The pointlessness of the Labour Party

I am looking at the question of whether it is a good idea to base a political party on the labour/trades union movement at all. This is not having a go at trade unions, which exist to serve their members' interests, and have as much right to do so as anyone has, whether or not it serves the common good - though it often will.

Trade unions exist to win a better and/or fairer deal for their members. Fairer deals must be a good thing, and unions which achieve this are therefore supporting the common good, providing they don't cause disproportionate damage to the industry they rely on in the process.

Can a better deal be unfair? Not if we always juxtapose ourselves with the idle rich, but perhaps if we compare ourselves to the other workers who will be paying for our better deal through prices or taxes. It is of course very difficult to work out what a fair pay and conditions package for everyone in the country would look like, and we are each left to make our case as best we can, which usually means comparison with the idle rich.

There's a wealth of research and debate over the falling labour share of income (and rising capital share), and the possible reasons for this, including the loss of collective bargaining power. Whatever the reasons for the overall trends are, it is clear that future investment relies on the expectation of future profits, so companies and industry sectors where collective bargaining has won a better deal for labour at the expense of capital in the short term, are bound to stagnate and fail in the long term, to the cost of those same workers and their children. And indeed this has happened - industries dominated by the unions in the 1970s have largely collapsed, and unionisation has become largely a public sector phenomenon.

On the other hand if a better deal can be won at the expense not of profits but of prices or taxes then the question becomes whether the worker is more deserving than the average customer or average taxpayer. And they may well be, but this is fighting over share of the pie with other workers.

So, when you try to unite workers in general, as represented by trade unions, into a political cause, what was an expression of legitimate self-interest, that may often serve the common good, becomes a purely destructive battle over share of the pie, either between workers in the present, or at the expense of investment and jobs in the future. In practise, many workers are left out of the "labour" movement, and they could not possibly be accommodated because the share of the pie demanded by the movement has to come from somewhere. Large numbers of working people recognise this and don't vote Labour, which is why the Labour party isn't on 90%+ in the polls.

With the union movement dominated by the public sector, what this often means is demands for higher taxes to support public sector workers, at the expense of workers in the private sector, many of whom may be more deserving. Yes, obviously public sector workers pay taxes too, and provide important services, but this is still the net effect. And this is aside from any debate over whether taxes should rise because the extra public services are worth it. I am likely to be told that I shouldn't pit public and private sector workers against each other. I'm not. I'm just pointing out that this is what the labour movement is doing.

Now of course it is possible to devise policies that serve the common good, that bring about a fairer society and a stronger economy, and seek to win elections to get them implemented. But there is nothing special in this about the role of a trade union; about the emphasis on the interests of one narrow group or another. And aggregating the interests of all unionised workers or even all workers as workers loses sight of the common good in the process for the reasons I've given. All parties should listen to the views of the unions, but none should be dominated by them.

The argument goes that someone has to stand up against the interests of capital which is the cause of most of society's ills. Where trade unions have gone beyond the direct interests of their members in seeking to influence politics, they have typically demanded a very left-wing position against the better judgement of the bulk of their own members as expressed at the ballot box.

Frankly, workers can outvote capitalists by a factor of probably more than a hundred to one; the idea that the large majority of the enfranchised population exists in a state of victimhood at the hands of capital would be pretty ludicrous even if socialism hadn't lost the intellectual argument.

The attitude that the union bosses know best, that their members should be co-opted into a left-of-Labour position whether they agree with it or not, is not healthy for democracy. A Labour party that is defined by this attitude is dangerous. 

To be fair, these days, Labour only flirts with the self-destrcutivism of socialism and the left, but that still somehow defines it, alongside this clumsy aggregation of unseemly narrow self-interests. Why not build your party of choice on something a little more wholesome? Like values.

Full steam ahead on infrastructure

Reprinted from Liberal Democrat Voice.

One thing that struck me about Tim Farron's Beveridge lecture last Saturday was the scale of his ambition for investment in infrastructure.

Conservatives have often talked about their admiration of Victorian values – if only they really did admire those values, because Victorian values included ambition to build an infrastructure, to create a transport, communications and logistics backbone to our economy, to make a difference, to see a problem and not worry about whether fixing it would fit with your ideology, but to just get on and fix it.

Challenging the narrative: Employment

This article has been reprinted from Liberal Democrat Voice

 I was engaged in a twitter argument yesterday with someone who was disputing the progress we have seen in employment, putting the improved figures down to a million people enslaved on zero hours contracts.

The Office for National Statistics have provisionally estimated the number of zero hours contracts to be between 583,000 and 1.4 million. There isn't an established data series for this that would enable historical comparisons, but there are such statistics for full time and part time workers. According to these the number of part time workers is up 356,000 since May 2010, and the number of full time workers is up 1,114,000.

Let me re-emphasise that point. Not just a million private sector jobs, not just a million net jobs, but a million net full time jobs have been created since the coalition was formed.

You can see my calculations here, based on data from here (A01)

A footnote on sheet 3 of A01 indicates that "The split between full-time and part-time employment is based on respondents' self-classification." suggesting that nobody has been classified as full time who is not able to work full time.

Now an unemployment rate of 6.8% is still too high (down from 7.9% in 2010), and for 26.9% of jobs to be part time (down from 27% in 2010) when many of those people may wish to work full time, is also still too high. But the signs are that we are moving in the right direction and need to keep going.

Zero-hours has been debated before on this site, and Vince Cable has been, rightly, looking into the issue and is prepared to act on abuses. The opposition has also been making noises on this issue, largely to distract from what is overall a strongly improving picture on unemployment.

Employment up 1.5 million. Unemployment down 282,000 despite a growing workforce. 76% of new jobs are full time jobs meaning that the proportion of all jobs that are full time has increased.

Maybe we could have done even better? Perhaps.



A basic analysis would say that Germany escaped the worst of the credit crunch and recovered quickly with help from a weakened Euro. France, under Hollande, is seeing unemployment still rise. The UK has escaped the debt default fears that have hit Spain (despite a higher post-crunch deficit), and is creating jobs faster than the EU average.

These facts are toxic to Labour's strategy and message. Understand them and use them.

On Demonisation

This article is reprinted from Liberal Democrat Voice. The comments on that article have not delivered any counterexamples to the hypothesis that the government is not demonising public sector workers.

 A fellow councillor recently retweeted in a spirit of irony, something about 'evil' public sector workers. After a short exchange it became clear that the issue was the 'demonisation' of public sector workers by the government.

 Now it almost has the status of received wisdom that Michael Gove hates teachers, Jeremy Hunt hates nurses, Eric Pickles hates local government workers, all Tories hate welfare recipients, that this hatred leads to demonisation, and the Liberal Democrats, while perhaps not directly involved, are quite comfortable with all this.

