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Leader's speech to the Welsh Party Conference, 1998

Paddy Ashdown (SDP-Liberal Alliance)

Location: [Location]

Let me tell you a story.

There’s a hunter, stalking through the jungle. And all of a sudden he hears a terrible trumpeting of a bull elephant in pain, followed by deathly silence.

He heads off in the direction of the noise, hacking through the undergrowth, to find himself in a jungle clearing. In the centre, there's an enormous dead elephant.

Sat on its carcass is a tiny three foot high pygmy.

"D'you kill that elephant?", asks the hunter incredulously.

“Yes", says the pygmy.

"How d'you do it?", asks the hunter.

"With my club", comes the response.

"It must have been a big club!"

"Yes", replies the pygmy, "it’s got 100,000 members!"

Fellow Liberal Democrats, that’s how we’ve got where we are today.

Teamwork.

It’s our secret weapon, you see. And that’s what the other parties don’t understand. We actually rather like each other. And even when we do sometimes disagree it’s not about people, it’s about policies. Not policies as a substitute for people, or a proxy for differences of personality. But REALLY about policies. The press can’t quite get their heads round that idea.

A journalist recently said to me: “I can’t quite get the hang of you lot. At the other parties’ conferences they spend all day slapping each other on the back on the stage, and then beat each other up in the bar afterwards. You lot spend all day beating each other up on the stage” - I think he meant constructively debating - “and then slap each other on the back in the bar!”

He just couldn’t work it out!

As our party celebrates 10 years of existence it is good to bear in mind this, and the other values that have stood us in such good stead and given us such great success this past decade.

We’ve come a long way.

Through the splits, the wrangles, the party name debate, the ‘dead parrot’ document. Fourth place in the Euro-elections. I remember looking at one poll, and commenting to my office that we were within the margin of error of nothing.

Well look at what we’ve achieved since then. Not just holding what the Alliance had in its heyday, but winning more - 1500 more council seats. Going from 14 councils, to 50. Winning our first ever MEPs.

And more than doubling our parliamentary strength - creating the largest liberal force Britain has seen since the days of Lloyd George.

At the election last year we promised people we’d make the difference. And that’s what we’re doing.

In Westminster today, just as in Labour's rotten boroughs across Britain, it is the Liberal Democrats who are providing the effective opposition.

And the Conservatives who are ... well, nowhere to be seen!

We know why the Tories are silent in Wales. There’s none left. The voters threw ‘em out. Just like they did in Scotland.

But even in Westminster, the ragged remnants of the Conservative Party - the English Conservative Party - are eerily silent.

The good ship Tory has become a ghost ship.

Last year - the Titanic.

Now - the Marie Celeste.

A once great vessel, now disabled by some strange and unnerving disaster. Eerily silent. Drifting aimlessly on with no hand on the tiller.

No-one on deck. No charts to steer by. The crew have mutinied. The Captain and his officers have abandoned the bridge - and handed it over to one of the midshipmen!

And all that’s left is a motley, rag bag collection, so anonymous as to make the average stowaway look high profile by comparison!

And so the Tories blow with the wind - drifting, directionless from one day to the next.

I tell you what, it comes to something when Tory MPs look wistfully back to John Major for decisive leadership!

So it’s little wonder that, increasingly, people are turning to the Liberal Democrats.

It’s little wonder, as more and more people are coming to realise, that when it comes to the things which matter most to them, it is the Liberal Democrats they can rely on.

We are the effective voice today for investment in our schools and our hospitals. In Parliament and across the country.

We are the effective opposition to the Labour Government.

Who was it who flagged up the hidden cuts in Gordon Brown’s Budgets hitting every Government programme?

Not the Conservatives. It was the Liberal Democrats.

Who exposed the Chancellor’s £200 billion hidden ‘war chest’?

Not the Conservatives. It was the Liberal Democrats.

Who brought the Government's shambolic handling of EMU policy - dictated by phone from a Whitehall pub - to public attention?

Who showed up the Government's puny response to the threat of the Millennium computer bug?

Who highlighted the potential £4 billion tax hike hidden in the Chancellor’s abolition of TESSAs and PEPs?

Not the Conservatives. It was the Liberal Democrats.

And here in Wales, who’s fighting hardest for schools and health services, and for a fair deal for business and farming?

Not the Conservatives. Not even the separatists of Plaid Cymru. It’s Richard Livsey. And it’s Lembit Öpik. Even when he’s stuck in a hospital bed himself. Best wishes for a quick recovery from all of us, Lembit.

Across Britain today we are the effective opposition. We’re not afraid to work with the Government, where we agree with them, especially on the great cause of modernising our political system, to help make the changes Britain needs. But where we disagree, we will not hesitate to oppose them, with vigour and with zeal.

Take the Government's five ‘early pledges’.

As luck would have it, I have a list of them here!

