Speech by Danny Alexander MP, Chief Secretary to the Treasury, to Liberal Democrat conference in Glasgow:
I want to start by saying thanks. Thank you to every single person in this room and across Scotland who gave their time, their toil, their vote to ensure that Scotland remained part of the United Kingdom.
The issue at stake could not have been bigger. The campaign at times raw and visceral.
More people involved than ever before.It was a life changing experience – for me and many others. A new generation of voters was inspired. And, by the way, we should be inspired to ensure 16 and 17 year olds have the vote in every election.We weren’t just fighting for the UK, but for the liberal values that define us.
The liberal belief that political argument should be won and lost on the basis of rational argument, of facts - which is challenged by the contempt in which so much of politics is (wrongly) held. The liberal belief that all of us should have the freedom to speak our minds, and that bullying and intimidation simply have no place in a liberal democracy.
The liberal belief that the entirety of human progress is defined by the removal of barriers between people – barriers of geography, of law, of prejudice - not the creation of new borders in the 21st century.
These liberal values will be challenged again by UKIP and the Tory anti-Europeans. For that argument to come, we should take confidence from the fact that, in the end, the quiet majority of Scots spoke confidently and clearly and delivered the result for which we campaigned so hard.
What a time. What a moment in history. I am sure I am not the only one who shed more than a few tears when the result came in. I want in particular to pay tribute to Willie Rennie and Alastair Carmichael for the way they led our campaign. Willie was right to say that we Liberal Democrats understand and share the frustration, anger sometimes, that motivated so many of our fellow Scots to vote yes.
Now we have to capture the energy and the emotion from both sides of the argument, to do better for our country. Work is now in hand for the devolution of powers that has been part of our liberal world view ever since Mr Gladstone promised ‘home rule all round.’ But it’s come as a shock to the other two UK Parties. Within hours of the result, some Conservatives were trying to score cheap party advantage by making powers for Scotland appear conditional on a particular change for England. Pathetic. Wrong. Desperate nonsense.
Thank goodness Scottish Liberal Democrats are in Government, guaranteeing this new home rule for Scotland. I was privileged to play a major part in the campaign. By virtue of that privilege, I feel a huge sense of responsibility. For me, this is personal. So let me make one thing clear. Beyond any shadow of doubt. Irrespective of any issues in other parts of the UK, new powers for Scotland will be delivered. It must be a radical package that puts Scotland’s relationship with the rest of the UK on a federal basis. Not just devolving power to Edinburgh, but devolving power from Edinburgh to the communities and people of Scotland. We must use this opportunity not just decentralise power in the rest of the UK, but to reverse the flood tide of centralisation that the SNP have imposed on Scotland over the last 7 years.
This is not the first time that we Liberal Democrats have helped save our country. It’s been a momentous 4 years. We gave Britain a strong, stable government when it was needed most.
We’ve rescued the British economy. We’ve kept the UK together. Three times pulling our country back from the brink. Not bad for our first spell in government for 70 years!
Let’s turn to the economy. Yes – friends – I’m not going to forget to talk about the economy.
Isn’t it telling that the only thing anyone seems to remember about the Labour conference is something Ed Miliband forgot? If the trauma of the great financial crash of 2008 has taught us anything, it is that a strong economy is a fundamental requirement for any society that aspires to freedom and fairness. When an economy fails, when a nation’s finances spiral out of control, it hurts people. That’s why we care so much about the economy. Every aspiration we have for our public services for the living standards of our citizens.
Every aspiration we have to be a nation that provides opportunity for everyone, depends on fixing our economy. Labour – take note. You might forget to talk about the economy. But be sure of one thing, the British people won’t forget the state it was in when you left office. Confidence shattered. The deficit the highest in peacetime. The very foundations of the economy crumbling.
There is still a lot more to be done to fully repair the economy. But we have made progress.
Solid growth for 6 quarters – when Labour said it wouldn’t happen. 1.8 million new jobs created – when Labour said it couldn’t happen. Britain now the best place in the world to invest and grow a business. The deficit on course to be halved. And then, there’s what we have done on income tax for working people. We‘ve cut it. We have. And cut it dramatically.
