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Speech Archive

Leader's speech, Brighton 1977a

David Steel (Liberal)

Location: Brighton


This Joint Liberal Assembly was the first since the Liberals entered into a pact with the Labour Party in March 1977. Under this agreement, Labour would adopt some of the Liberals’ policy proposals, while the Liberals would vote with the government in any future motions of no confidence. Although their influence was limited, the Liberals had succeeded in stopping nationalisation and the reduction of tax on petrol, and had made a significant contribution to the nation’s economic stability and recovery. They had also helped to create a new devolution package. However, there remained a number of challenges, among which were rising unemployment and Britain’s lack of manufacturing output.

It has been a somewhat unusual and tumultuous year. As one Liberal wrote to me: ‘We understood from your speech last year that you were keen on marriage but we didn’t expect to find ourselves pushed to the altar quite so soon.’ To be candid neither did I! But I take the point, and it is only right that at the outset of our annual assembly I explain what we have been doing and why. And so, reluctant though I have been to divide what I have to say into two parts I want to concentrate this afternoon on the current political situation and our role in it, and return on Saturday to the longer-term development of Liberalism.

I freely admit that I did underestimate some of the problems in the agree­ment between ourselves and the Government. I underestimated the difficulty of putting over what we were trying to do; I underestimated the rage of the Tories and their allies in the Press, thwarted of what they still think of as their rightful inheritance. Incidentally let us note the double standards - the Conservative Government elected in 1959 went on to within weeks of its 5 year maximum term of office despite great mid-term unpopularity and loss of seats at by-elections. I underestimated how much the British people have been taught to think of politics as ‘picking sides.’ I underestimated how frightened we have become in this country of innovation, of trying to do things a better way.

But I have never for one minute underestimated the significance of the step my colleagues and I decided to take last March. It was a decision of great con­stitutional importance and, however much it may be misrepresented by those who prefer the drama of confrontation politics, it marked the beginning of the return to sanity in this divided country. Negotiation, with patient bargaining and compromise, may not call for high adrenalin and screaming headlines but it does call for something more important: patience, persistence and judgement.

Our critics are not sure whether we have gained too much or too little: I am alternatively portrayed as the youthful dupe of wily old men, or the Frankenstein monster which has risen to terrorise his erstwhile master. Mr Ian Mikardo declared that Mr Callaghan has handed over the choice of date of the next election to me. If that's so, I must confess to you, the Prime Minister forgot to tell me.

Well history will have to judge where the balance of party advantage lies. I care much more for the long overdue emergence of the national interest as the proper standard of political decision.

I was much impressed by my visit last month to the conference of our Swedish counterpart, the Folkparteit. The parallel between our position and that of the Swedish Liberals is most striking. They had been out of power and influence since their participation in the wartime coalition. So have we. Per Ahlmark was known to me through our work together in the Council of Europe when we found an identity of views, and in 1976 his party elected him a new leader at the age of 38. We did likewise. He was attending his conference enjoying the loyal support and presence of his two distinguished predecessors. So am I. Within a few months he found himself leading his party into association with others. So did I. Only in Sweden they are actually inside a coalition government led by the Centre Party along with the Conservative Party.

I had a long talk with Ahlmark, who is now deputy Prime Minister of Sweden, and I asked him what was the greatest difficulty he had found. He replied that the biggest problem, which they were discussing at their conference, was how to preserve their identity as a party in the public mind when their work was submerged with others. That is precisely the difficulty of which we must inevitably be conscious throughout this week’s assembly.

The Swedish Liberal conference discussed soberly and amicably - as I hope we shall do not just in tomorrow’s important debate but throughout the week - the new role in which they found themselves, and emerged at the end of the conference with a sharper programme and renewed confidence. Let us do the same here in Brighton.

It has long been our view as Liberals that there should be fixed parliamen­tary terms subject only to the government retaining the confidence of parliament. We have opposed the uncertainty and unfairness which a Prime Minister’s arbitrary right of dissolution inflicts on the country. We have also in recent years campaigned against too frequent changes of policy direction by govern­ment which have prevented coherent long-term economic planning.

