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3rd Annual "Liberal Democrat News" Lecture, London 1998

Paddy Ashdown (Liberal Democrat)

Location: London

This is the third January in which I have given the Liberal Democrat News Lecture, but the first time when I have been able to do so without the prospect of an imminent General Election.

So, though I want to make a number of comments about the Government’s current predicament, I also want to use this speech to look further ahead - especially at the question of tax and the necessity of re-connecting the taxes we pay, with the level of services we pay for.

But first, a broader view of the political landscape after the earthquake of May 1st.

It is not any longer fanciful to say that the mood of change unleashed on May 1st has brought us, perhaps, to the threshold of what is, potentially, one of the great reforming decades of our century.

This is an opportunity for which Liberal Democrats have fought and dreamt for most of the years of this century. I am determined that we shall be players, not by-standers, in driving forward change and I am convinced that unless we fulfil that role, then the changes before us will be less far reaching, less liberal and far less likely to succeed.

Periods of constitutional reform and modernisation come rarely to Britain - around twice in each century seems to be the average.

But we may be living at a potentially even more historic moment. About once a century our politics and the outlines of our political parties change their shape. It happened after the collapse of the Conservatives which followed the repeal of the Corn Laws in the middle years of the last century. It happened again after the collapse of the Liberal Party in the early years of this one.

And I believe it is happening now.

There are today, in British politics, not three political Parties, but five. There are two Conservative Parties and they are very visible, at furious war with each other and seem to be on their way to a split.

But there are two Labour Parties, too. And Old Labour seems as far out of Government and influence as are the Conservatives.

It is quite possible that we will see, in the period of this Parliament and the next, and especially under the influence of Proportional Representation, a whole new re-shaping of our politics, for the next century.

What drives me is the same analysis that drove my predecessors, Jo Grimond, David Steel and Roy Jenkins. That there is a natural liberal and progressive majority in this country, if only we can find the means to assemble it.

And if that was true for my predecessors, then it is even more true for me today.

All around me I hear our ideas, our policies and our language being used, right across the political spectrum.

There is now a historic opportunity to assemble that natural liberal, progressive majority in Britain so that it becomes the dominant governing force of our age.

The Liberal Democrats can be a gathering point for this process. I am determined that we shall take that opportunity.

To do so, we will need to recognise that this cannot be fulfilled, simply by working within the boundaries of our own Party - how could we think otherwise, when so many from other Parties, like Emma Nicholson and Hugh Dykes have come to join us - with more to come - and so many others share our views and aims ?

We are seeing, at last, the breaking down of tribalism in British politics - in both the Tory and the Labour Parties. We Liberal Democrats will also have to show that we are prepared to be less tribal, too.

But the reshaping of British politics is only one of the prizes to be won.

The project before us is larger, even than that. Our task is the wholesale modernisation of our country to prepare it for the next century.

There are two strands to this.

The first is the establishment of a new relationship between Britain and its neighbours, especially those in the European Union.

And the second is the achievement of a new settlement between the citizen and the State in Britain.

The conventional way to think about this new settlement is in terms of constitutional reform. But the constitution is concerned only with the political relationship between the citizen and the state.

But there is an economic dimension to that relationship, too. And it is contained within the unwritten and tacit agreements which support, or don't as the case may be, the way the Government taxes and spends on behalf of the citizen.

There is not much point in creating a new constitution which, at last, recognises the political power and rights of citizens in Britain, if we maintain an economic relationship with them through the tax system, which continues to treat them as mere subjects.

It is to the reform of that economic relationship, through the tax system, that the rest of this speech is dedicated.

For most of this century, the precise wording of parties’ tax commitments hasn’t mattered that much.

People knew where they stood.

They voted for a principle, or at least for a well understood pattern.

Labour meant higher tax, with the promise of better public services.

The Conservatives meant lower tax, and with the promise of smaller public services.

And the Liberals meant ... well, probably something in-between!

You didn’t always get what you voted for - particularly when it came to lower tax from the Conservatives - or better public services from Labour - but at least you thought you knew what you’d voted for.

But it doesn’t work like that anymore. And I suspect it never again will. The politics of class conflict, of left versus right, rich versus poor, workers versus bosses, has gone. The age of deference is over. And a good thing, too. Times have changed. Class politics may have been embedded in Britain 100, 50, even 20 years ago, but it’s totally outdated now. We’ve moved on. We’ve progressed. We’re becoming a mature, a much more questioning, democracy - socially, constitutionally, economically.

