• What is the timescale? 5 years, so this is a clear Conservative victory. I am deeply concerned about this, possibly more than anything else, because I think it will damage growth over the next half decade (possibly plunging us back into recession) and thus prolong, not minimise, the pain.
• What is the proportion of cuts to tax rises? I hear differing figures, but I think the most accurate figure is 77% cuts to 23% tax rises. That is a slight reduction on the Tories’ 80:20, but is closer to that than the Lib Dem figure of 71:29 (or 2.5:1 depending on how you want to look at it). Of course, converting it all to percentages highlights quite how close all three parties plans were (Labour were committed to 67:33). To an extent therefore, I will concede that much of the battle had already been lost before the election. But there are tax rises and then there are tax rises. Which brings me to…
• What kind of tax rises? Leaving aside the Capital Gains Tax tweak, which only raises £1 bn (half the amount to be raised in the Lib Dem plan), the main hit is on VAT, both the higher and lower rates, to 20% and 6% respectively. There is no escaping from the fact that this is a total defeat for the Lib Dems in coalition. There are no new wealth taxes, despite the fact that large amounts of uneconomically productive wealth is locked up in land across the country, which in turn ensures that rent rises are artificially high (a problem exacerbated by the Housing Benefit cap) and contributes to the housing shortage. The Social Liberal Forum can point to one small victory however: the increase in personal allowance will not be passed onto people paying the higher rate of tax, something which we argued for at both the special conference and in our letter to Nick Clegg and Danny Alexander.
• Will it be egalitarian? Despite the government’s protestations, the broad consensus is that the overall package will lead to greater inequality, not less. Indeed, the debacle over whether the package is fair on the poor or not has made our case superbly about the need for the Office of Budget Responsibility to be both genuinely independent (ideally appointed by parliament directly) and have inequality written into its terms of reference. If it had been, I genuinely believe that it would have lead to a fairer budget: George Osborne to his credit understands the need for transparency in fiscal policy and has taken great strides to improve this. Ensuring that they can’t spin about inequality is a very crucial part of the jigsaw puzzle.
• Will we end up with more or less means testing? Superficially, this is a victory as the scope of means testing was not increased. With that said, the number of people facing marginal rates of tax of around 90% actually increased – despite David Cameron’s highflown rhetoric about ending this last year. If proof were ever needed of how a smaller state can lead to less freedom, this is it.
• Will this budget lead to a fairer, greener economy? The short answer to this is: wait and see. There was very little in the budget to give us hope on this score, apart from the commitment not to cut any further capital spend. We must now look to the Spending Review to see whether all this pain will lead for a more sustainable, brighter future. Much of what is in the coalition agreement is hopeful on this score, and much of it will be lead primarily by Liberal Democrat Cabinet members: Vince Cable and Chris Huhne. But it involves convincing the Treasury that these plans are worth proper investment, and sadly the Treasury have not exactly filled me with confidence this week.
• What will be in the budget to prevent a “double dip” recession? Again, we will have to wait and see on this score. The commitment to capital investment was at least something, as was the very small amount of help to entrepreneurs. But to suggest that taking such a large amount of money out of the economy during such a short timescale will have no impact on the recovery, is fantasy economics. Osborne and Alexander are taking a big gamble here. Only one thing is clear: if we do go back into recession, it will be very clear who is to blame.

Overall, then, I’m not convinced this is a good budget, or even a necessary one. If I were a Lib Dem MP would I oppose it? I would certainly be thinking very hard about how I might be able to improve it via the Finance Bill.

But where do we go from here: any thoughts?

A concern with inequality lies deep in liberal DNA. More than a century and a half ago, John Stuart Mill argued for a cap on inheritance so that wealth might be more fairly distributed in society. His views jarred with Victorian attitudes. Would they be more accepted now?

This pamphlet argues for a renewed liberal equality agenda, based on evidence of the divisive impact of inequality on society and recent findings of the central role that financial security and access to resource plays in life chances and child development.