It was against the background of these two attitudes that we met as a parl­iamentary party in March to consider the motion of no confidence tabled by the leader of the opposition. We knew that our votes could be decisive in bringing about a third general election in three years, something which scarcely anybody outside the ranks of the Conservative Party, and only some inside, thought to be in the national interest.

There was one preliminary matter we had to settle among ourselves. I knew how damaging in the history of the Liberal Party had been the splits when Liberal MPs regularly voted in opposite lobbies on major issues. These occurred in the pre-war parliament and indeed post-war as Frank Byers, who was chief whip after the war, will tell you. It took years - until after the 1964 election in fact - to get over that image in the public mind. I therefore told my colleagues that although following my talk with the Prime Minister I was going to argue in favour of supporting the government through a parliamentary agreement between us, if in the end of the day the party was going to divide part into one lobby and part into the other, I would rather call the whole idea off and lead a united party into a general election. We were all agreed therefore that whatever decision we took it should be a collective one.

There was another matter on which we quickly reached agreement. None of us saw any point in registering a vote for the government for that day only, to stave off an election. That way we should attract all the blame for maintaining in office an unpopular and unsuccessful government without having any influence over its future course, and we should also be exposing ourselves possibly to weekly ‘no confidence’ decisions at the behest of the Conservative leader. We therefore agreed that our decision should depend on the terms the Prime Minister would publicly agree in order to ensure maintenance of the government and on the creation of machinery to assist Liberal influence over it for the remainder of the parliamentary session. The rest is now well known. We took our decision, and I want to record a word of thanks to you all - especially to those of my parliamentary colleagues who had genuine and substantial reser­vations about the course we were taking - and to you, Mr President, and Geoff Tordoff as Chairman of the party, and many others for the necessarily speedy but efficient way in which liaison throughout our party was conducted. However history may judge the rights and wrongs of that decision, the manner of taking it was of a mature, decisive and democratic party.

Let me just say a word about the nature of the agreement itself. It is precise­ly the same as that we offered to the last Conservative Prime Minister in March 1974, namely support from the opposition benches for an agreed programme in the national interest. It is not a coalition. Coalition was not offered nor was it sought. In fact the Prime Minister and I have never even discussed the subject. Why? Because I have made it my guideline never to ask for things which I know it is not in his power to give. That seems plain common sense. But some people have quite fairly drawn attention to the dangers of a political arrangement which involves neither a coalition nor a subsequent electoral pact.

First, we are not inside the government and therefore some disagreements do occur after a government policy decision has been taken. This happened in the case of the petrol tax increase. Had we been inside the government we could have said: ‘Of course we agree with the need to conserve fuel. Let us therefore return to the system we used to have and which President Carter has just intro­duced of higher taxation on larger cars and less on smaller.’ As it was we had to get reversed a decision taken by Labour alone, a party which has very little knowledge of the problems of areas where a car is a necessary part of the cost of living, but on which we have extensive first hand experience.

Second, let’s not exaggerate what can be achieved by the influence of 13 MPs on a party of over 300 MPs. Every day I receive letters - some hostile to the agreement, others friendly to it - which advise me to break it off if the govern­ment does (or fails to do) such and such. The list of potential breaking points becomes enormous. Let us face the fact squarely that ‘we are in the position of a body of men whose sole sanction to enforce their behests is capital punishment. There are two objections to that. You cannot inflict capital punishment for minor offences; and you can only inflict it once for any offence.’ These are not my words but those of David Lloyd George in 1931.

Now, at this conference it is entirely right that we should assess the con­sequences of the agreement. First, there is no doubt that we have lost some public support. Part of this was foreseeable and in my view inevitable in the short-run. One of the Tory commentators wrote: ‘The electors who built up the Liberal vote for years have been the electors who have used the Liberal Party as their outlet for protest when angry with the Conservatives.’ He is possibly quite right. But frankly I have never thought that there could be a secure or expandable future for the Liberal Party as a kind of convenient temporary wastepaper basket for the ballot papers of discontented Tories.