But our political parties have not changed with the times. They remain locked in their old shapes; class based, top down, rigid. Trying, first, desperately to make the new structures fit old ideologies. Then, finding, painfully, they can’t. And, ultimately, abandoning those ideologies for a kind of new managerialism. “Don’t vote for us because we’re different, we’re not. Vote for us because we can manage better.”

One of the characteristics of our age is the strange death of ideology in our politics.

It’s no longer true, as Mr Major tried to convince us before the last election, that ‘Cats miaow, dogs bark and Labour puts up taxes’, and it’s no longer true, if it ever was, that cutting taxes is what comes naturally to Conservatives.

But, equally, it’s no longer true that our public services are safe in Labour’s hands, or, indeed, that you can even rely on them to increase NHS spending even at the same rate the Conservatives they defeated did!

With the old certainties gone, people don’t know what politicians stand for anymore. Which is perhaps one reason why trust in politics and the political process is in such sharp decline.

Look at what happened at the General Election.

Both the Conservatives and Labour said they wanted to tax less and spend less.

But people didn’t believe them - either of them.

According to an Observer poll a few months before the election, three times as many people thought the Conservatives would put up taxes, as thought they’d cut them. And the figures for Labour were even higher - four times as many saying a Labour Government would put tax up rather than down.

The irony is, of course, that they were right. Gordon Brown’s first Budget measures did put up taxes - by a total of £36 billion for this Parliament, around twice what we were proposing!

To be sure, he didn’t break either of his specific tax commitments - on the income tax rate, and the scope of VAT - but the cost of that was breaching what has, up until now, been a sacred principle of Labour tax policy - the principle of progressivity, that of relating people’s tax bills to their ability to pay them.

And it also breached a second principle to which we ought to be attached - transparency - or at least visibility of taxation.

A progressive tax system is actually fairly new, historically. It is only in this century, with the enlightened governments of Asquith and Lloyd-George, that the principle of progressive tax has been endorsed and a progressive system put in place.

And it is only in the last 18 years, with the governments of Thatcher and Major, that that principle has been seriously challenged. Not so much with cuts in income tax, but with a huge raft of new taxes, levies and duties, unrelated to people’s ability to pay, and often, as with VAT, hitting the poorest hardest.

And now Labour is doing the same.

The July Budget put up tax on petrol, on tobacco, on house sales, on pensions and savings; cuts in mortgage tax relief. Not all of these were bad. Some were necessary, and some were right. But as a package this was not a progressive Budget.

“As a proportion of their income it is the poor who have fared worst - they have lost around one per cent of their disposal incomes.” That was the Institute for Fiscal Studies’ verdict - not on the last Budget of the defeated Conservative Government, but on the first Budget of the new Labour one.

But while, for the Conservatives, it was a deliberate strategy to shift the tax burden away from the rich and onto the poor, surely that cannot be Labour’s intention? In fact, I doubt many people in the Labour Party even realised this would be the Budget’s effect.

No, for Labour, this is not so much a strategy for the long-term, as a corner into which they’ve painted themselves.

Because they played the game of fantasy tax cuts with the Tories at the election.

Tough words. Stern photos. Personal signatures. Billboards at dawn. Iron Chancellors. Read my lips.

Labour were so scarred by their experience in the 1992 election that they ruled out the most visible taxes - especially income tax - for fear that even the possibility of any increase would scare people out of voting for them. But these, of course, also happen to be the fairest, most transparent and, above all, most progressive taxes. As a consequence, for Labour, any additional tax burden - which they must have known would be necessary to make their promised improvements in public services - would have to fall on less fair, less progressive, and above all, less visible taxes.

I can understand their motives - and our over-excitable media must bear some of the blame for them - but that doesn’t make them any less wrong.

The second thing Labour did on tax at the General Election was to take their two specific promises - not to increase income tax rates or the scope of VAT - and put them, along with their startling commitment to stick to Conservative spending plans for two years, and allowed people to believe that they guaranteed not to raise tax at all.

In essence, they told us public services could improve without anyone having to pay for them.

Just as the Tories told us they could cut taxes without anyone having to suffer.

Of course it couldn’t be done. And both parties knew it.

On the wall of my office in Parliament there is a cartoon from the General Election campaign. It’s one of my favourites. It’s in the style of Bateman. On one side of it there are Tony Blair and John Major leaping up in the air, arms waving, in a state of advanced shock. On the other side of it there’s a drawing of me, looking, I think, rather saintly actually.