By raising the personal income tax allowance to £10,500, over 27 million working people will have had their income tax cut. Millions of basic rate tax payers are now paying £700 less income tax every year, which will rise to £800 by April next year.
The Tories shamelessly try to claim credit for our tax cuts. But Mr Cameron – voters won’t forget that you stared down the TV camera and told them it couldn’t be done. And the working poor who you intend to hit again and again in the next Parliament simply won’t fall for it. Tax cuts for working people are only happening because we Liberal Democrats, Nick and I, fought for it every day in coalition.
And the income tax threshold will only go to £12,500, and be paid for fairly, if there are Lib Dems in government next time to make it happen. In fact, the Tories like to try to claim credit for lots of our achievements, including the economic recovery. As readers of today’s Sun may have noticed, I am a bit disgruntled about that. We have to set the record straight.
Just like I wrote this speech – we wrote the recovery plan. Just look at its main elements.
Cutting taxes for working people. Not a Conservative idea - A Liberal Democrat idea. A dramatic increase in apprenticeships. Not a Conservative idea - A Liberal Democrat idea.
Investment in infrastructure – including pushing for upgrades to the A1 and A303. Not a Conservative idea, a Liberal Democrat idea. Record investment in renewable energy. Not a Conservative idea - A Liberal Democrat idea. Balancing the books, and doing so fairly. You ever hear that from the Tories? No! Absolutely core Lib Dem thinking. This recovery wouldn’t be happening without Liberal Democrats in Government.
But despite all the progress that we have made on the economy, our deficit is still too high.
We have to be frank with the British people: more tough decisions will be needed to balance the books.
I want to be clear with you today about what that really means. The decisions I have made in my time as chief secretary will, by April 2016, have resulted in £126billion of measures to cut the deficit. Of which, £101billion is spending. To those who doubt our economic credibility, I say: no chief secretary has ever done that before. And I say with all my heart, I hope none is ever put in the position of having to do it again.
But with the economic tide often running against us, this has not been enough. To meet our goal to eliminate the deficit by April 2018 will require tens of billions more in spending cuts and tax rises. That’s the scale of the biggest challenge the next government will face. But I also want to say with candour to Mr Osborne: the books cannot be balanced without the wealthiest being asked to do their bit through the tax system – not if Liberal Democrats are involved.
The Tories reject the notion that the pain should be shared fairly in the next Parliament, as we have ensured it has been in this one. Heartless, soulless. And let’s be clear what that means. Left unchecked – the Tories will be taking the axe to your local school. To the support that many hard working folk need to help make ends meet. We won’t sign up to a plan that says the only people who should pay to balance the books are the working poor. Not now, not ever.
We will put in place strict new fiscal rules to ensure that the job of deficit reduction is finished on time, but finished fairly.
Labour want to delay dealing with the deficit – but their ‘never,never’ plans means more cuts, over more years, a slow relentless grind of perpetual austerity. The Tories want to keep on cutting after the books are balanced. The only thing they have in common is that neither of their sums add up.
Neither adds up to a plan that is right for Britain. We will borrow less than Labour, cut less than the Tories.
Our approach is balanced. We will eliminate the deficit by April 2018, as planned. Once that is done, the UK will still have a heavy burden of debt from the last decade. It would be totally wrong to leave those debts to be paid by our children and grandchildren. So our first fiscal rule will be to get our nation’s debt as a share of GDP down to sustainable levels by the mid-2020s. That will require an ongoing fiscal effort, so there will be no spending spree once the deficit is dealt with.
But unlike the Conservatives, Liberal Democrats want the state to be able to invest in economic infrastructure and high quality public services. So our second fiscal rule will require a balanced budget, but allow for additional investment in productive economic infrastructure – roads, railways, broadband, housing – as long as the overall debt is falling as a share of the economy.
And, having listened to the Tory conference, today I want to propose a new, third fiscal rule that we will put in place. A fairness rule. Twice a year the Treasury has published an analysis that shows how much each income group is contributing to deficit reduction. I insisted on it. And every time it has shown the same thing – everyone has done their bit, but the best off have contributed the biggest share of their income to help pay down the deficit. Rightly so. So our third fiscal rule will require that to be the case until the deficit is gone.