As to party activists, we have lost scarcely any parliamentary candidates or national or local officers. But we have lost some members, though gaining others. I said last year that the road I intended to travel would be a bumpy one and that we might therefore lose some of the passengers. Some of them must have had a pretty tenuous hold on the vehicle, for they fell off at the first pot-hole.

Our influence through this limited agreement has so far been largely but not unimportantly negative. We can and have stopped nationalisation; we can and did stop certain tax proposals both reducing petrol tax and freeing thousands of small businesses from VAT; we can and will oppose those cuts in defence spend­ing which would take us below our obligations to collective security in NATO; we stemmed the flow of partisan legislation.

But our influence has been positive as well. Foremost, we have made a major political contribution to national stability and recovery over the last six months. As the director-general of the CBI put it earlier this month: ‘At least businessmen have returned to operating in a climate in which they can plan ahead - instead of reacting to circumstances on a week-by-week basis.’

If anyone had said to you a year ago that in 1977 a Labour government would introduce a bill for direct elections to the European Parliament recom­mending a proportional system, you would have been right to doubt his judge­ment. Yet under our influence that has indeed happened.

Of course the actual system proposed is not Liberal policy and is something of a concoction, but it .will be used on only one occasion until the Community as a whole agrees a rational uniform system throughout Europe for future elections, and it does have three obvious advantages.

First, the delegation we send to Strasbourg will become reasonably repre­sentative of political opinion in Britain.

Second, the system allows voters, rather than the party machine, to choose which candidates within a party list they prefer.

And third, because of the delays caused in the past by the uncertainty of the Labour Party's approach to the Common Market, it is the only way of securing elections in Britain in time to meet the Community target date of May/June 1978.

Of course we still face the difficult task of getting this system adopted in both Houses of Parliament on a free vote. It’s a free vote for everyone and we shall be watching the division lists most carefully. We have a right to expect the substantial majority of Labour Members - and especially ministers whose continuance in office depends on us - to support the government’s recommen­dation. We hope also that a majority of Conservative MPs will remain true to the European ideal and support it as well, though there are alarming indications of a readiness in some Tory circles to allow Britain to delay the whole European election, so great is their hostility to any concept of electoral justice.

We Liberals have often enough been the voice for European progress in Britain. Let us be so again. Our fellow-members of the Community are fed up with Britain always being last, always sullenly dragging its feet. That must not be the case on these elections. They must not be postponed as part of the British party game.

In a not so publicised part of her television interview with Brian Walden, Mrs Thatcher twice complained that in the February 1974 election the Tories had polled more votes than Labour. Well the answer to that is not to dream up another referendum, but to ensure that our system of election provides us with a government which commands the support of a clear majority of our people. That is the right way to strengthen parliament against forces which might seek to undermine its supreme authority.

Of course it may yet be a few months or years before we convince enough Labour and Tory MPs that this is so. Meantime the case for embarking on elections to new and non-government institutions such as the Assembly in Europe on the same proportional principle as every other member state is surely overwhelming.

While on the subject of Europe may I say how much we as a party are look­ing forward to contesting these elections in concert with our allies in the feder­ation of European Liberal and Democratic Parties. This is potentially an organ­isation of great mutual strength for liberalism on our continent.

We shall be debating this matter later, but I hope the Assembly will not adopt any rigid view of the internal political situation in France which could effect our membership of that organisation just at the very time when my friend Robert Fabre is finding his own position in French politics increasingly fluid.

Turning from the constitutional future of Europe to our internal constit­utional future in these islands, it has always been the Liberal view that all-round decentralisation and reduction of government is desirable in itself, but we also agree with the reasoning behind the Labour Party’s late conversion to the need for devolution to Scotland and Wales as a means of preventing the unneces­sary break-up of the United Kingdom, a view shared by a minority of the more rational Tories.