And the caption underneath it reads: ‘The man who said tax might have to rise’!

Our policy of putting an extra penny on income tax to raise two billion pounds a year for our schools was, in fact, not as saintly as it looked. It was, rather, very popular. In fact, according to opinion poll after opinion poll, it was the most popular policy on offer at the General Election from any party. It was backed by 85 per cent of people, according to one survey. It was clear, it was simple and it was straightforward. No tricks. No gimmicks.

And there’s a lesson in that for the future, which I will come to a little later in my speech.

Now I mention this, not because I want to re-run the election; but because it illustrates something much bigger and with much longer term consequences.

The mire we politicians have got ourselves into on taxation.

Let us be clear. Nothing that has happened since the election has changed my mind. The Liberal Democrats were absolutely right to argue for higher taxes at the General Election to pay for education and health. And we are right to argue it still.

If anything it has become even clearer since the election that Labour’s pre-election commitment to Conservative public spending limits was, as we warned, unwise. And the consequence is - will be - a deterioration of standards in our vital services - larger school class sizes, record NHS waiting lists - in direct contradiction to Labour’s promises - their “early pledges” to reverse these.

I fear that Labour has decided to reverse the priorities it put to us at the election; its “long-term aim” of a 10p tax rate will be introduced before its early pledges of smaller class sizes and shorter waiting lists are delivered.

Why?

Well, six months ago Tony Blair argued that debt was the problem - but now it’s just dogma holding the Government back.

In the early part of this Parliament the Prime Minister stuck to the dogma that departmental spending ceilings could not be increased, even if savings could be found from elsewhere. For weeks at Prime Minister’s Question Time we said that this was pure dogma and totally unnecessary. We were called “irresponsible”; Malcolm Bruce was even compared by the Prime Minister to a Tellytubbie. But finally, quietly, the dogma was dumped.

Now we are told that no more money can be found this year to deliver those early years pledges on schools and hospitals.

Yet, as Malcolm Bruce has shown, there is a £200 billion War Chest of cash being built up over the next five years - now recognised by most professional commentators. The Institute for Fiscal Studies and Goldman Sachs have now even said that the Government could spend more this year and still meet the Golden Rule, to which it - and we - are committed.

The IFS also said last week that if the Government could not get out of the self-created strait-jacket into which it had stitched itself, then “strains...on public services will be severe” and their early pledges would be almost impossible to deliver in this term.

Of course, towards the end of the Parliament there is going to be more money available. Maybe the Government will spend some of it to improve public services just before the next General Election - in the usual “timely” fashion of Governments facing the ballot box.

But does this really make sense? Why does a Government committed to ending “boom and bust” economic policies, think it right to indulge in “bust and boom” funding of our public services?

There is no point in saying that the creed of your Government is ‘education, education, education’ - but not until the year after next.

By then the experienced teachers will have been sacked, the school playing fields sold and yet another year’s intake of our children, or two, will have had their futures blighted. You cannot re-run a child’s education.

If the resources don’t come soon the Chancellor and his colleagues are liable to find that when the troops go marching in to relieve the crisis it will take more than a couple of years to clear up the damage inflicted by the Conservative cuts Labour fought in opposition, but which they themselves are now implementing.

I repeat now what I said at the General Election - only this time with even greater certainty. These things need not be happening. Waiting lists need not be growing. Class sizes need not be rising. Teachers need not be being sacked.

This is the price we’re paying for the pre-election promises. Two days of good publicity for Labour. Two years of unnecessary austerity for Britain.

And a choice, now, for Labour, between breaking their promises to parents and patients to make early improvements to schools and hospitals, and breaking their promises to Tory ex-ministers, to stick to their spending levels.

Well I know who should come first - the parents and the patients. Those are the people Gordon Brown should be putting top when he writes his March Budget.

But the Chancellor is facing this choice for one reason and one reason alone. Because the way the last two elections have been fought has made it harder than ever for politicians to have a rational, honest, mature debate about taxation.

This is the premise for my speech today. It is that politicians have, collectively, failed people on tax.

I see that the Home Secretary is now engaged in a nationwide campaign which he tells us is to re-build trust in politics. Good. But let him start by examining his own party’s attitude to tax. For the question of tax lies at the heart of the question of trust in politics.

This failure of politicians on tax is not a failing unique to any one party. And it is not a single failure. In fact I believe politicians have failed people in five quite separate ways.