“Keep this card and see that we keep our promises,” it says.

Well, one year on, how are they doing?

Pledge one: school classes will be smaller.

But the number of children in big classes isn’t falling. It’s rising. And to record levels.

Pledge two: a ‘new deal’ to get young people back to work.

Well, lot’s more young people are in jobs. And that’s great news. But it’s the economic recovery that’s done the work. The Government's ‘new deal’ is only just getting off the ground. But what the recovery has shown is that the bigger problem is getting the older, long-term unemployed - who there are twice as many of - back to work.

Pledge three: we’ll ensure low inflation, and low interest rates.

But the Government have raised the inflation target twice since the election, breaking their promise to stick to the Tories’ target. And interest rates have risen five times because of their refusal to rebalance fiscal policy.

Pledge four: fast track sentencing for young offenders.

All I can say is I hope the sentencing’s faster than the policy. Because we’re still waiting for it to be even piloted.

And that leaves hospital waiting lists.

Frank Dobson ... is embarrassed.

I think that says it all really.

I hope Ron Davies is too.

Ten thousand more people on waiting lists across Wales since the election.

And hundreds of people across Wales who have been waiting over two years for treatment - in direct breach of the Government's ‘Patient’s Charter’ guarantee.

Yet wards are being closed.

And community hospitals threatened with closure.

And the Chancellor provides a Budget increase which is less than the NHS got for most of the Tory years.

Let’s be clear. The Chancellor’s decision to respond, at last, to the calls from Liberal Democrats and others and put some extra money into education and health is very welcome.

But the questions on which we will judge the Budget are these:

Will it stop school class sizes growing?

Will it stop hospital waiting lists rising?

And the answer, I fear, in both cases, is NO.

The money provided will barely even cover inflation.

You see, the Chancellor has pulled a very simple trick.

He’s still using Tory spending levels. But inflation has risen since the Tories set those levels. On the one hand that means higher tax revenues; but on the other it means higher costs for public services. They’re two sides of the same coin.

Here’s a quick question for you.

Who said this in a Parliamentary Question?

“Will the Chancellor confirm that by failing to compensate for inflation there will be a real deterioration in our essential public services”?

No - not Malcolm Bruce. And not a Tory either - well it wouldn’t be would it. No, that was the question posed from the opposition benches in the 1980s by shadow minister ... Mr Gordon Brown.

Who has now has pulled off precisely the trick he complained bitterly about when Tory Chancellors did it. He has pocketed the extra tax revenue from increased inflation - all £7 billion of it - without giving public services the extra money they need.

And the effect?

Cuts.

Across every government department. Nearly £7 billion worth, oddly enough. A huge black hole in our public finances that last week’s Budget doesn’t begin to respond to adequately.

So waiting lists will go on rising.

Community hospitals will go on closing.

And problems will go on growing in the NHS throughout the year ahead.

And the same for schools.

At the election Labour promised to increase the proportion of our national income we spend on education. But it’s falling. It fell this year. And it will fall again next year - even after the Budget changes.

So class sizes will go on rising.

And teachers will go on being sacked.

And why? Because the Government's strategy is to starve our services of money now to pay for a huge windfall in four years time - just in time, conveniently enough, for the next General Election.

But this makes no sense at all.

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 can’t re-run a child’s education.

The Government's failure to provide for our public services was one of two fundamental failings of last month’s Budget.

The other was doing nothing to deal with the strength of the pound.

Now a strong pound might sound like a good thing. And it can be - in moderation - if industry has time to adapt and cope.

But when the pound rises at the rate it has been for the last two years - and the last few months in particular - it means trouble.

Trouble, most of all, for hard pressed exporters.

Because a strong pound means their goods suddenly become more expensive when they try to sell them abroad.

And that includes farmers - on top of all the suffering caused by the beef crisis. More than a third of sheep farming in Wales is for export.

But the strong pound doesn’t just hit exports, it hits sales in this country too - because it makes imports so much cheaper.

So it becomes cheaper for British supermarket chains to buy their meat and their dairy produce from abroad. Which forces down the prices our farmers can get here.

So lamb prices in mid Wales have slumped by 40% in just six months.

And farm gate milk prices have fallen by a third in two years.

So the pound needs stabilising - for the sake of farmers and manufacturers alike.

The best way would have been for the Government to take the heat out of private spending. They should have done this in the Budget, or - better still - in their Budget last year.

But they couldn’t. Because they’d made a promise - totally rashly - four months before the election - not to raise personal taxes.

So it’s been left to the Bank of England to act, with the only weapon they have - interest rates.

But interest rates are a blunt weapon.

You see, Britain’s economy is split in two at the moment.

The service sector is booming and urgently needs slowing down.

But manufacturing industry is flagging and needs to be stimulated.

Interest rates, however, hit them both the same.

