more … ]]> Sir Menzies Campbell MP has called for “decisive action” to be taken to tackle job losses in light of the recent figures which show unemployment in Scotland has risen by 1,000 to 135,000 and the UK wide figure breaching 2 million.

The North East Fife MP said:

“With the UK facing the worst recession for decades we need decisive action to tackle job losses. Right here in North East Fife there are still almost five people for each advertised job.

“We can create 100,000 jobs if the Government scrapped this years £12.5 billion VAT give-away which costs £350 every second of every minute of every hour. It is a colossal waste of money borrowed in our name.

“This money could have laid the foundations for a new green economy and provided 40,000 extra zero-carbon social homes and the insulation of 2 million houses. We could have invested in renewable energy and helped the growth of under developed industry.”

“We are at the sharp end of the economic downturn here in North East Fife following the closure of Woolworths stores, Curtis Fine Papers and job losses at Kettle produce to name a few. There will be scarcely any businesses here who are not up against it.

“These figures paint a bleak picture, which only confirms that Liberal Democrats in the Scottish Parliament were right to insist on a Finance Sector Jobs Taskforce for Scotland”.

ENDS

more … ]]> Ahead of the Chancellor’s statement on the Pre-Budget Report and Comprehensive Spending Review, Liberal Democrat Leader Ming Campbell called on Gordon Brown to take responsibility for the turmoil in the economy.

Ming accused Gordon Brown of going to ground while his Chancellor tries to steer his way through the stormy economic waters of the Prime Minister’s making.

He said:

“Gordon Brown must stand up and take responsibility for creating an economic outlook full of uncertainty and instability.

“As Chancellor, Gordon Brown happily lauded his own economic wizardry, but failed even to recognise the growing problems of personal debt. Personal debt now stands at £1.3 trillion and households now have to set aside about a fifth of their income to service existing debt, two fifths for first time buyers.

“Every day nearly 300 people face insolvency and 75 family homes are repossessed. All the indications are that the problems could get much worse. This is a problem of the Prime Minister’s making and he must take personal responsibility for it.”

Ming Campbell attacked the Prime Minister for creating a situation in which he offered tax breaks for the wealthy while increasing taxes for those on lower and middle incomes. He said:

“Since Labour came to power the gap between rich and poor has increased and social mobility has declined.

“We want to see a cut in national income tax by 4p funded by environmental taxes and taxes on the wealthy.

“Council tax in particular places an unfair burden on pensioners and the low paid, it is likely that by 2011 average council tax bills will have increased by 120% since Labour came to power. It is high time we moved to local taxation based on the ability to pay.

“The majority of people feel overtaxed, it is now time to cut taxation for low and middle income groups to make work pay and ensure that the super-rich pay their fair share.”

Concluding Ming said:

“The UK is now in a situation in which there is likely to be a painful economic slowdown and a housing market correction, given difficulty in servicing high levels of consumer debt, a lack of confidence in the banking system and unfairness in the tax system. Gordon Brown must take personal responsibility for this.”

more … ]]> Commenting on Gordon Brown’s budget, Liberal Democrat Leader Menzies Campbell said:

“The big increase in taxation is a doubling of the starting rate of income tax rate.

“The income tax changes announced in the budget will mean that anyone earning less than around £15,000 will pay more in income tax.

“The 2p cut in the basic rate is welcome, but let us be clear this is an income tax cut for the wealthy dressed up as a tax cut for the poor.

“While the Chancellor has taken some of the key headline policies from the Liberal Democrats, he has got the fundamental point wrong, we need tax cuts for the low and middle income earners now.

“Those on low incomes will now experience even higher rates of taxation and this will do nothing to increase incentives to work.”

In his speech to Parliament Menzies Campbell accused Gordon Brown of not doing enough for the hard working families, young professionals, nurses or police officers struggling with rising living costs. He said:

“The Chancellor had the chance to use this final budget to show that he was listening to the voices of the people of Britain.

“But he has delivered a budget of missed opportunities.

“He had the chance to build a fairer Britain through tax cuts for the low paid – but in fact he has increased income tax for the lowest paid.

“He had the chance to create a greener Britain by taxing pollution – but he shunned it.

“And he had the chance to shape a prudent Britain by saving billions of pounds on government waste – but he avoided it.

“Instead he has spurned all of these opportunities. He has concentrated on his own political succession.”

You can read more about Ming’s budget response and the real impact of Gordon Brown’s plans on the Liberal Democrat website.

more … ]]> July 6, 2006: Ming Campbell speaks to the City of London at the London Stock Exchange in association with CentreForum:

Elections show that my party is a powerful force across Britain.

Beating Labour in Dunfermline and West Fife earlier this year; beating Labour in the local elections in May and then within a whisker of beating the Conservatives in Bromley.

Three party politics is here and here to stay.

Our voice – raising issues that the other parties and the fashionable commentators miss – is critical to British politics.

And now as both Labour and the Conservatives want to close down debate on the tax system and tax structure, I believe it is time to open up that debate.

It is a debate that the Liberal Democrats will not shy from, and it is a debate that will be better informed with input from the City. No serious political party with ambitions to reach government should fail to take account of the needs of British business and industry.

