From the TUC

Vince Cable at the TUC fringe on Middle Britain

23 Sep 2009, by in Economics, Politics, Working Life

I’ve had a couple of posts rather critical of the cuts package proposed by Vince Cable at the Lib Dem conference. It would be churlish not to report his excellent contribution to a TUC fringe meeting at the Lib Dem conference where he shared a platform with Brendan Barber to discuss the TUC’s Touchstone pamphlet, the Real Middle Britain

He is the only serious politician willing to talk about making big changes to the tax system to make it fairer – a big issue for middle earners and the low paid.

He was also clear that his cuts package should be understood in a completely different context to that proposed by the Conservatives. Indeed he is not that far from the TUC’s view, agreeing that it’s wrong to try and reduce the deficit before there is real recovery. He argues that recovery will not take us back to the tax income enjoyed during the financial bubble because much of the apparent wealth generated during the boom years has turned out to be illusory.  Adjustments will therefore need to be made at that stage to both tax and spending to reduce the deficit and reduce debt, and the opportunity taken to make the tax system more fair.

So far so good, but important differences remain. While he went out of his way to say that he was not proposing a arbitrary pay freeze for all public servants, and wanted to protect the low paid and maintain flexibility, I was still unconvinced that the sums add up. Limiting pay at the top does not free up enough to protect the low paid.

But the biggest – and probably more fundamental difference – is that the Lib Dems do not really support an active industrial strategy. They look to make big savings in both the RDA and skills budgets, and have called for the abolition of the DTI. (I suspect replacing it with BIS doesn’t count.)

If we are to build a better balanced economy much less reliant on finance and make a just transition to a low carbon economy then the state does have a key role to play.

Yet while these are important differences, there is also a lot in common.