. But we need more companies and more jobs in the companies we have. It is my job as Business Secretary to support business growth. And this knowledge based economy requires more high quality people from FE, HE and vocational training. Here, we have a problem. Businesses cannot grow because of a shortage of trained workers while our schools churn out young people regarded by companies as virtually unemployable. The pool of unemployed graduates is growing while there is a chronic shortage of science graduates and especially engineers. There has to be a revolution in post 16 education and training. We are making a start. Despite cuts, my department is funding 50,000 extra high level apprenticeships this year – vital for a manufacturing revival. My Conservative colleague David Willetts and I want to sweep away the artificial barriers between universities and FE; between academic and vocational; between full time, part time and continuing life long learning; between the academic and vocational.
The ‘Yeah, but’ is that Vince Cable is making savage cuts in universities such as Cambridge, currently top in the world, at a time when we should be investing in basic research, translationary research and applied research, with a view to investing in our country’s future. This should be a top priority for Labour too.