I was reluctant to get involved, as I disagree often with Michael Gove, and have no desire to defend him; yet I've never heard him demonise any teachers. Disagree with teaching unions and teaching experts? Yes, frequently, though the unions and the experts are not the teachers. But demonise is a strong word, it suggests you are saying that someone is at least deliberately doing a bad job, or making a problem worse in some way. I wouldn't be too surprised to hear a Tory talk in these terms, but for it to be such a common complaint, there must be some good examples of it around.

So I could have left it alone, but I thought it was important to understand a) what ministers are up to, and b) whether this is an area for differentiation, or whether this is in fact an example of lazy and dishonest hatemongering, that deserves to be challenged whoever its target might be.

So I asked for an example of a member of the government demonising, or making out to be evil, a group of public sector workers. There followed a long twitter exchange including plenty of examples of public sector workers complaining that they were being demonised, but none of this demonisation in the act.

So I looked for my own examples. What does Gove think of teachers? There's this, which seems quite positive to me, though he clearly has some disagreements with the mainstream of the profession.

I've even heard it suggested that the Mid Staffs enquiry was done purely to demonise nurses, which shows disgraceful complacency over the standards of care. And is Jeremy Hunt lying when he says "I know that the last year has been difficult and how busy and stressful it can be on the frontline. Thank you to everyone for your amazing efforts to make our hospitals safer and more compassionate."

I guess a cursory google search won't find the unguarded remark or secret briefing, so, dear reader, can you help out my Labour colleague. Share with me, in the comments, ministers demonising public sector workers. Or claims of demonisation that seem to be unsupported by any evidence. Together we can get to the bottom of this, one way or the other.

I am aware that many people feel they are being demonised, but that might just be because they believe the Labour Party and the unions who are constantly telling them that it is the case. Who needs morale in the public sector, when you can generate some politically useful anger?

Carbon Price Floor

Spoiler: I don't get knocked over crossing the road.

That Ed Miliband speech in full (4)

Reposted from Liberal Democrat Voice

The following arrived in a brown envelope at Lib Dem Voice Towers, this morning. It is probably an early draft.

[Check against delivery]

[Note to self. I will be speaking without use of the autoclue. Will need to deliver the speech entirely without a clue.]

I want to start by thanking somebody from the bottom of my heart.

Ella Philips, who fell off her bike and called me an action hero who mysteriously appeared out of nowhere. She called me suave and not geeky at all.

I was pretty pleased with this until I realised she was concussed. So I got her to vote in her local constituency candidate selection.

I have emotion that is felt at kitchen tables across the country every night. Six simple words that say “can you pass the ketchup please”.

We have to rebuild anew one nation, and today I’m going to tell you how.

I will start with leadership. Leaderhsip is about risks and decisions. I ran for the leadership of this party to spite my brother.

The other week I faced a bigger decision: whether this country should go to war. All of us were horrified with the chemical attacks. But I saw the opportunity to score political points, and said no.

Let me tell you about normal person. She said to me “How can you understand the lives of normal people who live round here”. My answer – I was brought up in great privilege, infused with socialist theory from books.

The most important qualification for being prime minister is knowing good apple pie. this is what I believe and this is where I stand.

Every week I think about the people of Britain. What are they like?

Hooray for the troops!

Hooray for the police!

Hooray for all the poeple I have met!

Normal person wandered up, he was very angry about immigration. I was a bit scared.

Hooray for the NHS!

For generations in Britain, when the economy grew, people got better off. But somewhere along the way [under Tony Blair] this link was broken. They used to say a rising tide lifts all boats. Now a rising tide just lifts the yachts. Now I say this: don’t take a second look at a political party like ours that made this happen.

Now I have a question for you. Do the Tories get it?

murmur of confusion

Wrong answer! Do the Tories get it?

No!

David Cameron will be claiming to have saved the economy after the mess we left it in. Come on! We left it in a bigger mess than that!

[This is the bit where I channel Ronald Reagan]

Am I better off now than I was 3 years ago? The cost of living crisis is not an accident of economic policy, it is a consequence of our decision to spread the pain of 2008 over the following 10 years. [Sure we should say this?]

Britain can’t win the global race, it can do better than that, it can lose. Britain cannot and should not try to have a competitive economy, it must stagnate.

The Tories call our people inhabitants of desolate areas. We call them people whose votes we can take for granted.

To make Britain better you have to win a race to the top, and it will be tough. So forget everything I have just said, that was just positioning.

Many of the jobs in the future will come from small businesses. So I’m going to put up taxes on big business to cut business rates for small businesses. One nation Labour, extending the class war to cover small versus big business.

And because this government has overseen a massive voluntary expansion in apprenticeships, let’s introduce some compulsion to some businesses, just to give the whole program a bit of a sour taste.

Young people should have access to education and training. Why did nobody think of this before?

Going to primary school is a bit like being leader of the Labour Party. Can I have the paints please miss.

And we’ve also got to deal with low pay. We will strengthen the minimum wage so that people can pay our extra 10% income tax on low earners.

I’m the child of immigrants, but hiring foreigners to do work? It’s a race to the bottom! Not under my government! (Except for me being PM)

In the 1990s we committed to a dynamic market economy. But what happens when competition fails? Train companies, pay day lenders, energy bills – we did nothing about any of these in government but they make for good rhetoric in opposition.

If we win in 2015 the government will freeze gas and electricity prices until the start of 2017. So clearly – if we have any chance of winning – bills will rise sharply in early 2015, and we can blame that on the coalition.

Hooray for the NHS again!

We don’t just need to improve the health service we’ve got to rescue it from the Tories (and Liberals too) who are actually doing the work on integrating health and social care that we only talk about.

Let me tell you about the record of the last Labour government. When we came to office there was a moderately burdensome tick box target culture, but when we left it was immense. [Do we talk about Mid Staffs? No, you fool]

So we will scaremonger over the NHS all over again and for all time.

Now for the best bit. Party reform. Yay.

Change is difficult. But the reason it is impossible in our party is because of our unique link with the unions. My reforms are about hearing the voices of the few million union members much louder than the tens of millions of others.

I want to talk about gay and lesbian young people who are now allowed to marry thanks to the coalition.

But we have to win the battle for the United Kingdom, or I won’t have a chance of winning a general election.

So I have talked to you today about unfunded spending commitments. But the next election won’t just be about unfunded spending commitments and hidden extra cuts and tax rises to pay for them. If you want to know the difference between me and David Cameron, it is simple. He is a more effective class warrior than I am.

We know what we’ll see from our party at the election: divide and rule; north v south, rich v poor. It’s the worst form of politics. Britain is better than us.

The easy path for politics is to divide. I believe in one nation, us versus them. I want to win it for Britain. Britain is better than us.

That Ed Milliband Speech in full (3)

[check against delivery]

Hello and welcome to Manchester.