I am aware of the contribution that business can make in a liberal society.

The City is at the very core of Britain’s economic achievements. It is here in the City that British companies innovate and succeed through an ethos of openness and competitive free trade. And it is here in the City – not in Whitehall – that jobs and prosperity are generated to the benefit of citizens throughout the whole of Britain.

The generosity of spirit, entrepreneurial know-how and the ambition to succeed found in the City are qualities from which society benefits and which politicians must encourage.

Just last week we heard a prime example of where business can benefit society.

The Children’s Investment Fund – a UK-based hedge fund – was reported to have given £50.4m to its charitable arm, the Children’s Investment Fund Foundation, in the year to August 2005. The money is being used to alleviate child poverty and comprises around 1% of the hedge fund’s total annual profit.

Business stands no chance of giving to society if government stands in its way; and that is especially true of tax policy, which is vital to business performance.

We all know that for business to thrive, it must function within a framework of legal certainty and equitable treatment. That holds as a principle for other areas of life too. That is why I asked the Prime Minister yesterday if he we will do all that he can to end the current situation in which British citizens can be extradited to the United States to face charges for alleged crimes committed in Britain, and yet Britain cannot extradite American citizens in the equivalent position. This is the situation in which the so-called Nat West Three – all of whom are British citizens – are currently trapped. The primary function of any government is to look out for the interests of its people. Our government must not be found in dereliction of that duty.

Business can also inform debate, leading to better politics and, in turn, to a more prosperous society. There should be no doubt about our party’s willingness to engage with the City – and with business and industry beyond it.

With that, let me start with a question:

What is tax for?

The answer to this question usually depends on where you stand on the political spectrum.

Traditionally it might be said that those on the right believe in lower taxes; that government is a necessary evil and should only be accorded minimum resources.

The left, on the other hand, holds that state intervention is generally good and that the principal function of government is to act as a leveller.

So, what should we make of a party that believes in redistribution and smaller government at the same time?

A party that advocates a cut in national income taxes and a significant rise in environmental taxes whilst retaining fiscal neutrality?

How should we describe such a party?

The answer is radical, progressive, and liberal.

A liberal tax system is one that puts the poorest members of society first.

A liberal tax regime is one that is based on Fairness, Simplicity, and Sustainability.

Fairness means that everyone should contribute to the public good, according to their ability to pay.

Simplicity means that taxes should be easy to administer so as neither to hinder wealth creation, nor to over-burden business.

Sustainability means that tax should play a part in encouraging people to act responsibly in preserving our environment – and the key to all of these is reform.

Tax reform is urgent because the tax system has failed to keep pace with changes in society and the economy.

This government has presided over steady economic growth.

But that growth has been unbalanced. It has been fuelled by consumer spending and personal borrowing, but manufacturing has collapsed.

Income inequality has stabilised at historically high levels but wealth inequality is widening still further.

House prices have gone up 175% since Labour came to power. Those rich in assets like homes and shares have seen their property wealth roughly trebling in value since 1997 while those in rented property have experienced no wealth appreciation but substantially higher costs. Britain is divided between those who have property, and those who have not.

The UK tax system is not as progressive as is often claimed, with the bottom fifth of households paying a higher proportion of their gross income in tax than the top fifth.

For business, this government has allowed tax to become ever more complex, so that companies now face a jungle of red tape.

New Labour is addicted to micro-management. It has not kicked its fundamental belief that state regulation must be a good thing.

The litany of failed government interventions is embarrassing: u-turns on Operating and Financial Reviews, company incorporation, film industry taxation, the disadvantaged area stamp duty relief and last minute changes to Self-Invested Pension Plans. All of these are the product of a lack of financial competence, lack of consultation or lack of humility in the face of the complexities found in the real world. Working families tax credits embody these problems.

The complexity of trying to compensate for the fluctuating incomes of large numbers of claimants has defeated Inland Revenue bureaucracy. Half of all assessments are wrong and there has been around £2bn of overpayments a year. The Inland Revenue has sought to reclaim much of this. In many cases this has involved demanding large sums from people who were unaware of overpayments – for which they were not responsible – and who have already spent the money.

Considerable hardship has resulted from this and the Government has been condemned by the CAB and by the Parliamentary Ombudsman for its poor administration which has created opportunities for large scale fraud.

On the environment, the direction is right but the execution is timid.

Inequality and environmental damage are barriers to progress, and are harmful to society.

People are looking to government to generate a greater sense of fairness and personal security without sapping the creative energy of a competitive free-market economy.

Currently the party is considering its position on tax issues. I am clear in my own mind about the direction that I believe would be of benefit to the country.

My starting point is that there is no case for a general increase in the level of taxes. This is a big departure since we have been arguing for the last decade that more revenue was needed for expanding public services. The issue we should be approaching now is how tax should be structured.

I have four concerns.

First, that low and middle income families are paying high levels and high marginal rates of tax while those with large assets or good accountants are paying less.

Second, we are facing a major moral and practical challenge in the form of climate change. It requires radical action to persuade us to change behaviour and to point the way towards the low-carbon economy of the future.

