The Liberal Democrat Delusion


The Liberal Democrat annual conference in Birmingham this year appears to be nothing more than a showcase of the deluded. The streaks of yellow in the crowd, drowned by the sea of blue on stage. “In Government, on your side” is the tagline. One wonders whose side? The student movement that pre-election Liberals managed to win over? The 80,000 who have lost their public sector job since the Coalition came to power? The pensioners who lost their winter fuel allowance? The kids from low socio-economic areas whose youth club is now closed? Whose side are they on exactly?

A lovely big Corporate tax cut, from 28% to 25% by 2013, suggests the ‘side‘ the Liberals are on, is not ‘our side‘ at all. If Corporate Tax cuts ever led to high growth, growing wages, a happy and fulfilled population, we’d all fully support it. But it never does. It leads to higher CEO pay, dodgy stock market gambles, stagnating wages, and Corporate politicians. A report by accoutant Richard Murphy, of Corporate tax rates and job creation, of OECD countries between 1997 and 2010, found that:

Analysis of the correlation between tax rates and growth in OECD countries (excluding the top and bottom outliers) finds that, at best, the relationship between the two variables is weak.

– This contradicts the Government, who said:


“The reductions in the rate of corporation tax and healthy financial position of UK companies in aggregate should help support further investment growth.”

– My own opinion, for what it is worth, is that we need to get away from this odd idea that companies and the rich are “job creators“. It is a concept imported from the US. Demand creates jobs, not the rich. Investors do not look at that extra 5% and decide to keep their money in their pocket. If the demand is there for a product, then the potential profit far outweighs that extra 5%.

This obsession with cutting the deficit fast, which is clearly causing my damage than good, places the Liberal Democrats firmly in the category of deluded Neoliberal dogma adherents. The downgrading of growth this year, by the IMF, from 1.7% to 1.1% along with rising inflation, high unemployment, and the failure of the private sector to take up the jobs the Government promised it was more than capable of doing, would force right minded people to rethink their policy, to be a little bit humble, admit you might have got it wrong, and try another way. But no. They insist there will be no Plan B. This is the Liberal Democrats greatest failure.

One particular Liberal Democrat delegate to the conference suggested that Internet Access was now a human right. As far as I was aware, ‘human right‘ is an absolute term. There are no shades of human right. Something cannot be a ‘bit of‘ a human right. So, that being said, certain Liberal Democrats now consider providing internet access, just as important as providing water to famine stricken third World countries. But clearly more important than education, health and housing, if recent policy decisions are anything to go by. Interesting.

I’d suggest first sorting out the Coalition’s policies that actually do have human rights implications, before trying to introduce new human rights concepts. Firstly, health care is a human right. I believe the entire World (other than right winged America, who appear to be under the impression that State funded life saving is wrong, but State funded execution is perfectly acceptable) considers healthcare to be a human right. And yet the Coalition’s policy of dismantling the NHS for, what I can only see to be the sake of Care UK, whilst not a new concept, seems to put that particular human right at risk. I blogged earlier last week on the gulf between the god-awful state of the American private system compared to our Nationalised system, and one has to wonder why we’d import any of the US model into our own. It is absolutely not about consulting with the experts on how to improve the NHS. If we look back to the previous Tory Government, Thatcher’s ‘NHS Community Care Act‘ was the first time in history that the BMA were excluded from policy discussions, the end result being a purchaser-provider split – an NHS market. Similarly, whilst Cameron is walking a very thin line between twisted logic, and outright lying to Parliament, the very Health professional groups he insists support his plans for the NHS, actually do not support him at all.
On September 7th, Cameron said:

“He may not like the truth but that is the truth and I have to say to him that is why you now see the Royal College of GPs, the Royal College of Physicians, the Royal College of Nurses all supporting our health reforms.”

– The Royal College of GPs then issued a statement, saying:

“As a College we are extremely worried that these reforms, if implemented in their current format, will lead to an increase in damaging competition, an increase in health inequalities, and to massively increased costs in implementing this new system.

“As independent research demonstrates, the NHS is one of the most efficient healthcare systems in the world and we must keep it that way. “‬

Similarly, the Royal College of Nurses, which Cameron insisted supported his reform proposals issued this statement:


“The Bill being placed before parliament next week has enormous ramifications for patients and for our members. While we acknowledge that the Government have listened to our members in a number of areas, we still have very serious concerns about where these reforms leave a health service already facing an unprecedented financial challenge.”

– When does propaganda, evolve to ‘misleading Parliament’?

