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Speech to Liberal Democrat Parliamentary Candidates Association, London 1997

Paddy Ashdown (Liberal Democrat)

Location: London

Can I just say - you were brilliant!

Seven weeks ago we had our second most successful election this century - narrowly beaten, I think, only by 1906!

We fought the best campaign.

We had the best policies.

We set the agenda.

And we won the arguments.

I am especially grateful to all of you who did less than you might in your own seats, in order to make sure that others won theirs. The victories which have made our party so strong in this Parliament, are as much your victories as they are those who now have the letters ‘MP’ behind their names.

Unlike either of the other parties we can be proud of the campaign we fought. It was open, honest and principled. Indeed the Independent described it as “ostentatiously honest” - which I think they meant as a compliment!

Even the Daily Telegraph had to admit that it was refreshing to find “a manifesto which requires no reading between the lines.” And the Daily Star welcomed our honesty, in its own inimitable style, with the ultimate accolade: “Good on yer, Paddy!”

But what is more important, than the praise of the press, is that our campaign struck a real chord with the people of Britain!

We saw this in the most comprehensive qualitative survey of the election campaign - Channel 4’s ‘Power to the People’. A random group of 300 people from across the country, assembled by Channel 4 for a weekend of political discussion. When they were polled on their voting intentions at the start of the weekend, just 11 per cent were planning to vote Lib Dem. Two day later, after statements from the main parties’ Treasury spokesmen, discussions with economic experts - both partisan and independent - and analysis of all the parties’ policies that figure had trebled - to 33 per cent - well ahead of the Conservatives and challenging Labour for the lead.

After one weekend! No wonder the Financial Times afterwards called Malcolm Bruce “the Billy Graham of British politics”!

The message of that, and of other deliberative surveys during the election campaign is that when we get our message across people like it - and, more importantly, will vote for it - especially where they know we can win.

Our penny on income tax to pay for education was the most popular proposal on offer from any party. I think most of us knew that from the doorsteps. But it was nice to have it confirmed by a Daily Telegraph poll which said 85 per cent of people backed it.

And that’s why, in the ultimate test - in the ballot box, too, despite the fact that people were constantly being told by the media that we stood no chance of achieving any power at the election, we were still the only party to increase our support during the election campaign, nearly doubling our poll rating. But our victories were not just victories for what we said. They were also victories for the way that we said it.

What marked us out was not just our policies, but the open and straightforward way in which we presented them.

‘You don’t get something for nothing.’ That was our constant warning during the election.

And we were right.

For, already, those impossible promises of something for nothing are now coming home to roost.

I recall saying during the election campaign that I could already see the long Scottish face of Gordon Brown on the Treasury steps, telling us how he had looked at the books and they were much worse than he had ever expected, and that something would have to be done urgently to plug the gap.

And that is exactly what has happened.

Right on cue, last Thursday, the Treasury predicted a huge black hole in the public finances. Half a billion pounds this year, but rising over future years, to a total of twenty billion pounds over the course of the Parliament. Twenty billion pounds more just to meet the Conservatives’ spending plans, or as they have now become, the Government's spending plans.

For Labour is now committed to improving public services, and especially health and education, without spending a penny more than the Conservatives on them.

Worse, Labour went even further. They committed themselves, not only to the Tories’ overall spending totals, but even their individual departmental limits, for the next two years.

And what this means is this. That, unless Labour can now find a way out of the corner into which they have painted themselves, even if they save money elsewhere, they cannot use it to solve the crises in health and education this year - or next.

This is, quite simply, ludicrous.

A Government which can make the most radical changes to the Bank of England for 50 years in its first few days of power, and revolutionise our whole system of financial regulation a week later, now tells us it has to wait two more years before it can touch the ceilings on our health and education budgets, while teachers are being sacked and our health service plunges further into crisis.

Now Labour has won a mandate. And they are entitled to put their policies into operation. They can claim that that mandate is to maintain overall public spending at its present level - though how they will satisfy the aspirations of the millions who voted for them in the hope of better public services I do not know.

But is it really part of that mandate not even to be able to transfer money from one Government department to another?

New Labour tell us they are about new common sense and pragmatism. But this sounds to me more like old Labour dogma and silliness.

And this is not just a matter of accounting. The effects of this totally unnecessary inflexibility will be very real.

They will mean that, in our schools and in our hospitals, we will see this winter, yet again, a crisis - and one which will be as bad or worse than any we have seen under the Conservatives.

And what will those who voted for Labour because they wanted better schools and hospitals think then?

Today, in the media, we have at last heard some whispers that Government resolve is weakening on this matter. There are rumours that, if savings can be found in time, money may be transferred from social security budgets to education before the end of next year. But the Chancellor denies that even this small hint of flexibility is in his plans.

We Liberal Democrats were the only party which said during the election that we could only have better schools and hospitals if we were prepared to have higher taxes.

It must now be our task over the summer and up to the local government settlement in October to persuade Labour out of the folly which they have brought upon themselves, because during the election, they fought a campaign more driven by fear of the Conservatives than by sensible plans for the future.

We Liberal Democrats have decided to follow a policy of constructive opposition - agreeing with the Government where we believe they are right and opposing them where they are wrong.

We voted with them on the Queen's Speech because, on balance, we agreed with the programme they offered.

But we shall vote against them on the Budget if they fail to provide the increased and urgent investment which health and education need to save the jobs of teachers who are being sacked now and prevent another winter crisis in our wards.

But it is not just in health and education that we are about to pay a bitter price for the way that the election was fought.

In a more subtle and deeper way, openness, accountability and fairness are also about to suffer, because Labour and the Tories couldn’t bring themselves to talk honestly about taxation in the election campaign.