The original devolution package was a mish-mash of two entirely different schemes for Scotland and Wales thrown together in one unhappy bill, with ex­cessive veto powers over the operation of the assemblies by Westminster. The new devolution package which we have helped to create, while still falling short of the federal solution a Liberal government would introduce (and which enjoys increasing support in non-Liberal quarters), represents a substantial improvement; and this time parliament will also be free to discuss and vote on the case for proportional representation in these assemblies without opposition from the government. The long awaited aims of the people of Scotland and Wales for their own elected internal government can be achieved this session, thanks to our political agreement.

But the greatest gain for the country has not been progress on these impor­tant constitutional questions, absorbing alas only to a minority, but on the new confidence and the path to economic recovery which has been followed with our support over the last six months.

Over this period the annual inflation rate has dropped. In the quarter before the agreement it was running at 18%. This last quarter it was down to 9.6%. The Financial Times share index has risen from 427 to 521 and earlier this month reached a record level. The pound has risen 22 points against the dollar after months of decline. The balance of payments has changed from a deficit of £76 million to a surplus of £316 million. The reserves have shot up from £5½ billion to £8½ billion and could be nearly £10 billion this month. Meantime bank interest rates are down from 10.5% to 6% and mortgage rates from 12¼% to 9½%. This means that the family with an average mortgage is now paying nearly £17 a month less for their house than they did in March.

In short the economic outlook is now very much brighter than it appeared in the spring. It was right to give the battle against inflation our highest priority. Rising prices have ruined the expectations of the retired, discouraged savings, harassed the housewives struggling to operate a family budget and forced many people out of their jobs. The relentless rise in British prices was also threatening to do permanent damage to our economy by wrecking our international trade prospects. The volume of imports was becoming larger and relatively cheaper while our exports became more expensive and difficult to achieve.

The stark truth is that from 1973 to 1976 we had successive governments, Tory and Labour, presiding over this growing threat of disaster and failing to rectify it. But in these last few months we have provided the political conditions in which it has been possible to start on the road to recovery. I don’t believe it could have happened any other way.

But, say some critics of the agreement, that’s all very well. So what if the country does benefit, what’s in it for the Liberal Party? Isn’t the Labour Party going to get all the credit at the next election? Having avoided the return of a damaging Tory government are we not now risking the return of an even more damaging Labour government?

Michael Foot is regularly quoted at me as saying: ‘What we want to do is to prepare for the time when we can get a full Labour majority again in the House of Commons. There is nobody who wants that more than I do.’

Well he would, wouldn’t he. Of course if a Labour government is returned at the next election with a majority of its own it will be a very different kind of government from the one we have now under Liberal influence. Read the reports from Labour’s national executive, or watch their conference in this town next week. The onward march of bureaucratic state takeover and control remains their main aim.

It is up to the electorate to decide whether they wish to give them that opportunity. Let us invite the voters to compare the period of Labour govern­ment 1977-1978 when the Liberal tail wagged the dog to the period 1974-76 when the Tribune group wielded more influence than us. I’ve no doubt which will prove the more successful and the more popular with the electorate. It is up to us to argue forcibly and convincingly that a Liberal hold over government is both healthy and desirable, and that the electorate should seize the opportunity to increase our influence and representation in parliament. Our chances of arguing the case are stronger the greater the success we make of this agreement. We will enter the next election not just as a party equipped with splendid policy pamphlets and an excellent history in government in the distant past, but as a party which as I said last year has shown itself not afraid to roll up its sleeves and dirty its hands with some responsibility for the direction of national policy, and then made a good job of it. As Shakespeare’s Henry V said on the eve of the battle of Agincourt ‘He that hath no stomach for this fight, let him depart.’

The question is have we the self-confidence as a party to make such an appeal convincing? As I say, I understand many of the legitimate anxieties of those who questioned the agreement we made. But I am absolutely certain that the one course which would prove totally fatal in our standing in the public eye would be for us to be dithering and hesitant now that we have embarked on this course. If we stop now and say ‘oh dear, we’ve lost local elections and the polls don’t look too good for us, let’s pull out,’ we should acquire and deserve a reputation as purposeless incompetents.