Failure one, quite simply, is the failure to be honest with people.

Failure two lies in the lack of any kind of enduring tax strategy, and the resort, instead, to opportunistic taxes, like the hidden ‘tax on pensions’ in last July’s Budget.

Failure three is the failure to explain, let alone consult with the tax payer, about how taxes are raised and what it is their taxes are spent on.

Failure number four is the failure of politicians to convince people that their money is being spent efficiently.

Gladstone used to ask his Ministers to account for the postage stamps they used. No doubt that was excessive, even then.

But when it comes to spending that portion of the citizens’ money which is necessary to fund the Government and its activities, a healthy spirit of frugality, even of meanness, is the right attitude for a Government to take that is serious about rebuilding trust in politics - and these qualities of frugality and meanness are not ones that I see much reflected in the glamour and glitz of the new Camelot that is being paraded before us.

The fifth failure of politicians is to make any attempt to connect tax raising with tax spending.

The time is now long overdue for a mature debate on our system of taxation. On the principles which underpin it. On the way new taxes are introduced. On the means by which people can have a say how their money is spent. And, crucially, on how we can reconnect the tax payer - the citizen - with the tax spender - the politician - and by so doing rebuild trust and legitimacy in the process of taxation.

And what are the keys to achieving this?

Well, 228 years ago the economist Adam Smith set out his four canons, or principles, of tax raising - equality, certainty, convenience and economy.

They still seem broadly apt, assuming you read equality as fairness in its widest sense.

But if we are to take these principles and translate them into the age of the citizen, we need to go further.

So here are Ashdown’s three foundation stones for rebuilding trust in tax.

They are connection, consultation and decentralisation.

Connection first.

Centuries ago, taxes were mostly raised for specific purposes - waging war on France, say - and they were levied as and when they were needed. Each round of taxes was highly visible. And the connection between tax raising and tax spending was obvious to all.

Since those days, however, the tax collection and distribution system has become ever more complex. Both the state and the tax burden have grown relentlessly. And with them has grown public unease about how their tax money is being allocated.

People don’t trust politicians to set their priorities for them in the way they once did. All people can see is the murky black hole their money is going into. Can it be any surprise that they are becoming increasingly unwilling to write politicians a blank cheque to use their money, not for what they want, but for the political enthusiasms of the Party in power - or even the Minister in charge.

So the task is to rebuild legitimacy by seeking to reconnect the taxes people pay with the benefits that flow from them - and preferably to do so without waging war on France!

Part of this is about simplification. The simpler tax law is, the more transparent, the easier to understand, the cheaper to collect, and the harder to evade.

Where the tax system can be sensibly simplified, it should be. Where tax law can be turned into something comprehensible to the average taxpayer, it should be. The Inland Revenue’s long overdue attempt to simplify the wording of the direct tax laws is a positive step, at least symbolically.

But what about the system itself?

What about simplifying the bewildering array of allowances and tax rates which often seem to confuse even the Inland Revenue themselves? What about integrating the tax and benefits systems to tackle the problem of overlapping tapers and high marginal tax rates? And what about looking at whether we actually need all four of our separate tax bureaucracies - Inland Revenue, Customs and Excise, the Contributions Agency and town halls - or whether savings can be made and efficiency improved by merging two or more of them?

These are the sort of common sense reforms which ought to command cross-party support. Therefore why not set up a new cross party Select Committee on Taxation Reform, and make it its first task to look into these kind of proposals and recommend appropriate changes.

But if this process of re-connection is to be really meaningful, it must also change the way Government works internally.

It must make us think more about what we want from public services, look at the costs of different options, understand the costs of tax cuts in relation to better services, involve debate and consultation over alternatives, measure the outcomes accurately and hold ministers and government employees more accountable for delivering the results.

This is why I believe that we should draw on the New Zealand experience of public service reform - we should pass a Public Services Act requiring pre-Budget consultation and debate not just about taxation but about public services. That Act should require Parliament to debate and approve a Service Delivery Agreement between Parliament and each major Department, annually, setting out the targets for outcomes and outputs.

And if this sounds like a radical untried step it is not. This is the sort of contract local authorities routinely have with their own Direct Labour Organisations.

But having an agreement about Service Delivery is not the same as adhering to it. What we need is an independent watchdog, operating on behalf of the public and standing between the politicians’ promise and its effective delivery.