I'm not very sure what to talk about today. I've been leader for two years, and I'm feeling so old my memory is going.

My son tells me I should be talking about dinosaurs, and that seems as good an idea as any.

Anyway instead of making a speech today I'm going to do what my image advisors keep telling me to do and tell you my story.

I was born in a hospital and went to a school. Just like you normal people.

I wouldn't be standing here today without an education from one of the most exclusive comprehensive schools in the country.

My parents instilled in me a sense of duty to get on with my brother. [shrugs]

I believe we shall overcome, nuns in a convent, over the alps to Switzerland. This is my faith.

Of course my parents didn't tell me what career to go into. And they are both so scarily left-wing, they must be ashamed of me. Or maybe I show them a different face to what I show you.

That is my faith. Those are my two faithes.

When I think of normal person I met I think how full of positive empathic energy she was. And then she told me her story. It was a better story than this one.

When I think of small business person I met I feel so touchy-feely, I'm in danger of touching myself here on stage.

Why is it that the gas and electricity bill just goes up and up? [Should I mention my time as Energy Secretary?  Ed. No, you fool]

Hooray for the olympics and paralympics. We succeeded because of the 70,000 games makers all of whom are here with us today. [We'll need a bigger hall. Ed]

Hooray for the troops. Hooray for the police. Hooray for Seb Coe and Tessa Jowell.

And Hooray for us. [What about all the elite athletes - do we mention them? Ed]

That sense of a country united. I can't remember a time like it since the country rejected Michael Foot.

Bejamin Disraeli - Clement Atlee - One Nation [Tory? Ed] - that is my vision, that is the Britain we must become.

But Labour's failures on youth unemployment, the increasing gap between rich and poor, and a welfare system that fails to make work pay, has stood in the way of these things. [Er, I'm a bit worried people will notice I am praising coalition policy. Ed]

So who can do this? What about the Tories. [murmur of agreement from the crowd] Wrong answer. What about the Tories [boos from the crowd]

Borrowing borrowing borrowing borrowing. We are against the government doing this. We want them to do more of it and/or less of it. But the opposite is true.

The problem is the British people are paying the price of the last governments failure. [This government surely? Ed. Sorry.]

What do they choose as their priority at this time? A tax cut for milliionaires like me, balanced by caps on reliefs that will raise five times as much from millionaires like me. [better not mention the last bit]

How can we justify the unfairness in 2012 of ignoring the whole balance of the tax package when criticising it? We have to do it or we will have nothing to say in this speech. I mean story.

Remember the people's budget of 1909 that was blocked by the House of Lords? We have sunk Lords reform so that it would be blocked again.

My advisors tell me to attack on the issue of competence because we are rightly seen as weak there.

Ooohh silly Tory toffs look tee hee. You wont find that kind of privilege among Islington and Hampstead millionaires like myself.

So we disagree and agree with the government on welfare reform.

And we agree with many of the government cuts, and we agree that those with the broadest shoulders will bear the greatest burden. I will never support a top rate as low as 45p, that's just wrong. That's why our party had it at 40p. One nation can be two-faced nation.

There is no future for this party as a party of one sectional interest, led by a man bought and paid for by the unions.

In One Nation, no interest from Murdoch to the banks will be too powerful to be held to account. [So why didn't we set up Leveson and Vickers? Ed]

Think about small business person who was ripped of by his bank thanks to our failure to regulate. We will do something about this if it hasn't been done already.

To be a One Nation economy, you see, you have to support coalition policies in all these areas. Let's pretend there aren't a million extra apprenticeships under the coalition and talk as if we've just thought of the idea.

So we'll now focus on the forgotten 50% who don't go to university - by making them pay higher taxes to support the tuition of those who do go.

We will make apprenticeships a condition of public contracts. And I'll talk for a bit about coalition policy on apprenticeships as if it were ours. But focusing on the public sector.

Michael Gove. Tee hee. He wanted to bring back a two tier system, but the Liberal Democrats wouldn't have it.

We can bring about this one nation economy by removing clarity from accounting standards, and by putting up barriers to trade. Because that's never gone wrong, no sir.

I want us to engage with Europe and the rest of the world. Too often in the past we have been tolerant of immigration where it might benefit our economy and society. So this is something I will do differently. The last Labour government did too little to win the "bigot" vote.

Scotland could leave the United Kingdom, but we would be much worse off as a result. Not just in pounds and pence but also in the electoral prospects of the Labour Party.

Hooray for the NHS. I'm so pleased it still exists despite everything we said about the reforms.

What a scoundrel Cameron is. The Labour Party would never do a top-down reorganisation of the NHS.

So I'm going to pretend for a bit that the NHS has been abolished, because that will get you fired up.

The worst thing for me about these reforms is how they were designed around Blairite values. It proves the old adage: You just can't trust New Labour on the NHS.

So let me be unclear. The next Labour government will repeal something.

So that's my speech, I mean story.

I was talking to my mum. Not about dinosaurs this time.

Who in this generation will fight them on the beaches, and on the landing grounds? It's not some impossible dream. One nation under labour can fight these [other] dinosaurs. Thankyou very much.

Review of The Alternative View by Lembit Opik

I haven't read it and I'm not going to.

The problem with the EU is that it is the same as the UK

Endorsing and responding to this and this.

Do not throw at me the policies and structures of the EU. I want the EU to have better, more liberal policies and better, more democratic structures. This is the same as what I want for the UK.

The reason the EU doesn't have these things is because it is dominated by socialist and conservative politics; the same as the UK.

And yet I will not cry and take my ball home, and demand secession from the UK and the EU. Our interests lie in engaging with the politics of both and working to make them better.

Yet just as my support for the localism agenda in the UK does not make me a secessionist, it should be possible to have a sober debate about EU competencies without it becoming a proxy for the hare-brained withdrawal agenda.

Our best interests are served by a strong and democratic EU, acting on trade, the environment, cross-border crime, security and in the international community. The entrenchment of democracy in Eastern Europe is unlikely to have happened without the EU. And much of it might easily have fallen back into Russia's sphere of influence. A quadrillion pounds of defence spending could not have achieved this kind of progress for democracy and the rule of law, which is in all our interests.

This should not be taken to imply support for any particular socialist or conservative policy adopted by the EU at the behest of the conservative and socialist national governments that control it. Given this political dominance it is a small miracle that the policies of the EU (or UK) are as good as they are.

No. The demands for localism and democratic reform are not predicated on the belief that liberals will suddenly win all the arguments and all the elections under a more democratic system. Rather that politicians of whatever party will be more accountable to the people and will therefore make better decisions.