What is the image of the Liberal Party to the onlooker? An ability to laugh at ourselves is not a bad political quality and I thought this description a few months ago by one political correspondent rather near the bone: ‘There was a time when it welcomed all and sundry. All the pied beauty of British politics was found in the Liberals. They were there to amuse, to entertain, to divert. All over Llandudno their orange badges proclaimed things were going on - a commis­sion on microdevolution, a meeting of Gays against Fluoridation, An Esperantist coffee morning. There was street theatre, Morris dancing and a lecture entitled ‘Radical Alternatives to Sex. 

Heaven forbid that we should ever lose the capacity to entertain and divert, and become a party of dull grey uniformity. But we do need a greater sense of professional determination. We can’t go on lurching into by-elections with little money, no organisation and no candidate until after the writ is issued.

At the Assembly in September 1972 we had fewer MPs and lower opinion poll figures than we have now. Yet within eighteen months we went on to score our biggest electoral turnout in the general election. We can do that again and more if we set about it the right way.

The Labour Party in this country has been in steady decline for years. As a radical movement it is intellectually exhausted. The social democratic tradition has run into the sands and many of its ablest exponents have departed for more worthwhile or agreeable perches in Brussels, in universities or on television. The left has taken refuge in the reiteration of past doctrines and is making successful takeover bids in moribund constituency parties. The grassroots Labour member­ship in the constituencies has been shrinking steadily over the years to a point where a successful Liberal membership drive this autumn should for the first time give us more individual constituency members than the Labour Party.

We must give special effort to expanding our resources and that is why the Executive and the parliamentary party have joined forces to launch a nationwide membership campaign today. The response to my appeal for members at the end of each recent party political broadcast has shown that there are large numbers of people in all corners of this country who want to help but have no present contact with the party and are never asked to join. We must go out and find them.

I do not want to pretend, however, that the Lib-Lab agreement has provided the solution to all our national problems. There are two obvious ones staring us in the face.

Unemployment is still growing. Under our agreement for next session we have put forward four proposals which will help to reverse this appalling trend, apart from the overall strengthening of the economy.

The first has already been accepted in the announcement last week that Harold Lever is to co-ordinate plans to help small businesses. Successive govern­ments have - possibly unwittingly - discriminated against small businesses and the self-employed. The number of firms employing 200 people or less dropped in Britain from 136,000 in 1935 to 58,000 in 1968. Some drop is general in the western indust­rial world, but our competitors - Germany and America - have far more small firms than we have. If our governments instead of propping up decaying indust­ries or spending over £760 million on Concordes had encouraged new enter­prises to replace the 20,000 we’ve lost since the war, even at only 25 employees each this would provide half a million jobs. This is one area of greatest potential in providing new employment.

Another is in the construction industry, and we hope that any reflation this autumn will concentrate on providing more jobs in labour intensive building work.

In the exchange of letters with the Prime Minister we called for a particular campaign on youth employment and I expect a government announcement on this very shortly.

Fourth, we have put forward detailed proposals now being considered by the Treasury for a steady and major shift in the burden of taxation off incomes. This is absolutely essential to provide stimulus to production, and we shall expect at least a move in this direction in this session.

We have also incidentally asked for the reintroduction of the lower rate tax band, which is vital to help overcome the problem of many families who at present can be better off on social security for part of the year.

But the biggest single long-term ailment in Britain - of which both inflation and unemployment could be assessed as symptoms - is the lack of output. We are a manufacturing and trading nation which over the years has been becoming steadily less competitive. And it’s no good for the Tories having correctly diagnosed what is wrong to prattle on about how all that’s needed to put it right are the Conservative policies for incentives. This is no new problem. We had a long period of Conservative government from 1951 to 1964. According to OECD figures the average annual economic growth rate in that period was 3.2% in America, 7.3% in Germany, and 9% in Japan. In Conservative Britain it was only 2.9%. In international real terms we were getting steadily comparatively poorer. Mrs Thatcher talks of expanding the national cake, but in the more recent period of Tory rule in which she was actively involved, 1970-1974, the growth rate was actually slightly less at 2.8% per annum, and it is still more stagnant now.