At the last election we proposed that an expanded National Audit Office and Commission could fulfil this function, commenting annually and in public, on whether the Government had used its revenues to achieve its stated aims, whether this was done efficiently, and whether it had been effective in its outcome.

Together, this system of Service Delivery Agreement and independent monitoring could be incorporated into a National Tax and Service Contract - informing people annually not just what they are paying in tax, but what services and standards they can expect in return, and how the Government is measuring up to those objectives.

This Tax and Service Contract with people could be extended right across the public services and could even include a Contract of Entitlement for Social Security. No longer would a Government so easily be able to take a person’s contributions over a 40 year period and then decide, just before retirement, to means test, or reduce the benefits which had been paid for in good faith.

Which brings me to the question of hypothecation. A dreadful word - but a very important idea in the battle to rebuild trust and legitimacy in taxation.

I do not believe that the principle of hypothecation can be applied across the board in taxation. But it can play a role at the margins which is both important and symbolic.

The Treasury will say hypothecation is too dangerous. But it already exists. The TV license is a hypothecated tax - and road tax should be.

National Insurance was originally intended as a hypothecated tax and is still widely, if erroneously, believed to be so.

The Liberal Democrat penny on income tax for education is a prime, and more recent, example of this approach. Extra investment, carefully targeted, to three specific priority areas - nursery education, reducing class sizes, and books and equipment.

We shall build on the success of this policy over the Parliament - and look at other areas where hypothecation could have a role.

And, in particular, we shall look at areas where we can raise money by taxing a “bad” and shifting such money into cutting taxes or increasing expenditure on a “good”. Much as we did with our “5p on cigarettes for the NHS” policy at the election.

For example, Liberal Democrats have long been advocates of a Greenfield Development Tax, to deter developers from ploughing up green belt land and countryside when there are alternative sites available. It is gratifying to see that one or two members of the Government - the Deputy Prime Minister no less - now seem to be coming round to our way of thinking.

But rather than sending revenue from the tax into the ‘black hole’ of the Treasury, why not look at whether we could earmark it for an appropriate purpose - such as incentives to make better use of existing buildings and previously developed sites, reducing the need for greenfield development. And the beauty of this is that the need and the revenue are directly related. If the money dries up, the need for it is gone.

My second foundation stone for rebuilding trust in tax is consultation. For too long politicians have tried to have their cake and eat it. They’ve wanted the kudos of association with high-profile spending programmes, unsoured by any of the resentment that comes from asking people to pay for it. So they’ve misled people about their tax plans, and they’ve misled people about what they can achieve. And in doing so they’ve created such a mismatch between expectation and reality that it has brought the whole of politics into disrepute.

I have already explained how we could make politicians’ promises more explicit and their delivery subject to closer scrutiny through a National Tax and Service Contract. Now I want to propose an even more radical notion. That we might actually ask people what it is they would like their money spent on.

Why not send the Tax Contract to every household in the land. Not just for information, but for consultation too. Not the traditional approach to consultation, characterised so memorably by Douglas Adams as a display in a council cellar - with no lights or stairs - “in the bottom of a locked filing cabinet, stuck in a disused lavatory, with a sign on the door saying ‘Beware of the Leopard’”!

Not that. But an opportunity for every tax payer to number, say, five simple priorities about how they would like their money to be spent. With a Freepost address to send it to. And an annual debate in Parliament, accompanied with all the appropriate paraphernalia of media debate and discussion, once the public’s views have been collated. I can think of few ways which would be better to stimulate the mature national debate on taxes and how they are spent, that is so miserably lacking at present.

But that needn’t be the limit of consultation.

You may, or may not know that I have something of a reputation among my colleagues for being, well, something of an “anorak” about computers. But you don’t have to be into science-fiction to wonder whether it would really be impossible to take the basic British tax and spending structure and figures and put them onto a couple of computer disks, in a user-friendly format, and make the program available, for the price of a blank disk, or free via the Internet, to anyone who wants it to help them work out a submission.

The system could be set up at libraries across the country so anybody could try it. And it could be sent to schools and colleges as part of the educational process. And people could experiment with the system in their own time, play around, understand how everything inter-relates. They could decide which tax or allowance they would cut to pay for increased spending on their favourite project, or which department’s budget they would cut in order to lower taxes. And then, if they found a set of proposals they were happy with, at the press of a button they could be sent straight to the Treasury and into the official Budget consultation process.

But, to return to the present day ...