The Liberal Democrats face a unique opportunity: concern for economic inequality has never been more fashionable or higher in the public mind than in this post- recession era and following the double-scandal of MPs expenses and bankers bonuses. In the wake of the Labour government’s failure to effectively tackle inequality, a radical agenda focused on redistributing resource, capitalising disadvantaged families and improving services would cement the reputation of the Liberal Democrats as the vanguard of the contemporary progressive left.

The book makes three main policy recommendations for the Liberal Democrats to adopt:

• Tax wealth via land value taxation and replacing inheritence tax with an acquisitions tax.
• Introduce a capabilities boost to benefits and services by increasing benefit and tax credit levels for the working poor, additional resources for early years education for children from disadvantaged backgrounds and focusing Sure Start on programmes with a proven impact on child well-being, capability development and parenting.
• Capitalise low income families by raising the minimum wage, entitling low income families to a £500 lump sum on the birth of a child, refocusing child benefit so that it is higher for younger children and encouraging people on low incomes to save via a system of matched funding.

The pamphlet can be downloaded for free on the Demos website.  You can also download their pamphlet aimed at Labour, Society of Equals and the Conservatives, Everyday Equality.

Okay, it ever so slightly over-eggs the pudding, but it is good fun nonetheless.

The Social Liberal Forum will be running a joint fringe with the Equality Trust at the Liberal Democrat Spring Conference in March. More details soon.

At the heart of The Spirit Level is a wealth of statistical data outlining how more equal societies (defined in terms of income inequality) do better in terms of physical health, mental health, drug abuse, education, crime and imprisonment, obesity, violence, teenage pregnancy, child welfare and social mobility (the latter is a bit of a killer incidentally, it would appear that “The American Dream” is more of a reality in many countries which Fox News would condemn as “socialist”). If that were all the book had to offer I would suggest you save your money and simply peruse the excellent Equality Trust website which Wilkinson and Pickett have helped to set up. What is more compelling, for me at least, is the explanation about why this may be the case.

Some of this has already been covered in Duncan Brack’s chapter on equality in Reinventing the State (which you can read here). In essence, the sociological evidence fits with what we understand about evolutionary psychology and biology. As a species, we are hardwired for fairness and living in a socially stratified society is not merely something we dislike but something which we find physically stressful. Wilkinson and Pickett cite numerous pieces of evidence which suggest that, for example, low caste children in India perform worse at intelligence tests when they are told they are competing with high caste children than when they don’t realise they are being compared (New Scientist recently reported some interesting parallel research looking at exam performance of Black Americans before and after Barack Obama’s election victory). Other evidence suggests that shame can be as unbearable for people as physical pain and that living in poverty tends to cause children to mature early.

Overall, it is a compelling document. I have some qualms however. I don’t think the most startling claim, that inequality harms the wealthy as well as the poor is proven. They do provide evidence for this to be fair, but not an awful lot. I’d like to see more research on this before being convinced (I’m rather more convinced by the argument that inequality harms people earning median income and even higher income groups, just not those at the top). I would also like to better understand the dynamic between growth and equality: at what point does equality become a bigger factor in improving, say, health, than economic growth? In the first section of the book Wilkinson and Pickett do acknowledge that growth is a bigger factor for developing countries but the precise relationship between the two doesn’t get explored as much as I would have liked.

I also wish the book explored how inequality and ethnic diversity are interrelated. Most of the more equal societies listed appear to also be more ethnically more homogenous. Does ethnic diversity drive inequality and to what extent is it a barrier to greater equality? These are, admittedly, problematic questions to answer but I think it is something we need to understand. It would be nice to be able to discount the notion that the same biological factors which make us well disposed to equal societies don’t also dispose us towards more homogenous societies but what if it doesn’t? Ultimately, we can’t merely trust in social science to make decisions for us – that’s where political choices come in (for the avoidence of doubt, I’m NOT arguing for segregation or anti-immigration policies here – quite the opposite – but if there is a relationship between inequality and diversity we need to understand it and be able to respond).