Eurosceptics of left and right, in common with the SNP have a very quaint belief that the political challenges they face can be attributed to some evil outside force, and if only "they" could be got rid of then "we" can put things right. The use of "they" and "we" is pure emotional button-pushing, and quite arbitrary. Yet the challenges in Scotland are not that different to those in the rest of the UK, nor those in the UK very different to the rest of the continent. Scapegoating the other is cheap and dangerous politics.

So what I am advocating here is not a compromise between the Europhiles and Eurosceptics. I am uncompromisingly in favour of the EU, and of a particular liberal democratic vision of it, and against the policies of socialists and conservatives that stand in the way of that vision; against those policies when they are implemented at the EU level just as much as when they are implemented elsewhere. This means campaigning against the EU "government of the day" in the same way that we would campaign against a similarly wrong UK or local government.

Axe the fat tax

The idea of an extra tax on high-fat foods has been in the news lately, since David Cameron suggested that the idea was worth looking at. Now I've argued before against activism through the tax system. I think most of the time it creates too much administration cost and avenues for avoidance for any good that it does. And I am skeptical of the psychological value of small incentives to do the right thing, which it turns out can often be counterproductive.

In this case the fat tax is intended to tackle the "epidemic" of obesity. But it is not a tax on fat people, but on selected foods deemed to contribute to obesity. Why? I'm pretty sure that it is possible for a thin person to eat doughnuts, and for an obese frame to be maintained with sufficient quantities of muesli and semi skimmed milk. More specifically the argument is precisely that fattening foods are a problem, because it is a problem that people are fat. So a tax on fat people would surely be much more to the point. Yes, there are practical difficulties with a tax on fat people. All that weighing. But let's park that for now and just consider the principle.

The problem is that a tax on fat people would be grossly unfair, offensive and discriminatory. Thus the attempt to levy an extra tax on fat people by proxy, in the hope that we thereby don't notice that the policy is grossly unfair, offensive and discriminatory.

I've had some feedback on this argument from @IanEiloart, @beccaet and @MsNoeticat, which I will address here without attributing particular views to any one person. Thanks for your comments, by the way.

First is the question of whether a fat tax would produce a social benefit by incentivising food manufacturers to change their recipes in a lower fat direction, i.e. to make their regular products more like "diet" products. You know diet coke, diet yoghurt, diet ready meals. All the bulk of the regular product with little of the flavour. There's a reason I don't buy diet products: they are horrid. Making food in general more horrid is not something I would count as a social benefit. Just as starving sailors lost at sea would fill their bellies with sawdust to quell the hunger pangs, the modern body-image conscious person is supposed to fill their belly with a modern food-sciencey equivalent such as cellulose (which may be made from sawdust in fact).

Second is the point that pushing diets in the right direction will benefit everybody. Will it really? Will it benefit people who are underweight? How many borderline anorexics will be pushed over the borderline because they are eating food with more cellulose and less food in it? The problem here is that we are looking at the average person - who may be overweight - and imposing a food policy for everybody, as if everybody was the same as that average person. Many people eat too little fat or too little cholesterol, or too little proper food of any kind. Should they be sacrificed on the altar of the average? Top down, one-size-fits-all policies fit very few.

Finally the suggestion that revenue from a fat tax could be help people who are struggling with weight issues. This is true. And it is fair to say that weight is a very big problem for some people, causing a great deal of distress and poor health outcomes. I do think a fat tax would have to be very high indeed in order to help everybody in this kind of need, which raises the question of why isn't this kind of health support more of a priority anyway? Why should it rely on a hypothecated tax? We don't hypothecate tobacco and alcohol taxes to particular health interventions, and nor should we.

And I would say that a large part of the distress surrounding weight issues is a result of social pressures to conform to a perceived weight ideal. Now what is the fat tax, but another kind of pressure to conform to that same perceived ideal? On the one hand we are campaigning against unrealistic body images in the media; do we really want to turn round and try to impose unrealistic bodies on people through the tax system?

Update: see also freakonomics.

Ed Milliband's little big idea

While it is easy to lampoon Ed Milliband and the speech he gave to his party conference, he had one big idea that is worth looking at: that of bringing moral values into government's dealings with business, to reward the good and punish the bad.

On the face of it, what could possibly be wrong with that? It is better to have more training, more R&D, better cared for workers, a social conscience, environmental sustainability. Let's reward the companies that go the extra mile to deliver these things, and punish those that merely follow the rules. Companies that merely tick all the boxes and play the rules to their advantage are not giving back to society in the way they should.

Ed was subsequently challenged to give some examples of what he is talking about and failed abysmally. Southern Cross was mentioned as a company that wasn't giving back, but of course that was in the process of it failing as a business. Let's punish failure with higher taxes? The problem is that it isn't obvious who the good guys and the bad guys are. If you can't even say which companies you think ought to be punished for existing, how are you ever going to write laws to fairly judge the predators from the producers?

The challenge here is to turn good intentions into good policy. Ed's project has been tried before with almost no success under the banner of stakeholderism. Stakeholderism held that workers, suppliers, consumers, the wider community and the environment all had a stake in a business, not just the shareholders, so businesses should be run with all these stakes in mind. But put workers, suppliers and consumers on the board and you get big conflicts of interest. So little policy was ever developed to implement this vision beyond saying "you really ought to think about this stuff". I have written about stakeholderism before, and it all still applies to Milliband's new compact.

While it is possible and necessary to regulate for such things as environmental standards and workers rights, it is logically impossible for a regulation to meaningfully say that you must go the extra mile, beyond ticking all the boxes, because every regulation is precisely one of the boxes to tick. So you can't legislate for virtue.

And while tax breaks for R&D, support for apprenticeships and so forth are reasonable attempts to improve incentives, they don't reward virtue, they are attempts to steer self interest towards more public spirited goals. If Ed's vision means another avalanche of schemes and tax loopholes aimed at rewarding virtue, it will be met head on by an avalanche of tax accountants for whom virtue is not the pressing concern. This is no new vision, this is very much Gordon Brown's signature move of trying to micromanage behaviour through the tax system, giving us one of the most complex tax codes in the world and record levels of tax avoidance.

And let's not forget that creating jobs and providing goods and services are a positive contribution to society. We might like more training and R&D, but there are few businesses that could exist without ever doing any of either. Is Labour just too uncomfortable with the fact that business generally makes a big positive contribution to society even without being tinkered with by government?

So Ed, I hope you enjoyed telling your conference that you will stand up for what is right and oppose what is wrong. It is a fine and noble ambition, albeit somewhat unoriginal. But if you can give it any substance at all, that will be an achievement. Failing that, a mountain of regulation motivated by good intentions is the best and worst we can expect.

That Ed Milliband speech in full (2)

In a big scoop for the Extra Bold Blog, I have again obtained an early draft of Ed Milliband's speech.

For copyright reasons, I won't release this until after the actual speech has been delivered.