It is important that all the consultation processes - the sounding-out processes - of Government should be as open as possible. Except when it comes to matters of national security, or otherwise specifically protected information, why should the results of all government consultation and public opinion tests not be made public - from Gallup polls to focus groups. After all, information is power. And if the people who pay for Government are to be reconnected to the key decision-making of Government they should have access to as much of the information politicians hold as possible.

My third foundation stone for rebuilding trust in tax is decentralisation.

At present, people mistrust taxes because the money they pay is laundered through the black hole of Whitehall where it miraculously becomes, not the tax payers’ money - but THEIR, the Government's, money.

Thus “THEY” are sacking the teacher in our school. “THEY” want to close the local hospital. “THEY” won’t build our by-pass, etc, etc.

It is scarcely surprising that it is becoming impossible for Governments to explain, let alone take, hard decisions - or, as the Prime Minister likes to put it, “tough choices”.

If we are to reconnect tax paying with tax spending then we must ensure, as far as possible, that taxes are levied at the same level of government that the spending decision is made.

It is in this context that the devolution of power in Britain is so important.

But there is no point in devolving power to Scotland and Wales if the Government maintains, or even strengthens, the Conservatives’ centralised control of local government, which is what they seem to intend.

What we should be doing is giving local councils a power of ‘general competence’, so that they can act on something unless the law specifically prevents them from doing so, rather than the other way round, as is the case at the moment.

And we should be allowing local authorities to raise more of their funds locally, and have greater discretion over their spending - if necessary with new safeguards to prevent these powers being abused.

I see no reason why we should not radically reduce, or even abolish, central government funding for local government and, subject to an effective system of transfer payments to poorer ones, allow councils a free hand to raise the bulk of their funds locally. I see no reason why we should not then release capping controls, subject to two conditions - firstly the Councils should be required to observe their own “golden rule” in public finances - balancing debt with capital investment - and secondly that they could only breach whatever “responsibility” level for expenditure central government sets if they have specific agreement in a referendum from their electorate.

Some Councils, like Liberal Democrat Richmond and Sutton, have already led the way in pioneering this approach.

We should be putting in place rules for increased transparency and accountability within local government. And, most crucially, of course, we should be introducing proportional representation for council elections, the one reform guaranteed to send a fresh wind blowing through all those rotten old Labour and Tory one-party-states of local government - from Scotland to Yorkshire to inner-London.

What I am talking about is nothing less than the renaissance of local government. Not a return to 1960s municipalism, but the development of a new style of local government: open, involving, pluralistic, genuinely engaged with tax payers and accountable to them rather than to their present paymasters in Whitehall.

This way local government would cease to be just a “land agent” for Westminster but become instead a reservoir of experimentation, imagination, innovation and new practise, from which, who knows, Westminster might even, in due course, learn.

So these are my three foundation stones for rebuilding trust in tax: connection; consultation; and decentralisation.

Together, restoring public legitimacy, support and accountability for the raising and allocation of our tax revenues.

These reforms are desperately needed. The tax system we have now has expanded rapidly since its inception. But the way it runs has barely changed in a century. It is a top down system, dependent for its mask of legitimacy on the pretence of electoral accountability through Parliament for the setting of tax rates and the spending of revenues.

This might be a suitable system for a nation of subjects. But that’s not my vision for Britain. That’s not the Liberal Democrat vision.

My vision is of a nation of citizens, self-reliant, empowered by education, protected by a Bill of Rights, informed about their State and invested with power in the political process so that sovereignty flows up from the individual, not down from the state.

We need a new tax settlement to go with the new constitutional settlement that, working with the Government, we are already starting to put into place. The two are halves of the same project - the project of giving citizens more power, more control.

I am ambitious for this country, and for her people. I want to see people getting more opportunities - to work, to study, to fulfil themselves. I want to see people safe and secure in their old age or if they fall sick. I want to see a cleaner, greener Britain. And most of all I want to see this country become the world’s foremost learning society - the educational envy of the world.

This is my agenda for the twenty first century. This is the Liberal Democrat agenda. But to achieve it we need a funding system for the twenty first century. One that commands national confidence. A system for citizens, not for subjects.

So that is what we must fight for.

I am determined that in the months ahead it will be the Liberal Democrats who lead the case for reform in how we provide and pay for our public services just as we lead on reform of how we govern our country. And as with constitutional change we must be prepared to talk to, and work with, others, judging our ultimate success by the building of support for our agenda and finally for its implementation.

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