So where does all this get us? Wilkinson and Pickett point to a few possible solutions. They are keen to emphasise that a more equal society doesn’t necessarily mean going down the Scandinavian route of redistributive taxation and a larger state. Japan for example has neither of these. Indeed, while they certainly do not oppose public policy solutions, most of the final chapter in the book is concerned with establishing a cultural shift.

Some of the solutions they do propose sound remarkably familiar to those of us who have read our Schumacher. A starting point for them would be to revolutionise employee ownership. “Industrial democracy” is something which the Lib Dems have forgotten about over the past couple of decades – perhaps it is time we rediscovered it as a central tenet in these post credit crunch days?

I was slightly surprised to read in a book about social problems and public health a section on the open source revolution and information technology but this is another aspect that Wilkinson and Pickett feel that politicians need to embrace in order to lead us towards this much needed cultural shift. I think they’re right to do so. The debate over intellectual property laws goes to the heart of what kind of society we want to live in – one where every tune and image is owned by private corporations or one where we have a cultural commons (all too often the artists and writers themselves tend to get forgotten in this debate but the public library system proves that we have alternatives to the limitless copyright model international law is drifting towards). A shift towards the latter would strike a blow for those of us who believe equality matters.

We can’t forget public policy of course, but as Wilkinson and Pickett point out if those shifts in policy are to be lasting they have to go hand in hand with an attitudinal change. The tricky thing is that it is clear that most people have an innate sense of fairness, outside of the laboratory there is a wide difference of opinion as to what is “fair.” This makes it all the more crucial the politicians start talking about these issues. Gordon Brown has demonstrated over the past decade that redistribution by stealth merely gets you into a mess.

The Social Liberal Forum and Compass will be hosting a fringe meeting on Overcoming Political Barriers to Equality on Monday 21 September at the Lib Dem autumn conference in Bournemouth. Richard Wilkinson and Kate Pickett will be speaking at the Hackney Liberal Democrats Garden Party on Sunday 13 September (£10 or £5 in advance).

Title: After the recession, a different future
Date: Wednesday 1 July 2009
Time: 7.30pm-8.30pm
Location: Room Q, Portcullis House, Westminster, SW1A 2JR

Full details are available on the Flock Together website. Please confirm if you are likely to be attending on that website so we can keep an eye on numbers.

Our meeting the other week with Danny Alexander MP was very constructive (and well attended!). One of the recurrent themes at that discussion was the need to tackle equality and in particular the findings in The Spirit Level: Why More Equal Societies Almost Always Do Better by Richard Wilkinson and Kate Pickett. Social Liberal Forum council member Rev Chris Brice will be hosting a talk with Richard Wilkinson at St Martins Church, Gospel Oak, on Sunday 5 July and would like to extend an invitation to SLF supporters to attend. Details are available at the Flock Together website.

We have a new Liberal Democrat think-tank. And when there has been little or no thinking around the party for two decades, that has to be a good thing. So why am I uneasy about the appearance of the Social Liberal Forum?

It isn’t that I am suspicious of social liberalism. Heaven knows, I was even a contributor to the excellent essay collection Reinventing the State.

Nor am I a closet ‘market liberal’ – if there is such a thing – dedicated to handing over health and education to faceless American corporates.

No, this is an argument inside social liberalism, but it is an urgent one. Because there is more than one kind of social liberalism, and we can’t afford for the backward-looking Fabian variety to dominate again.

When the electorate demands something progressive, it would be disastrous for us to exhume the soulless old language of the 1970s and argue that we just never tried Fabianism hard enough.

This article is me asserting my right to try to claw back a genuinely Liberal social liberalism from the jaws of the Fabian beast.

It is a kind of open letter to Matthew Sowemimo, Richard Grayson, Duncan Brack, and all the others involved in the Forum, to look forwards – to look for the real reasons why Britain is becoming so unequal. To be Liberals, which means, I believe, rejecting the Fabian idea that everything can be solved by tax and spending.

Cerebral Knees-up

The inspiration for writing this was the fringe meeting at this year’s Liberal Democrat annual cerebral knees-up at the LSE, under the title ‘Reclaiming the State’, an attempt to push the issue of equality higher up the agenda. Fair enough. We are social Liberals: that is what we are for.