[check against delivery]

Friends, comrades, it is great to still be here. A generation ago a Labour leader condemned Labour in Liverpool. Today, Liverpool has been put right, by someone.

Ask me the three most important things I've done this year, and I'll tell you. They're all about my family. Which is nice.

But let me talk about my nose for a while. You'd be surprised how many unfunny jokes it can inspire.

Conference, let's get down to business. This is a dangerous time. This is not the time for the same old answers to the challenge of growth. People need to know where I stand. We lost trust on the economy, and I am determined to restore that trust.

We will only spend what we can afford, we will live within our means, but not yet. The next Labour government won't be able to reverse any of the cuts we purport to oppose today.

We will set new fiscal rules [like the "Golden Rule"? - Ed]. But I have a disagreement with this government. They believe the government should live within its means, but they are wrong. [Didn't you just say the opposite? - Ed]

Of course the world economy is suffering, but our government is making it worse by following our legacy of debt and austerity, albeit slightly more effectively.

I say to David Cameron, put politics aside and look at the facts. I am going to tell it straight. That's a lesson I have learned over this year. [Insert actual straight talking here later.]

Milly Dowler, Milly Dowler, Milly Dowler. What kind of country have we become where political parties such as this one would suck up to Rupert Murdoch? That's why, once opinion had turned against him, I was willing to change. I'm not Tony Blair (he wouldn't have done this) - a great man, I am my own man, that's what it means to lead. Nobody ever changed things by being nice.

My message to the public is simple... Technical Fault.

... the Labour Party lost trust on the economy. [Haven't we already had this bit.]

... people looting shops, burning cars. But thousands came to help with the clean up. That is what we mean by the big society, I mean Blue Labour, I mean Purple Bookery, I mean refounding next new Labour.

Citizens and public servants alike are truly British, I think. We are great people in a great country, ready for the Olympics. So with such great people, how did we end up here. It is because of the way we have run the country for decades.

There are hard lessons here for our party. Some of what happened in the 80s were right, but too much of it was based on the wrong values. Wrong values that we did not do enough to change.

You believe you deserve more, but bankers are getting more instead.

You believe in the long term, but the fast buck, short termism, borrowing and debt bubbles have been the rule.

You believe in responsibility, but big vested interests like the unions have for too long been able to get away with anything.

Who do we blame for all of this, apart from the last Labour government? Why the fat cats in industry of course. Oh except for the good fat cats, we like them, they create jobs and value. But often the bad fat cats earn more than the good ones. I'm sorry our wages policy didn't crack that one.

Opportunity, opportunity, opportunity. Children, children, children. Sad puppy expression.

Values, values, values. You know what your values are. Celebrity culture, gangs, life on benefits, chavs.

People who have paid into the system all their lives find the safety net full of holes. We need a new bargain. Let's confront head on the new challenge of values, wealth creation, you know what your values are, values, values, China, India and Brazil, the kind of economy we have now, we can't pay our way in the world, confront head on.

Not credit default swaps but creative industries etc.

Now not all business is the same. Who knew? All parties must be pro-business today, but we can distinguish between wealth creators and asset strippers like the Phoenix Consortium; I learned this from a hollywood movie from the 80s.

We must learn the lesson that growth is built on sand if it is built on debt, I mean predators, not producers. This is the pro-business choice because really there is not much asset stripping going on these days, but it makes a good soundbite.

This is why our new industrial policy will stick government fingers deep into the hearts of businesses seeking contracts.

But lets get more competition in energy supply, despite all that.

The wealth of our nation is built by the hands not only of the elite few, but also the proletarian masses.

Just think of our young people going into higher education facing a graduate tax in all but name style repayment. We would cut the amount that a few top earning graduates would have to pay by cutting the headline notional fee to £6000.

Schools, schools, schools, children, children, children.

Have you noticed how uncomfortable David Cameron is when talking about responsibility at the top of our society. When you have had to pay, it is always our fault, our toxic legacy of debt and austerity. Yet at the same time the government is taxing top earners more than Labour did. [Sure you want to say this? - Ed] How dare we say they're all in it together!

If you think putting things right means reforming welfare then you're wrong, but at the same time you're right, work must pay. I'm prepared to make the tough decisions to make the welfare reforms to make work pay a reality, seeing as it will already have been done by 2015. But that won't stop us scoring points along the way.

Decency, fairness, helping those who do the right thing. These are values we are learning from the coalition. And with these values we will make welfare work again.

Millions of public servants deliver a fantastic public service every day and every week. But public services can become unaccountable, and need reform. Patients, victims, standing in the queue, computer says no. We need to sign up to the government's reform agenda, in the hope people think we thought of it. We need to stand up to the vested interests, except the unions, who own me.

Why does Britain care so much for the NHS? Because it's really good. And free, mostly, at the point of use. And when I look at everything the government is doing, I try really hard to find a way in which that will change. That reform agenda I spoke of a moment ago; if the government does it, we will scaremonger as if our lives depended on it.

I'm not finished. Yet. If you want someone who will rip up the old rules, new rules, old rules, new hat, old hat. You know Britain needs to change, kids, mum and dad, a fight for a new bargain, your values, pay our way in the world, values, break open closed circles, a new bargain, a long pause, a new bargain, kids, mum and dad.

I promise to promise the promise of each so we promise the promise of Britain. Thankyou.

Cuts and opportunism

Ed Milliband was again emoting if not explaining his alternative economic strategy on radio 4 this morning. If only we were to borrow and spend more money, that would be good for growth, and therefore good for debt in the long run. It has enough plausibility for people who want to believe it to give Labour cover to proclaim themselves anti cuts, to go on ukuncut demos where by rights they ought to be lynched.

The reality is that Labour's plans are to cut the deficit more slowly: in 8 years rather than 5. That is reaching the midpoint in 4 years rather than 3. (The coalition reaches the midpoint of deficit reduction in 3 years, rather than 2.5 because the first year (this last one) saw only token cuts.)

What this means is that whenever Labour score political points by "opposing" a cut, they have a policy that would demand that same cut is made, on average, only 1 year later. Not "save our libraries" but "keep our libraries open for one more year then close them" would be an honest slogan. Ditto every other cut.

More could be done by raising taxes of course, but when Evan Davies put the question about not capping council tax, Milliband rejected the idea, saying, rightly that an increase in council tax would squeeze many at a difficult time. (An apology for Labour's record on council tax might have been in order, particularly to pensioners, who didn't even have an earnings link as they do now.)

And that story is repeated. Despite having the policy of somewhat higher taxes and therefore fewer cuts, no tax increase is supported or proposed, save the "jobs tax" that would have raised only about 2% of the deficit.

We are told that Labour's plan would be better for growth. Growth is the answer to everyone, even the Greens it seems, confusingly enough. Of course I would hope they do think their plan better for growth, rather than adopted just for the cheap point-scoring value of pretending to have an alternative to cuts. But believing your plan to be better is one thing. Spending the difference is quite another.