So mere sloganising about growth is not enough. If you define output as a result of the most effective use of labour and investment then you can readily identify the British disease. We have shockingly low levels of investment and poor output per man employed.

It is time we recognised quite bluntly that we shall continue to be a failure as a country so long as we are governed both industrially and politically on the outdated confrontation attitudes of the class war. Mr Terry Beckett, Chairman and managing director of Fords, whom I’ve never met and who to the best of my knowledge is not a member of our party, put the damage of alternating political confrontation very well in a speech recently: ‘The gap between the stance of our two major parties in this country is too wide on economic matters and this gap is a real impediment to our progress. If the Conservatives were returned to power in the near future they might well want to reverse some of this government’s legislation as this government reversed some of its predecessor’s. Contrast the common ground for economic policy in Germany between the two main parties and the chief coalition party the Free Democrats with the situation in this country with some Conservatives’ advocacy of a pure market economy and some Labour Party members’ insistence that their real aim is to secure Clause 4. Extremes are advocated and are held with increasing intransigence. The over­whelming majority of the electorate is moderate politically. But this is our problem. No one has told them what a sensible common ground is, what is really needed.’

We are now telling them.

If we are going to change this pattern we need to secure electoral reform which will provide a genuinely representative parliament. To get that we need to increase our own influence over the next government of whichever colour at the next election.

Although we actually don’t do at all badly as far as output lost through official union strikes is concerned, our industrial relations are bedevilled by restrictive practices, antagonism to new technology, go slows, working to rule and unofficial strikes. All of this suggests that we are attempting to run a late 20th century economy on late 19th century attitudes.

We are supportive of a democratic and free trade union movement and offer it opportunities for responsible power far beyond the Labour confines of Bul­lock - as electors of Board members, as Board members, as works councillors, as shareholders in share-ownership schemes.

But we are critically supportive of trade unions. We cannot and will not - in joining with the trade union movement, owners and management in a common quest for economic growth - give up our responsibility for those at work who are not and do not wish to be trade union members. Nor do we give up our responsibility for those owners and managers who are not members of the CBI, nor to the consumer as we demonstrated when we persuaded the govern­ment, the Post Office management and the unions to accept consumer represent­ation on the new Post Office board.

The Liberal trade unionist seeks to convince the ‘doubter’ to join him - not threaten him with the sack; the Liberal trade unionist knows the difference between a good closed shop and a bad one.

It is a pretty worthless organisation which, unable to persuade or attract employees in a non-unionised firm to join up, then forces them to do so by blacking that firm’s work.

Having condemned the worst side of some trade union practices and uphold­ing as we do the right not to belong to a trade union, it is also necessary to con­demn bad employer practices and assert that right which was fought for and won decades ago, namely the right of workers to combine together in a union for their own protection. That is what the Grunwick dispute was originally about. Of course sadly it became obscured in activity which we deplored, namely mass picketing and the illegal interruption of public services to the company, but Lord Justice Scarman put the position in a nutshell when he said in his report: ‘The company was perfectly entitled to prefer a policy of conducting its employee relations without the intrusion of trade unions in a collective bargaining role. But the maintenance of such a policy depends on industrial relations policies which in terms of pay and conditions, management attitudes, and the provision of an adequate alternative to collective bargaining machinery, do not cause employees a sense of deprivation or grievance. We are satisfied that it was the company’s failure to meet these exacting criteria which led to the dispute.’

The public was rightly outraged at the riots outside the factory and I joined in the condemnation of those who had nothing to do with this dispute and whose presence resulted in violence and disorder.

But equally as Liberals we must condemn and apportion a share of the blame to those who encouraged an autocratic low paying employer in prolong­ing, deepening and widening the dispute, not least Conservative politicians who should know better.