Both turned the election into an auction of fantasy tax cuts; both made promises, often suitably accompanied by stern photos and personal signatures, that they would not raise taxation.

Now, we know that the small print and the carefully inserted subordinate phrase, made it clear that that promise was only not to increase the income tax rate or VAT’s scope.

But I wonder if the public realised that when they saw those posters?

And I wonder what they will feel when, in the forthcoming Budget, our new Chancellor raises other taxes by perhaps three or four billion pounds, all of which must come, in the end, from the ordinary taxpayer and the ordinary citizen.

I am not sure that the public will feel, that to have been duped by the slippery promises on tax of the 1997 election, is much better than to have been betrayed by the broken promises on tax of 1992.

But our failure to find a more rational, honest language for the taxation debate is now beginning to affect more than just trust. It is beginning to undermine fairness, transparency and accountability in our democratic system itself.

Thanks to the way Labour and Tories have fought the last two elections we have now, effectively, ruled out the two taxes which are fairest, most progressive, most open and most efficient to collect - income tax and VAT.

But a Government cannot exist without taxation.

So they have had to look elsewhere.

And what they have both now fastened on is a new method of taxation.

It’s very simple.

You choose a political enemy. You make them pay. You collect the money. They take the blame. And the public pays in the end, just the same.

You will remember the Tories’ political enemy. It was local government.

You will remember in the last Budget, with Labour acquiescence, they cut income tax by a penny and paid for it by cutting local government grants. They hoped to get the electoral advantage. The councils took the blame. And our children paid the price in the classroom.

Labour have now chosen their political enemy - the utility industries. And they are about to do just the same.

Now I am not here to defend the privatised utility industries any more than I would have defended the appalling behaviour of many Labour councils in the last 18 years.

Indeed, in their arrogance and insensitivity to the public they are supposed to serve, there are many similarities between the behaviour of some of the Tories’ privatised industries and many of Labour’s worst councils in the past.

But the way to deal with that is through much tighter regulation and much greater transparency, not by exploiting their unpopularity in order to make them into an unseen milch cow for government funds.

The windfall tax is a classic example of this.

Every Liberal Democrat will applaud and support any step the Government takes to relieve unemployment - and especially youth unemployment.

But this should be a permanent scheme offering long-term hope - not a one off affair of the sort Labour is offering to pay for through the windfall tax.

But even if we accept the timescale for Labour’s scheme - this is still wrong.

The money that the Government will now expropriate, from we don’t know how many utility industries, to pay for this scheme is not their money. It belongs to the customers. And a Government is not entitled to take money which does not belong to them, even if they use it for the best of purposes.

If the utilities have made excessive profits - and they have - then those profits should be returned to the customers, not grabbed by the Government to fill its coffers.

Now, perhaps, to some, this is just a matter of dry principle that doesn’t count. After all, the Government says, many will benefit and only the fat cuts will suffer.

But that, too, is a subtle deceit.

Of course someone pays. Someone has to pay. The money must come from somewhere. And, of course, it’s the customer and the shareholder, and the pension fund holder who pays. Maybe not straight away. But eventually - and inevitably.

This is a means of taxation, just as cutting income tax and forcing up council tax was a means of taxation.

But it is hidden. The Government gets the money. Someone else gets the blame.

And worst of all, this is not progressive tax. It is a regressive tax, for it is the poorest who will pay the most in rising utility bills, cut utility services or falling pension returns.

Now, we are told that the windfall tax is a one off. I hope it is.

For it shows every sign of being a gimmick, turned into a policy, made into a flagship. I doubt that, in the end, it will bear the weight the Government want to put on it.

And it’s not the right thing to do, fiscally, either. We need to take the heat out of the consumer economy - and the Windfall Tax won’t.

So if it’s never repeated again, then that’s a good thing.

But watch this space.

There are more ways of skinning a cat than drowning it in butter - as my old grandmother used to say!

The Government may not have another windfall tax. But they almost certainly will pass duties over to the utilities for performing new functions that are government’s responsibilities, not those of the utilities.

And when they do, the Government will save money. Visible public sector borrowing will be changed, magically, into invisible private sector borrowing. The utilities will take the blame. And the poor old public will still end up paying the price. But, of course, in a more haphazard, unfair, undemocratic, unaccountable way than they would have done through the system of income tax and VAT which we ought to be using for the purpose, but which because of the timidity and failure of politicians, we can no longer even talk about.

This is an ‘Alice through the Looking Glass’ means of raising taxes, from which only the Government will benefit and everyone else will suffer.

I am determined that the Liberal Democrats will continue to lead the fight to get Britain back to a rational approach to taxation again - we carried that fight through the election and we shall carry it into the Budget debate in a week’s time.

We Liberal Democrats won a mandate at the last election. The strongest mandate we have won for 60 years. We carry that into this Parliament with the strongest parliamentary party we have had for 60 years. And with new MPs whose ability, commitment and energy not only strengthen our voice in this Parliament, but also ensure our future for the long-term.

That mandate is for more investment in health and education.

It is for a more honest debate about taxation.

It is for a new style of politics, based more on constructive debate than confrontation; more on co-operation than conflict; and more on common sense than dogma.

We shall work with this Government in any way we can to fulfil that mandate. But we shall oppose them vigorously where they fail.

We are not frightened of taking risks.

We will not shy away from partnership, where that pursues our aims.

And we will continue to lead in the battle of ideas.

Against the background of a Conservative Party disabled by divisions and civil war, and a Government unable to act as it knows it should because of the legacy of its election rhetoric, we have a real role to play to shape and influence a Parliament which, we believe, must open the way to a return to trust in politics and a generation of change and reform in our country.

We have never been better placed to play that role.

And I am determined that we shall play it.

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