Borrowing to spend is right during a recession to blunt the hard edge of the downturn. It will temporarily boost growth, but at the cost of a long term deadweight of debt dragging the economy down. So as Keynes said, such debts should be paid back when times are good. Now the recession ended in 2009, and we are still borrowing. We will still be borrowing 5 years after the recession, hitting balance in the 6th. Labour's plan is to still be borrowing 8 years after the recession. This is not Keynsianism, just borrowism. Borrowing not just during recession, but all the time, hoping some other party will be in government when it has to be sorted out.

So on the one hand we have lower corporation tax, enterprise zones, apprenticeships, university technical colleges, cutting red tape, part of a comprehensive strategy for growth in the private sector. On the other hand the strategy to borrow and spend in the public sector for 8 years, creating a massive long term dead weight of debt, and neglecting the private sector that could actually bring us the tax revenues we need.

All this for an average 1 year delay to cuts, and the chance to play the good guys.

Caroline Lucas' U-turn on taxes

Channel hopping between Question Time and 10 O'clock Live, I caught the following exchange...

David Mitchell: The key is that ultimately, surely to save the environment things have to be made more expensive - the things that are destroying the planet have to be made as expensive monetarily as they are to the environment and that's going to involve a lot of sacrifice, don't you have to be honest about that?

Caroline Lucas: Well I will be honest about that, what I think it needs is a shift in taxation, not an overall increase in the burden of taxation, but if we taxed carbon instead of taxing income so much for example that would be a very good thing, we'd get more people into jobs, we'd also tackle the environmental crisis, so it's not rocket science...

This is a far cry from the Greens' general election manifesto that called for massive tax increases to close the deficit.

Whatever happened to "left wing plus"? Don't get me wrong here, I agree with the policy - but it is not a left wing one - the left much prefers taxing income to taxing consumption. I also agree with the question - if the Greens can't be honest about the sacrifices they expect, it is a bit rich to accuse other parties of being all talk and no trousers.

But more significantly, whatever happened to the Green Party being the last bastion of big tax and spend politics, appealing to the disaffected left? Is it really quite so shallow as to switch its whole politics from the hard left to the centre now it thinks there might be more mileage in attracting disaffected Lib Dems?

And has this monumental step really happened in an interview on a comedy news and politics show? Does the rest of the Green Party know anything about this? What do they think?

I am feeling a little stunned here.

Coalition FAQ

Why are you in coalition with the Conservatives rather than Labour?

Throughout the election campaign, we said that in the event of a hung parliament that we would talk first to the party with more votes and seats, and we spelt out our four policy priorities on fair taxes, schools, the economy and political reform. It was also clear that the country would need a stable government willing to take the tough decisions to tackle the deficit. The Conservatives won more votes and seats than Labour, they were more willing than Labour to support our policy priorities, and they were more willing than Labour to take the necessary decisions to tackle the deficit. And because Labour and the Liberal Democrats combined did not have enough seats for a majority in parliament, a coalition with Labour would not have been stable.

Do the two parties now agree on everything?

No. The coalition is a constructive relationship between two parties with differing values and priorities but willing to work together in the national interest. It would be extremely difficult to make this work if ministers were publicly arguing with their own government. We saw how damaging the conflict between Tony Blair and Gordon Brown was, and we are determined not to let our disagreements lead to rancour. However, we recognise that there have been problems of message and tone, and it has now been agreed that, in future, Lib Dem ministers will be freer to express distinctively Lib Dem views.

What influence are the Liberal Democrats having in government?

We are delivering on our four key policy priorities: reforming the tax system so that low earners pay less than they did under Labour; supporting the most disadvantaged children in schools through the ‘Pupil Premium’; investing in the green economy and reforming bank regulation; and fixing our broken political system with the right to recall MPs, fairer votes, and elections to the House of Lords.

We are engaged in all areas of government policy, with much of our manifesto being implemented, and the more extreme elements of the Conservative manifesto blocked. For example:

• This government is rebalancing the tax system so that low earners pay less and high earners pay more. Rather than lower Income Tax for low and middle earners, under a Conservative government we would have seen Inheritance Tax cuts for the richest.
• The coalition takes a moderate position on the European Union. It's likely that a Conservative government would have headed for a major confrontation with the EU, damaging the national interest.
• A Conservative government would have shown less commitment to civil liberties, and no interest in constitutional reform. This government has strong programmes for rolling back Labour’s encroachment on our freedoms and making our democratic institutions fit for purpose.

Is there a coalition between Liberal Democrats and Conservatives in Sheffield?

No. There are no Conservative councillors in Sheffield, and the Liberal Democrat councillors follow Liberal Democrat policy. They have a good working relationship with the coalition but are not part of it, and are not influenced by Conservatives. In Sheffield there is a simple choice between Labour and the Liberal Democrats.

Will the coalition parties merge?

No. Nor will there be any pact between the two parties at the next General Election. The two parties have not changed their values and priorities: we have simply found a way to work together. But there is no guarantee we will need or wish to work together, or be able to find so much common ground, after the next election. We would be just as willing to work constructively with Labour in the future if the circumstances were right.

22 Days in May - my reaction

David Laws account of the coalition negotiations and his few days of ministerial office is a must read. Learn the difference between a traffic light coalition and a car crash coalition. Find out exactly where the hand of history was squeezing. David's account is most politically relevant for its description of how willing the Conservatives were to negotiate in good faith and compromise on policy, and how unwilling elements within the Labour party were to do the same. Shockingly the Labour negotiators didn't seem to agree among themselves, or have the authority to negotiate for the party. I'm shocked enough that they included Ed Balls at all - that really isn't trying to make a deal work is it?

Of course this account is disputed by Labour figures, who want to portray the outcome of the election as Lib Dem decision. (Along with the existence of the deficit.) Naturally I believe David Laws' account and Labour supporters believe the opposite. Of course it is true, as David says, that a deal with Labour would have been much harder to operate because of the parliamentary arithmetic. But you might have thought that sort of difficulty would inspire Labour to greater not lesser efforts than the Conservatives.

The credibility of Labour's version of history falls apart when we get to Appendix 5 of Laws book: Labour's 10th May policy proposals for a Lib Lab coalition. If this had been a serious attempt to reach agreement, if the Lib Dem negotiators had capriciously rejected it, then this document would be waved in the face of every Lib Dem MP, councillor and grassroots member up and down the country with the refrain "this is the radical, centre-left government you could have had". It would be in all the newspapers. Every government policy would be compared to it. You Lib Dems have chosen that when you could have chosen this. And surely enough Plaid and Irish MPs could be found to say the same.