Disease should not have a market value. Healthcare is a necessity, not a commodity. It isn’t simply Socialist reasoning that brings me to that conclusion, it is simple Market logic. A Market is based on demand. If demand falls, prices will fall, businesses that fail to adjust will go bust. Demand is based on an individual’s informed choice. An individual has no choice if he or she suddenly gets cancer. He or she is not in control all of a sudden. He or she may have a choice which provider to go to, but they don’t have a choice on the ‘commodity’ for sale. Buy or die. So, a healthcare company has no reason to drop their prices, because demand will absolutely never fall. This gives a great advantage to private health companies and insurers. There will always be profit to be made. Markets respond best to peoples desires rather than their life needs. So, the commodity might be a drug to treat cancer, it will never be the cure, because the cure is worthless to shareholders. This is evident with the privatising of the utilities sector in the UK.

Privatising that particular sector, a necessary part of life (heat, electricity, gas) will always result in demand that will never die. And so unsurprisingly, we’re now in a situation where there are six energy providers, charging extortionate rates and an energy secretary who continuously blames the consumer for not switching provider. Huhne (the energy secretary) took to the Lib Dem conference stage today and blasted energy companies for offering cheap deals to new customers whilst pushing the prices up for existing customers. In June he said:

“Consumers don’t have to take price increases lying down. If an energy company hits you with a price increase, you can hit them back where it hurts – by shopping around and voting with your feet.”

And yet today, he says:

“It’s not fair that big energy companies can push their prices up for the vast majority of their consumers, who do not switch, while introducing cut-throat offers for new customers that stop small firms entering the market.

– Isn’t this simply asking the consumer to perpetuate a system where new customers will be offered lower prices and then face huge hikes after a period of time? The first quote, seems to say “switch, you’ll find better cut throat deals, if you switch!” whilst the second quote seems to say “It’s not fair that you’ll get a better deal if you switch“.
– The question has to be, who do you switch too? None of the big six like to undercut each other by much at all. It is not the consumer’s fault that 18% of all households in 2009 were classed as ‘in fuel poverty’. These are households in which 10% of annual income HAS to be spent on fuel bills. From 2007-2009 35% of single pensioners were living in fuel poverty. The biggest pensioner group, the National Pensioners Convention warned in 2009 that due to the cost of heating their homes, in a cold snap during the winter; 12 pensioners could potentially die every hour. As people struggle even more to pay their energy bills due to this latest round of price hikes, we must assume the ‘big 6’ are having trouble staying in business? Well….no.

Centrica, which owns British Gas, posted pre-tax profits from Dec 2009 – Dec 2010, of £1.92bn. Its highest ever. 18% higher than the previous year. What Centrica tends to do, is rise prices very quickly when wholesale prices rise, but then refuse to lower prices, as wholesale prices drop. Profits from all six big energy companies far exceed £2bn, whilst prices for consumers have risen from an average of £572 p/a in 2003 to over £1000 in 2010. There is no excuse. Privatisation failed. Energy companies have proven that they find it impossible work in the interests of both investors and consumers. I cannot imagine anyone is deluded enough to argue that privatisation has benefited consumers.

British Gas, whose tag line is:

British Gas is the nation’s favourite Cheap Gas and Electricity Supplier

– Put up its price at the end of 2010, by 7%. In July this year, it then shocked everyone by putting up its price gas price by 18% and its electricity price by 16%. The other 5 followed suit, and now the average household will have to fork out around £200 extra for the annual fuel bill. Huhne, has done nothing. Whilst his party is partly responsible for kicking thousands out of work, stalling growth, stagnating wages, and rising inflation, the ‘energy minister’ has done nothing, but complain about consumers, and say ‘naughty gas companies’. And worst of all, he is part of a government that, in March, cut the Winter Fuel Allowance for households in fuel poverty. It isn’t like he was unaware that further rises in the fuel market might be on the cards. Even back in March, there were warnings. Helen Knapman writing for Money Saving Experts back on March 11th, wrote:

Energy prices are predicted to rise this year, prompting some experts to suggest you consider fixing gas and electricity costs.

– The Coalition Budget was made public on March 23rd. The Government had at least twelve days to reconsider cutting the Winter Fuel Allowance. They chose to cut it anyway. Unsurprisingly characteristic of the cowards in the Coalition, they kept the cut to Winter Fuel Allowance out of the Budget document. If Huhne wants to gain some sort of respectability back, for his beleaguered and battered Party, he should be arguing for a Nationalised Utility option.