But here we come to the crux of the matter. Measure equality broadly and design policies that can genuinely understand the complexity of it, and maybe we can move forward. Measure it narrowly, and assume that tweaking the bottom line is all the government needs to do – that it is only a question of how much money the state spends – and we find ourselves back where we started, somewhere around 1977.

The heart of the fringe meeting was a presentation by a personable young man from the Institute of Fiscal Studies. Listening to him made it horribly clear why narrow technocratic Fabianism failed to shift equality in Britain before.

Because defining equality in terms of income is all very well, but it misses the real question as we pore over the graphs: why is such inequality so persistent?

Defining it in terms of consumption, as he preferred to do, is an interesting intellectual exercise but compounds the error. It assumes that Lord Scrooge is poor because he spends as little as he can, but that a single mother is rich when she has five children and juggles the same number of credit cards.

This is the Fabian approach to policy. It reduces everything to a handful of technocratic metrics, chosen largely because it thinks the government can make a difference to them, but which ignores the basic problems.

Not just money

It pretends that the whole problem is about money, when people outside the policy bubble know perfectly well that it isn’t. It certainly is partly about money, but it is just as much about power, class, education and culture and much else besides.

And it implies that the whole solution to the problem is welfare. That poor people should be supplicants to government redistributors, when we know that won’t be nearly enough.

This is the original Fabian sin. It reeks of elitism, and ineffectual elitism too, rooted as it is in an organisation that was originally dedicated to moving very slowly and that – thanks to George Bernard Shaw – ridiculed anything that did not reduce any problem to money alone.

None of that is to pretend money is irrelevant. Of course it isn’t. But what the narrow obsession with poverty graphs is emphatically not is Liberalism, with its broader understanding of the problems of power, its human sympathy, and its understanding of the limitations of the central state.

Of course, Liberalism learned from the Fabians, especially in the days of the Newcastle programme. It learned, for one thing, to trust the state so far – that no other institution was available. But it always understood that human beings come before bureaucracies and that bureaucracies are not nearly as effective as politicians imagine they are.

Even if the occasional Liberal policy paper imbibed some of the technocratic language (it made them sound serious, after all), Liberals never followed the fearsome Beatrice and Sidney Webb in their rejection of people power.

“Some old ladies fall in love with their chauffeurs,” said Beatrice Webb just before she died, at the height of the Stalin’s purges. “I have fallen in love with Soviet communism.” Liberals never followed her that far.

Nor did they follow the Fabians where all this led to: the punishment of impoverished communities that failed to respond in the way the theory prescribed, to the destruction of their neighbourhoods and the theft of what power they had to the centre.

“We are dealing with people who have no initiative or civic pride,” said Newcastle’s chief planner in 1963. “The task surely is to break up such groupings, even though people seem to be satisfied with their miserable environment and seem to enjoy an extrovert social life in their own locality.” That was the logical consequence of technocratic Fabianism.

None of this suggests that equality is unimportant. Of course it is. But the Fabian idea that you can measure it simply and solve it just by increasing public spending dangerously misses the point – and leaves people just as unequal, but a little more cynical. The real problem is much more insidious than that.

Sixty years after the Beveridge Report, which identified the Five Giants that blighted mankind and predicted their progressive destruction, the Giants are still with us.

Beveridge didn’t slay them, and neither did the Fabians with all their graphs. Neither did Gordon Brown over the past decade when he doubled the money going into the NHS and increased the national budget from just below £4 billion to nearly £6 billion.

So tell me, Fabians. Is it possible that some other factors are involved which meant that the money wasn’t spent as effectively as it could have been? Or is the question really only how much?

Should we, as an effective opposition, articulate the real reasons why Britain doesn’t work for everyone? Or should we just confine ourselves to the old tried and failed metrics and the sheer dullness of the political promise of specific amounts of money?