There is both on the left and right of politics today a growing thirst for confrontation and for blaming the other side for all our ills. I see it in my mail­bag. Leave aside the cranky or extremist letters which I receive by the bundle and let me quote one perfectly rational letter disagreeing with my views on Grunwick and supporting Keith Joseph’s: ‘the return to sanity cannot be accomplished without hard, relentless and prolonged confrontation, though let us hope without too much actual bloodshed.’

‘Confrontation without we hope too much bloodshed.’ What an appalling vision of a Tory Britain. Reconciliation, tolerance and co-operation are the Liberal watchwords, loathed by the extremists on left and right alike.

It used to be thought that radicalism meant moving to the left of the Labour party or to the right of the Tory party. Certainly both of these can be described today as radical. But the biggest single radical change we could make n Britain to ensure both a contented society and a more successful one would be to break down the barriers in industry, housing and education which separate our people into distinct warring categories.

That is radicalism which can come only from the centre of British politics and as the other two parties each move increasingly in opposite directions the middle ground of politics is becoming potentially larger than at any time in the last thirty years.

I propose three steps to break down the barriers in industry. First, I believe that the transition from a rigid pay policy should not be the total free for all of free collective bargaining. The encouragement of genuine plant productivity deals in which employees get a direct share in the rewards from increased output should become the pattern for greater prosperity in the 1980s.

Second, we favour a total but calm and not hasty review of the whole framework of labour legislation which should include new measures to promote a genuine working partnership in industry. I believe we have to look not only for greater partnership in existing industry, public and private, but for the stimulation of new forms of enterprise. I am greatly encouraged by what I have read of the co-operative in Spain started over 20 years ago at Mondragon. It now employs 13,000 people in some 75 units backed by a co-operative bank operating in a free market economy. Jo Grimond is leaving us later in the week to visit Mondragon and we look forward to hearing more about it from him.

Third, I want to see as part of a programme based on first creating and then sharing greater wealth direct encouragement of profit sharing and employee shareholding schemes. In our agreement for the next session of parliament the government undertook ‘to consider ways of encouraging the creation of schemes for profit sharing in private industry with a view to legislation.’ Work has indeed been proceeding in the Treasury on this subject, and the government has been in consultation with us on possible tax incentive schemes. The Chancellor has now told me that he intends to issue a consultative document outlining these within the next three months and that providing all goes well the necessary legislation will follow in next year’s Finance Bill.

Almost every year since the war the Liberal Assembly has passed magnificent resolutions on this subject. Almost every year the party leader has included a plea for industrial partnership in his speech from this platform; almost every year our spokesmen in the House of Commons have moved an appropriate new clause to the Finance Bill; and almost every year we have trooped solemnly into the lobby in vain to support it. But this year we’re actually going to do some­thing about it. I don’t pretend that this itself is going to bring about a total revolution, but it is a significant step in a direction never before taken by any Tory or Labour government.

What we have to do is turn the country away from the remorseless conflict of interest and ideologies which has rendered us incapable of developing and allocating our resources in a successful manner. For in persistent economic failure lies the greatest threat to liberty and democracy.

We have met together as Liberals at these conferences for years talking of the ways we would like to change Britain. Too often for us the light at the end of the tunnel has turned out to be that of a train coming in the other direction. This year we have done more than talk. We have begun to change - just slightly - the way in which Britain is run. Now we have to demonstrate that if this much can be done by a tiny band of Liberals outside government how much more could be done by a larger grouping inside the next government, and still more by a Liberal government itself.

The task of the Liberal Party is to convince people that we need not be governed in a way which divides our people against each other. We need to face an election in which we argue that the voters don’t have to choose between a government dedicated to making us all subservient to the state and one anxious to create a society in which you grab what you can for yourself and clobber any­one who gets in the way. Don’t let anyone tell you that being moderate means being in favour of timidity or appeasement of the aggressive. I want our party to become the militants for the reasonable man. We need to create - and I shall return to this theme on Saturday - a nobler concept of the family that should be Britain.

Time is short. Our task this week is to prepare for that argument. Enjoy the Assembly. The responsibility on us is greater than before. But so is the need for liberalism greater than before and we must not fail our people.

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