Think of the Bank as a doctor with two patients - one with blood pressure too high, and one with it too low - but compelled to give the same treatment to both.

Now you see why the Bank’s Monetary Policy Committee split 50/50 on whether to put interest rates up at its last meeting.

There are some signs now that the pound’s rise is slowing. I hope they’re right. I hope desperately that the economy has the ‘soft landing’ we all want, rather than being tipped into recession.

But the Government should be aware that, through their actions, they have made the latter more likely than it would have been - certainly for our manufacturing industry.

By pursuing ‘one club’ ‘interest rates only’ economics - just as the Tories did in the early ‘80s - they have exposed our recovery to unnecessary risk, and our exporters to unnecessary pain.

And all because of that rash, pre-election promise not to raise personal taxes.

There is one step, though, that the Government could take tomorrow, which would lower interest rates, stabilise exchange rates, and give a real boost to our exporters.

And it is staring them in the face.

Come off the fence on the Single Currency.

Britain has met the main criteria for monetary union.

The Government should adopt, now, what is called a “declaratory” position on EMU.

Set a clear target date for joining.

Follow policies consistent with that aim.

And announce that you are prepared to have a referendum on the principle of the Single Currency before the next election.

The benefits would be substantial, and immediate.

A lower, more competitive pound.

Lower interest rates, helping companies borrow.

Increased influence and standing for the Government in Europe, with a place at the top table now, as the rules for the Single Currency are being set.

A real boost for farming. Don’t just take my word for it. Listen to the NFU, because this is what they’re saying too.

And, especially important for areas like South Wales, a real boost to inward investment - at a time when it is desperately needed.

You only have to open the newspaper to see the threat hanging over much of our inward investment.

The crisis in South East Asia is showing once and for all that no country can isolate itself from serious economic failure elsewhere in the world.

Already four countries have virtually ceased importing products from Britain.

Look at the wobbles, just last week, of the Korean giant LG Semicon about whether or not to continue with their new £1.3 billion plant in Newport. And the similar concerns about Hyundai and Samsung elsewhere in the UK.

Not to mention the report by an independent consultants last week saying that Wales alone could lose up to 70,000 jobs if inward investment from Asia dries up.

But look beyond Asia too, to the doubts expressed by managers at General Motors in America, and Siemens in Germany, as well as Toyota in Japan, about investing in Britain if we stay out of the Single Currency.

Here in Wales you have a great record of winning foreign investment - more than £6 billion of it over the last five years.

But this success is being put at risk in future by the uncertainty the Government have created over monetary union. If we fail to participate, many multinational companies may prefer to limit their currency risks by placing production facilities within the area covered by the Euro. We will probably not lose existing plants, but we may well lose new ones.

If the uncertainty goes on, the Government are set to deliver a double blow to our economy. Higher interest rates, and lower levels of foreign investment. A double whammy.

And this is not only unnecessary - it is pointless.

Because I am firmly convinced that events will force the Government to make their decision on the Single Currency before the next election.

So my message to the Government is this.

Don’t wait for Rupert Murdoch. Take your decision now.

Don’t be led by events on Europe, like the last Government was. Lead them.

And then we can all start reaping the benefits.

Colleagues, we are living in historic political times.

Over the next decade it is likely that we will see shifts in the political landscape to dwarf even the changes of the last. A Welsh Assembly. A Scottish Parliament. A single currency. Proportional representation. A complete reshaping of our politics.

And the Liberal Democrats are the one party with the potential to come out of these reforms stronger than we went in.

I believe, as Jo Grimond, David Steel and Roy Jenkins before me, that there is a natural liberal and progressive majority in this country, if only we can find the means to assemble it.

Our party is stronger now than at any point in its 10 years. And stronger than any of our predecessors for more than 70.

We are united. And we are strong.

But our ideas are stronger still.

Our agenda - from empowerment to the environment - is at the heart of the political debate today, more than we could possibly have imagined a decade ago.

Our task now is to take our liberal values and set the agenda for the next century. Just as we have done for much of this.

Lloyd George’s creation of national insurance and the old age pension. Beveridge’s welfare state and NHS. Keynes’s economics. Entry into Europe in the 70s. The green agenda in the 80s. The constitutional reforms we are helping implement today.

Historic successes for which our party and our predecessors have fought from government and opposition benches alike. Historic Liberal and Liberal Democrat achievements.

But now we look forward to a new century - and new challenges.

Forging a new settlement between the citizen and the state.

Creating a welfare system that combines social justice with individual responsibility.

Renewing our public services and restoring people’s faith in them.

Transforming our relationship with our natural environment.

Stripping away our class system and build a more open, tolerant and liberal society.

Building a new role for Britain and her nations in this increasingly interdependent world and especially with our sister nations in Europe.

These are the challenges for our generation.

Together, we can meet them.

Together, we can go into the new century with new courage, new belief and a new determination.

Together, we can make the difference.

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