Here is a handful of Liberal explanations of why such inequality is still with us:

• Centralisation: this plays a major role in increasing isolation and sense of powerlessness, as institutions get ever more distant from people – geographically and politically – and as frontline staff become ever more enmeshed in the target culture and ever less effective in helping those they are supposed to help.
• Education: generations of people in Britain have inherited a suspicion of schools and universities, and it is a suspicion that is reciprocated – how else can we explain why successive governments believe it acceptable that we shove teenagers into monstrous factories of 2,000 pupils or more?
• Snobbery: there are structural reasons why our public services are geared to treat some people differently from others, and to treat poorer people with deep and authoritarian suspicion. Why else is my local shiny new Children’s Centre absolutely empty of punters? Because those it is aimed at believe it isn’t on their side – and they are correct.
• Passivity: we have structured our public services in such a way that they prefer the poorest and most dependent to be passive supplicants rather than authors of their own destiny.

This last one is an insidious legacy of Fabianism; creating public services that are ruled by technocrats, and which waste the energy and imagination of the people who go so passively through the system. It is precisely what Beveridge warned against in his less famous second report on the urgency of people power.

The truth is – a Liberal insight this one – that none of our huge social problems are going to be tackled sustainably and effectively without a huge injection of voluntary effort by ordinary people on an unprecedented scale, bringing to bear their human skills, and to do so via our public service institutions.

Will that require more money? Of course it will, at least to start with. But is this primarily about money? It isn’t that simple.

So this is my challenge to the Social Liberal Forum. Will you dare to grapple with these broader structural issues – or will you turn back to the old Fabian delusions, handing down percentages and targets from on high to an electorate that has long since ceased to believe in numbers?

Will you hammer out a non-market social Liberalism that trusts people to take charge of their lives – or will you remain suspicious that this implies somehow that they need no support from government, central or local?

Will you develop a critique of the combination of state and corporate power, the new reality – or will you just re-hash the tired old assumptions of tax and spend?

The danger is that social liberalism becomes what the media tells us it is – torpedoing outdated market reforms to public services, without suggesting any real changes instead. A symbolic gesture, with money attached, here and there perhaps. No articulation of the basic problem. No ambition. No faith in people.

The real battle seems to me to be a tussle inside social liberalism for the soul of the party – not to accept or reject the state, but to decide between the old technocratic abstractions versus human solutions.

People can see the wreckage of Westminster solutions all around them. They want a political force that can see that too, but which doesn’t respond by consigning them into the arms of American corporations ringed all around by ‘commercial confidentiality’.

I still believe the Liberal Democrats will be that force. Not until they have excised the fantasies of Fabianism, they won’t be.

In the end, the people who can do that most convincingly are the new Social Liberal Forum. This is a small plea from a potential recruit: give us a lead into the future.

Social Liberalism is the mainstream philosophy of the Liberal Democrats and has been so since the Grimond era. Social liberalism recognises that an individual’s material and personal circumstances can act as a constraint on them realising freedom. How meaningful is freedom if you don’t have a house or a pension? This core Social Liberal analysis is as relevant to today’s world as it was to the Edwardian era.

While political freedoms such as freedom of speech are crucial, poverty, inherited disadvantage and in today’s world, climate change, can curtail freedom. Lloyd George preceded his challenge to the landed aristocracy with the damning phrase that “a nation that ruled the waves could not even flush its own sewers.” Liberals have used state action to challenge disadvantages that prevent individuals realising their full potential. As Nick Clegg has said, “freedom and liberty mean nothing unless the barriers to progress and opportunity are removed.”

Beveridge provided the intellectual underpinnings for a welfare state that brought about significant improvements in life expectancy and quality of life for many Britons. The call for state intervention to give disabled people full civil rights in the high street and the workplace did not come from some Fabian elite but from the grassroots. It came from people who had been dismissed from employment and who could not cross the threshold of the local supermarket.

The state can play a role as an enabler and can break up concentrations of power and wealth essential for expanding life chances. But a call for renewed state action does not mean an embrace of the forms of intervention favoured by Crosland, Brown and Blunkett. The state of 2009 is centralist, insensitive and unresponsive.