Talk of ‘human rights’ is laughable, when you look at the record of the Coalition government. The right to education – which I’d consider a Human Right, has been tirelessly dismantled with the appalling Free Schools idea, and the cuts to EMA along with the trebling of Tuition Fees. To suggest, in a key note speech, cutting the benefits of the parents of kids who misbehave is a hideous indictment on the thought processes of Tories. Immediately, Cameron linked bad behaviour with low socio-economic regions. What ‘punishment’ do we give to rich parents of misbehaving kids? How do we punish the Bullingdon Club? Is it REALLY ethical, to make life even more difficult for struggling families, if their kids misbehave? Kids from towns where funding to youth clubs is drastically cut, where their jobs are never secure and where schools teach about five subjects, badly. If you take money away from the poorest and most underdeveloped areas, you force unemployment up, and you struggle to control inflation, whilst offering massive Corporate Tax cuts; expecting low-socio economic areas to respectfully suffer in silence, is economic warfare, and will always be matched with social unrest; be it in the classroom, or on the streets.

On Tuition Fees, Grant-Thornton (an international Tax and Advisory service) reported that contrary to the Coalition’s claims that the highest earners would be hardest hit by the hike in tuition fees, actually the richest kids will pay back the least given that they will be able to pay back the quickest, thus avoiding large interest rates. The middle earners, will pay back the most. A lawyer, in a scenario set out by the report, with a £40,000 debt, will pay back £68,00 overall. The middle earner, with a debt also of £40,000 will pay back £98,00 altogether, despite earning 34% less than the lawyer. The report points out that if rich parents pay the debt immediately, the rich kids pay no interest. So the middle earner is effectively subsidising the education of the rich. The Lib Dems tend to keep this quiet during Conference season.

It also contradicts the government, who claimed that Universities charging above £6000 tuition would be the exception rather than the rule. Grant-Thornton say:

Most universities have declared that they will be charging the £9,000 maximum or an amount close to it.

These levels have been struck as there seems to be a consensus of opinion that to charge less than the maximum would send the wrong signals about quality, and that the easier decision (or the decision that is likely to be ‘less wrong’) would be to charge the full amount.

If the Lib Dems unique selling point for 2015, is simply “You think this is bad, it’d be worse if the Tories were in power alone” is not going to endear mountains of voters to their cause. Voters look at results. We know that anything the Lib Dems claim they are doing to financially support the poorest, is offset almost entirely by rising inflation; which they helped cause with their dogmatic obsession with cutting everything, including the one thing that pulls Nations out of stagnating growth; demand.

Whatever they say, there were not just two options; Coalition, or Tories. The Conservatives in a minority government could not be doing what they are now doing. The divisive nature of Free Schools, the dismantling of the NHS, and the horrific speed of deficit reduction, that even the IMF is now a little bit worried (downgrading our growth forecast…..yet again) about the speed of deficit reduction, despite referring to fast deficit reduction as “essential” in 2010, the weak position on the banks, and cuts to winter fuel allowance would not have happened, had Lib Dems been allowed to vote freely as opposed to cowardly abstaining in order to preserve ‘strong government‘. More voters voted for centre-left parties, more voters voted for slower deficit reduction, than voted Tory and fast deficit reduction. There were other choices for government. Both Liberals and Tories put their money on fast deficit reduction and public sector cuts leading to growth and the resilience of the private sector in taking up lost jobs. Both have failed to materialise and that will be the legacy of Tory/Liberal Neoliberal economics. For me, the Liberal Democrats will always be associated with right winged economic vandalism.

There is absolutely no substance to anything the Liberals say, that rhetorically keeps them on the centre-left.

To finish, I am sick of hearing Liberal Democrats defend their ditching of the Student Tuition Fee abolition pledge, with “Well, you have to compromise in Government.“. If that’s the case, if it is the case that you can’t stick to your pledges due to hung Parliaments, then the Coalition should have presented a new, joint manifesto, which included NHS reforms, which included the Lib Dems u-turn on the speed of deficit reduction, which included cuts to Winter Fuel Allowances, which included disability cuts, which included VAT rise, and put it to the electorate in a second general election against Labour. What they shouldn’t have done, is presumed they now have a mandate to do whatever they like.

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2 Responses to The Liberal Democrat Delusion

  1. Jeff says:

    Brilliant. You’ve eloquently stated what the majority of the population are thinking. Get it published in the Guardian 🙂

  2. […] this article: The Liberal Democrat Delusion « Futile Democracy Tags: between-the, contradicts, god-awful-state, gulf, last-week, model-into, own-opinion, rich, […]

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