Fairness will be at the heart of the economic policy of any government that we are part of in the next Parliament. We will balance the budget as planned, do it fairly, and then allow public spending to grow as the economy grows. With pensions and healthcare costs rising and debt to be reduced, the belt will need to stay tight, but we will be able to ensure the NHS has the funds it needs through the next Parliament.
The difference is clear: Labour will borrow too much, the Tories will cut too much. Labour will risk the economy, the Tories will sacrifice working people to protect the better off.
Our approach is balanced, sensible, and fair.
And, yes, it does mean asking the wealthiest to pay a little more tax. We will introduce a new levy on the highest value properties - new bands on top of council tax to end the outrage that a £50million pound property can currently pay the same as a half million pound home. This new tax will be fair, affordable, and will generate funds that will help our nation to live within its means.
Liberal Democrats have led the crackdown on tax avoidance. The investment I announced at this conference in 2010, is now bringing in an extra £7bn. We are now insisting that tax dodgers pay the right tax up front – they will only get any money if their scheme is later proved in the courts to work.
And we are using psychologists and behavioural economists in HMRC to get the money quickly. Tax dodgers beware – we know where you live, we know how much you owe, and now we know how you think. Your behaviour is unacceptable, and we are coming for our money.
The same goes for multinational companies. For many years, a small minority have flitted between tax havens, paying little or nothing anywhere. Those days are coming to an end. Our government has led the way in a global movement to rewrite the tax code. That work is nearing completion, and I can tell you Britain will be one of the first countries to put the new rules into action. This December, we will take the first steps with new rules to stop firms lending money across borders just to minimise tax.
Anyone ever heard of hybrid mismatches? Thought not. Well the good news is we’re stopping them. This could yield hundreds of millions of pounds and it will put Britain in the lead with the first of many steps to implement the new global tax rules. Liberal Democrats, we will ensure everyone, however big, pays their fair share.
You’ll remember Liam Byrne’s infamous letter – ‘there’s no money left.’ We’ll I’ve started drafting mine. It says: ‘Growth up. Borrowing down - fairly. More jobs. Less red ink. Income tax cut. That’s the Lib Dem legacy – don’t mess it up!’
But I also need to be clear. The entire deficit cannot be removed through taxes on the wealthy. Far from it. Departmental spending will see further reductions, and we will have to keep social security bills under control. We’ve proposed stopping winter fuel payments to the wealthiest pensioners.
In finding savings, people expect us to look first for waste and bad practice in Whitehall. To be honest, when I started at the Treasury, I pushed this very hard, but I was sceptical about how much would be found.
But in fact, we have found an additional £5 billion of such savings every year. These reforms are far from painless, but they are not at the expense of frontline services. The experts we have brought into Whitehall have told me we can do more. So I can tell you that I have asked the cabinet office to start work now on plans to deliver a further £10 billion of savings in this way. Plans that will be ready for the next government, and which will help us to balance the books, and do so fairly.
Fellow Liberal Democrats, we are living through momentous times. We are shaping those times. Shaping our country so that power is given back here in Scotland and across the UK. Shaping our economy so it is stronger and greener. Shaping our society so that it is fairer.
Be inspired by what our Party has achieved in these 4 short years.
We have rescued the economy, given opportunity to young people, cut taxes for millions of working people. This message needs to be told in every community, on every doorstep.
Don’t be shy about it. And remind people of this.
The crash of 2008 was the product of the old two Party system. For decades, Labour always borrowed too much. For decades, the Tories cut too much. Like two drunks fighting over the steering wheel of the car, the lurches between one single party administration got bigger and bigger, until they crashed it completely.
And tell them this. It isn’t one party putting this right. Liberal Democrats are at the heart of this administration – and many would say we are the heart of this administration. It’s because we are in Government that we have an economic recovery. It’s because we are in Government that the recovery that will be sustainable and that the repair job will be done fairly.
We have rescued the country, and we need to summon up all our courage and resourcefulness to save it again, from a Labour party that would borrow too much and a Tory party that would cut too much.
We have brought the country so far in the last 4 years, we cannot let them wreck it with another lurch left or right. So roll your sleeves us and go tell our story.
Go fight for every vote. For a strong economy, a fairer society, a Britain where everyone has the opportunity to make the best of their lives. Let’s make this happen.