Despite record funding, our public services remain stubbornly unresponsive. All the consultation documents in the world do not amount to a genuine voice for citizens in the planning of key services like health care. Liberal Democrats need to refashion and reinvent the state and not simply through decentralisation.

For example, will citizens have a stronger voice in shaping decisions about schools and hospitals if they are given social and economic rights, enshrined in a written constitution? Campaigners used South Africa’s constitutional entitlement of ‘the right to health’ to force Thabo Mbeki to overturn his ban on the funding of HIV drugs. Defining clear rights in these areas should also be part of the debate.

But why the Forum and why now?

Social Liberalism speaks powerfully to the needs of our times. This is an age when we survey the ruins of insolvent financial institutions bequeathed to us by the abdication of regulation. Across the world, existing divisions over ethnicity, religion or caste are being intensified by poverty and the advance of climate change. Equality is now not just a moral imperative but is essential for the quality of life of people across the social spectrum.

Economies like South Africa and Brazil are the real growth engines for the world economy in the future but they are being held back by the inequalities within their borders.

I am diminished if the child down the road is underachieving at school and leaves school with inadequate qualifications. If a woman in Salford is paid less for her work than a male colleague doing the same job, our taxes will end up paying for her retirement. How can we compete in the world economy when working class children born at the millennium are already falling behind their less academically able middle class peers?

Richard Wilkinson’s new publication, The Spirit Level, has provided powerful evidence that unequal societies like Britain diminish the quality of life available to people across the social spectrum. For example, Wilkinson found that even in an area that is closely associated with working class disadvantage – achievement at school – more equal societies see higher levels of literacy among the children even of better educated families. He demonstrates how inequality hits the quality of life across the whole community in areas ranging from trust in your neighbours to homicide. Wilkinson’s findings should chasten those who believe that the affluent can insulate themselves from the consequences of deprivation elsewhere in our society.

So while there is a compelling case for a reinvigorated national and international effort to achieve equality, can Liberal Democrats generate the electoral support to make this possible? Some people have suggested that we have now reached the limits of public support for redistribution of wealth and opportunity. I disagree. When voters are shown the impact that successful anti-poverty policies can have, they rally in support of equality.

The banking crisis represents a major strategic moment for the centre left. Margaret Thatcher exploited the IMF crisis and the Winter of Discontent to press her case for free market policies and possessive individualism. The banking crisis demonstrates that free markets do not inherently serve the public interest. In this recession, both middle and working class people share economic insecurity and will look to the state to provide them with social protection. President Obama is taking advantage of this climate in the United States to push forward with the biggest expansion of the federal government since the New Deal.

And Social Liberalism is indispensable for our electoral coalition. Labour voters put us over the top in a series of seats won from the Conservatives in 1997 and 2001. We now represent a swathe of seats in university towns where middle class Labour voters were won over by our policy on tuition fees and our uncompromising internationalism on Iraq.

The Social Liberal Forum was formed in order to generate debate within the party and beyond. Our title is not accidental. We don’t exist simply to promote some pre-defined policy agenda. We want to engage with party members across the country. That’s why we have started the Ideas Factory on our website. A liberal party needs open debate.

There are some really big questions for our party to consider as we formulate our manifesto and beyond:

• Can we break the cycle of inherited disadvantage by investing in education alone? Will an emphasis on education be distinctive enough to counter David Cameron’s Conservatives?
• If we are serious about hitting the 2002 child poverty target, and we reject means-testing, what does that mean for child benefit?
• Who are the poorest in our society and what are the policy interventions that will help them?
• While worklessness is a key driver of poverty, free marketers should recognise that work that delivers low pay and limited progression can also entrench poverty, particularly for women.
• How can we develop a framework where business meets its social and environmental obligations and maintain competitiveness?

One hundred years on from the People’s Budget, the inequalities in life chances in today’s Britain demand that we reconnect with our radical heritage. Throughout our party’s history – whether it be honouring moral obligations to the Hong Kong Chinese; Kosovo; or upholding international law on Iraq – where we have shown leadership and moral clarity, we have been rewarded.