Why has this not happened? Because the document is pathetic. All major disagreements on policy between the parties seem to be met, at best, with a review. Labour know they are right and their review will confirm it. The Lib Dems should be grateful for this sharing of wisdom.

If Ed Milliband has really been won round by the Lib Dem position on student fees, he might have said so on the 10th May when he could have done something about it. But no. There will be a national debate and a full consultation. We know what that means.

Oh you can have the pupil premium, so long as we can dictate what it gets spent on, because government knows best.

Yes, you can have a personal tax allowance of £10,000, wait for it, only for pensioners. Was that an attempt to be funny? Labour doubled income tax for many low earners when they abolished the 10p rate, and this is how they treat the opportunity to put right that injustice.

No. Labour knew the next government would be unpopular because of the state of the public finances. We've all seen Labour's joy at seeing both their opponents suffer the consequences of the £150bn per year fiscal turd they left behind. We've heard senior Labour figures brief against a Lib Lab deal and talk of 'principled opposition' - as if there were any principle that should cause a centre-left politician to reject a centre-left deal in favour of a centre-right one. Although to be fair, this government is better than the last one even by centre-left standards.

Laws talks of Labour's lost opportunities from 97 to 2010 to attempt to forge any kind of closer links with the Liberal Democrats, that might have paved the way for a different outcome, and of Gordon Brown's deathbed conversion to pluralism, at a minute past midnight.

I look at it differently. Labour have been in a coalition with the Conservatives, almost as along as they have existed. But it is the kind of coalition where you take turns enjoying untrammelled power rather than sharing power. They have been quite happy to maintain this closed political system despite the fact that it led to frequent Conservative governments that did more harm to the interests of people who Labour purport to protect, than Labour could ever undo when it was their turn. The party has every reason to be terrified that a different kind of politics might work better. Voters with Labour values on the other hand have every reason to welcome it.

Lefty firebrands demand a better deal for top earners

I was on the radio this morning debating with Max Brophy of the Education Activists Network - the group linked to the Millbank incident. While iPlayer lasts you can find it here, starting 1h05mins in.

As always it is a shame I didn't get to respond to some of Max's points directly. The fairly preposterous line that there is an ideological attack on the public sector - when the share of national income spent by the government is simply returning to the level it was in 2006. And it is a little bizarre that something called the Education Action Network is rioting, when education is relatively unscathed in the adjustment this country is making to the fact that it has a great deal less money to spend.

But my main point, which I almost managed to get across is this. While clearly we are in a coalition, and in no position to deliver on our original policy, it is worth noting that student debts are becoming very undebtlike indeed. There is no commercial loan you could take out that you would be let off altogether if your earnings were below £21000. For people on these incomes, there are essentially no fees and free education, before we even consider the new bursaries and maintenance provision. This is a big improvement on the status quo. The fees pledge is honoured, and in spades, for low earners. They pay no fees, nothing.

For people on middle incomes, repayments will be limited by income, and not by the size of the debt, which therefore becomes a notional debt not a real one. Payments defined and limited by income are usually called taxes, and this differs from a graduate tax in name only. Of course a pure graduate tax would keep the pledge. If this policy breaks the pledge for middle earners, it does so entirely because of what the payments are called. Toby Foster, the host, asked if the protest was really all about semantics, and it almost is.

But not quite. There are still the top earners - the top third or so - those who will end up paying £6000 fees, or in exceptional cases £9000. That's the full cost of their education in the chalk and talk subjects, and a little less in the more expensive subjects. These are the people we have let down in compromising on fees. So effectively what leftwing firebrand Max was demanding was a better deal for top earners. It's a funny old world isn't it.

Young's Gaffe

Lord Young is in trouble and has apologised for a gaffe stating that most people have never had it so good.

Specifically, if you have a mortgage and you still have a job, then with interest rates lower than ever, you have more money to spend that you did in normal economic times.

There are two big problems here. One is that "a job and a mortgage" accounts for a minority of households. So the remark, while true of the hypothetical middle-Englander Young probably had in mind, is not true of "most people".

The second is more telling. There seems to be something implicit in ever saying "most people" that pushes people's irrational tribal-brain buttons. Because if most people are X and a minority are Y, are you saying, and am I hearing that X matters and Y doesn't?

If, in a democracy, you say most people want better railways, that kinda suggests that support for better railways matters politically, and democratic governments ought to represent that interest group.

On the other hand if you say that most people want a heterosexual relationship, that doesn't imply any kind of political demand for priority or favour for heterosexuals from the government. Or does it? Why did you bring up the question of what kinds of relationships people want? Is it a dog-whistle? Are you framing some question as straight v gay?

Young's remarks, we are told, are insensitive to those who have lost their jobs, or fear they will. Is this really the problem? The government's institutions for dealing with unemployed people show total crass disregard for their feelings and always have done. Having been entirely forgotten about by some Lord is probably something of a mercy by contrast.

No, the problem here is the politics of framing an analysis in terms of, say the better off 60% versus the worse off 40%. It might not even be intended, but those are the buttons that are pushed. And many - particularly on the left, and the far right - see politics entirely as an exercise in identifying or creating, promoting and exploiting tribal divisions in society. They get very upset if you pick the wrong dividing line to exploit. I get upset even if you pick the right dividing line. Politics should not be about dividing people into groups, but respecting them as individuals.

And it is a fact of recessions that most of the pain falls on relatively few people. Surely it is more insensitive to deny this than to mention it.

The dawn of a new kind of politics?

So I had a bit of fun the other day with Ed Milliband's speech, but there is much in there to be welcomed. In particular, rather than attacking the Liberal Democrats - Labour's favourite pasttime for the last few months - he almost sounded like one of us at times.

Let’s be honest, politics isn’t working.

People have lost faith in politicians and politics.

And trust is gone.

Politics is broken.

Its practice, its reputation and its institutions.

I’m in it and even I sometimes find it depressing.

This generation has a chance - and a huge responsibility - to change our politics. We must seize it and meet the challenge.

So we need to reform our House of Commons and I support changing our voting system and will vote Yes in the referendum on AV.

Yes we need to finally elect the House of Lords after talking about it for a hundred years.

Yes we need more decisions to be made locally, with local democracy free of some of the constraints we have placed on it in the past and frankly free of an attitude which has looked down its nose at the work local government does.

This could easily be from one of Nick Clegg's speeches.

Let’s be honest, changing our institutions won’t be enough to restore trust on its own.

Look in the end, it’s politicians who have to change.

We've got to reject the old ways of doing politics.

...

Some of the political figures in history who I admire most are Keynes, Lloyd George, Beveridge, who were not members of the Labour Party.

Frankly, the political establishment too often conducts debate in a way that insults the intelligence of the public.

We must change this for the good of the country.

I will be a responsible Leader of the Opposition.

What does that mean?

When I disagree with the government, as on the deficit, I will say so loud

and clear and I will take the argument to them.

But when Ken Clarke says we need to look at short sentences in prison

because of high re-offending rates, I’m not going to say he’s soft on crime.

When Theresa May says we should review stop and search powers, I’m not going to say she is soft on terrorism.

I tell you this conference, this new generation must find a new way of conducting politics.

If the rest of the party listens, this represents the most radical change of direction since the New Labour project. New Labour was defined as much by its posturing - and outdoing the Conservatives - on crime, on terror, on throwing away our hard-won civil liberties, as by anything else. New Labour since the election has done nothing but opposition for its own sake - if only because it was easy and they lacked a leader who might have the authority to do anything more difficult.

Of course there are dangers to our party if Labour were suddenly to agree with us too much, but it is still something to welcome. That we have comprehensively won the arguments on civil liberties, crime, Iraq, political reform and the culture of political debate, is a huge cause for celebration.

I hope Ed can take his party with him. It will be very difficult to engage in constructive opposition, particularly on the deficit. As John Maynard Keynes famously said:

"A public sector deficit of 10% of GDP should be halved in 4 years not in 3."

...or something like that. This means the honest opposition to every cut is either: a) we would do this same cut 6 months or a year later, or b) we would cut somthing else or raise a tax instead, with specifics.

But I am optmistic. I think there is a demand for a better kind of politics. Politicians are so much more beholden to the media these days. We're not even allowed to be old - Ming Campbell was destroyed for that crime - lest the pecking order between journalists and politicians might become less clear. We live or die by their praises or damnation, and they are untouchable. But judging by the way we conduct politics, we deserve no better.

Of course the media's desire for a good scrap has often shut down serious debate of the issues, and this is not going away. I am talking about how politics now responds to the situation we have. Playing the infantile games - spin, smear, and opposition for its own sake - has given some quick wins and will continue to do so. But being more grown up will better serve us, will be truer to the passions that brought us into politics - to make the world a better place - freedom and fairness.

It is not easy to leap first into a more grown-up kind of politics, but with the Liberal Democrats and Conservatives already co-operating, Labour need only leap last. Good luck.

That Ed Milliband speech in full

In a big scoop for the Extra Bold Blog, I have obtained an early draft of Ed Milliband's speech.

For copyright reasons, I won't release this until after the actual speech has been delivered.

[check against delivery]

Friends, comrades, it is 72 hours since I became leader of this party. I want to say how incredibly honoured I am that you have chosen me over my brother to lead our party. David that'll teach you to nationalise my train set.

And let me pay tribute to two colleagues who are standing down. Alasdair Darling: you kept cool while Mandelson and Brown were overriding you. And Jack Straw you were always good as the butt of my unfunny jokes. Like this one.

The gift my parents gave to me and David is what I want for every child in this country: an indoctrination into the revolutionary road to socialism.

We have a responsibility to leave this world in a better state than we found it, except when it comes to public debt.

Freedom and opportunity are precious gifts. This is something I learned not to be true from my dad's books.

But lets face facts we had a bad result. Every day out of power is one where we can blame the coalition for the consequences of our deficit. So lets resolve to be back in power when the deficit has been removed, er, hopefully just 5 years.

Remember the spirit of 1997. But by the end of our time in office we had lost our way. Tony and Gordon took on conventional wisdom and lost. Let's do that again.

The old way of thinking said that public services would always be second class. And they still are. I'm proud of, er, something. But we saved the National Health Service, apparently.

The old thinking was that the world was too big and this country too small to make a difference. But look at our wars!

So Tony and Gordon took on established institutions until they became them.

But we also have to understand where we went wrong. How did we lose 5 million votes? A party taking on old thinking became trapped by its own dogmas. We became friends of the city, insufficiently racist on immigration, corrupted in the expenses scandal, and piling the debt on students.

But this week we embark on the journey back to thinking. We don't know all the answers yet. Dis generation wants to rule the nation with version. This generation wants to change our foreign policy so that we don't always start wars when we have the chance.

As we emerge from the global economic crisis we need to reduce the deficit. We are in no position to oppose what the coalition does because we would have had to do much the same. The fiscal credibility we earned in 1997 was hard won, and Ed Balls has being doing his best to throw away the last shreds of it.

But I'm now going to pretend I didn't say any of that, and have a go at all the cuts we would have had to have done anyway.

This government has no 5 year plan for growth, and no 5 year economic plan is no way to a planned economy of any kind.

I have a much bigger vision - to emerge from the financial crisis learning to listen to Vince Cable next time.

I want our businesses to benefit from the globalised economy. But not if it means hiring foreigners. Except people like my dad. We didn't listen on the doorstep to complaints about immigration. [camera cuts to some black people in the audience]

We want to win an argument about the danger the coalition government poses to our party. So let's have no truck with overblown rhetoric about waves of strike action. Labour would have had to do the same. In case that sounds evil, I'll talk a bit about caring for children.

This is one of the hardest issues for our party - but those who can work should do so. Reforming our benefits system must not be about stereotyping everyone out of work, like it was under Labour, but a genuine plan to make sure those in need are protected, and those who can work do so, like under the coalition.

We are a generation that yearns for things business cannot provide - green spaces and family. We were right to introduce markets, but naive about them. We shouldn't have closed all the post offices. We shouldn't have put all those pubs out of business with the smoking ban.

We stand for these things not because we are social conservatives, but because we are just conservatives.

Family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family, family.

So as we rebuild our economy, family, family, family, family, family, family, family, family.

But government can itself become a vested interest. I know the value of a good school, and I know that many parents are frustrated that they don't have them. But we wouldn't let them set up their own schools.

I believe individual freedom and liberty matter and should never be given away lightly. [Do I need to duck for cover at this point? Ed] Locking up innocent people undermined the good things we did like the database state.

We, me and my brother are the new generation. And we need new thinking in foreign policy.

Troops, troops, troops, troops, troops, troops, troops, troops, troops, troops, troops.

I've got to be honest with you about Iraq. Iraq divided our country. I'll say it divided our party, although we didn't show it at the time. But we were wrong.

Politics is basically broken. We have a huge responsibility to reform it. I support changing the voting system and will vote yes on AV. And we need to elect the house of lords. And we need more decisions to be made locally. I am so happy we have a government that understands all this unlike the last lot.

Hooray for Red Ken being our candidate for London Mayor. We can be the Red brothers. Sorry David.

Wisdom is not the preserve of any one party. Keynes, Lloyd-George and Beveridge are among my heroes. When Ken Clarke wants to review short sentences, I won't call him soft on crime, sorry Jack. Let's have a more grown up kind of politics. [Do make sure this early draft of the speech isn't leaked.]

We are the optimists, the new generation, the optimists and the new generation. Hooray for us.