Third, business taxes are too complex and are in danger of choking small business, stifling creativity and undermining entrepreneurship.

Fourth, a heavily centralised government and tax system draws power away from local government and encourages inefficient target setting and distortions in local tax regimes.

We need taxes which are fairer, greener, simpler and more local.

The details of our response to this challenge will be refined as we approach the election, but we have an interim set of proposals.

FAIRER

I envisage a fully-funded, tax neutral package which reduces the direct burden on people on low and middle incomes for whom tax is a disincentive to work and save. Specifically, we would take more than 2 million workers out of tax and national insurance altogether by lifting the thresholds.

I would also raise the starting threshold for the 40% upper rate of taxation to £50,000 per annum, so taking 1.3 million middle-income earners who have been dragged into the upper tax band under Gordon Brown back out of paying higher rate tax.

In addition to lifting the starting threshold for Income Tax, I would also cut the basic rate of national Income Tax, initially by 2p in the £ to 20%. This will substantially assist low and middle-income earners and make it easier to switch to a system of local taxation based on ability to pay.

Our party should be about substance, not symbols.

That is why I propose that we should drop our policy of a symbolic 50p top marginal rate of tax.

I recognise that in the USA, Germany and other key competitors, top rate taxes have come down and are now below the 50% band. We have to be realistic about what can be imposed without avoidance.

Moreover, a 50p rate is no longer necessary to make the system more progressive overall. There are other ways of achieving the same end.

I would end taper relief on capital gains tax. It is far from clear that there is a serious economic rationale for what is a very expensive tax relief. We are also considering a proposal to restrict tax relief on pension contributions to the basic rate of income tax. Money from these changes would be used to cut taxes for those on low and middle incomes.

GREENER

The other way in which we could raise revenue is by shifting the national tax base from income to environmentally damaging activities. Our plans for green taxes are bold, radical and decisive. They have already received an airing – but the rationale should be repeated.

There will have to be radical change in the patterns of consumption and productivity if environmental objections, particularly reduced CO2 emissions, are to be realised. As a liberal party, we believe that it is better to use market incentives rather than regulation.

We would like to see further developments in carbon trading markets, but for some time yet tax incentives will provide a more effective way of changing behaviour. This is about taxing differently, not taxing more.

In practice, the process of changing behaviour is slow which means that environmental taxation will rise. We have adopted an intermediate objective of increasing the share of total tax take and GDP represented by environmental taxes – with offsetting tax cuts in other areas.

In the short to medium term we will increase the level of direct environmental taxation to at least the 3.6% of GDP achieved in 1999.

This means raising approximately £8 billion in current values. This will come from four principal sources – fuel duty, aviation charges, vehicle excise duty and the Climate Change Levy.

Fuel duty should rise along with inflation.

We will reform Vehicle Excise Duty (VED) on new cars purchased in future so that it is much more sharply graduated according to CO2 emissions, with the most highly emitting vehicles paying as much as £2,000 per year.

We will replace the existing Airport Passenger Duty with an Aircraft Tax based on the emissions of each aircraft. This will cover freight aircraft as well as passenger services, and will be charged on the operator rather than individual passengers.

Aviation is seriously under taxed in relation to the environmental costs it imposes and I am quite explicit that this industry will face higher taxation.

But there are remote island communities in the UK that are dependent on air links and we would exempt these services.

We will reform the existing climate change levy on the use of carbon fuels, which is over-complex, and has not been indexed.

By off-setting our green taxes with corresponding tax cuts, we seek to avoid causing overall harm to business.

On the contrary, we believe that our proposals will open up particular opportunities for eco-friendly business.

One of the key new developments in financial markets is the emergence of significant volumes of shareholder funds which are seeking ethical outlets and, in particular, investments in companies with a record of environmental responsibility.

Green issues have become more prominent in political debate and the public mind. It has therefore become less acceptable both to investors and consumers of any given business for that company to neglect its moral responsibility to protect the environment. In an era of increased business transparency – aided by the government’s Freedom of Information legislation – business ethics are more apparent, and pressure to observe them is stronger.

Market forces now push towards green reforms, not against them.

The Fortune 500 Company, DuPont, is an excellent example. Between 1990 and 2003 DuPont reduced its green house gas emissions by a staggering 72%. Rightly, it received public recognition for its achievements.

By reducing its energy consumption, DuPont has also managed to save more than $2 billion dollars since 1990.

Either environmental ethics, or the realisation that financial gain was possible, persuaded DuPont to change its ways. Our off-set green taxes, aimed at recognizing the polluters and taxing their behaviour, will surely encourage other companies to behave both ethically and, to their own financial advantage by changing their behaviour when it comes to polluting the environment.

There is an increasing synergy between Liberal Democrat policy and market forces.

SIMPLER BUSINESS TAXES

Business currently contributes a significant proportion of the total tax take. The most significant business taxes are corporation tax, business rates and employers’ national insurance contributions which account for over a fifth of tax revenue between them.

Business taxes are too complex and the job of administering taxes and tax credits for employees is a significant burden, especially for small business.

Promoting innovation is better served not by government spending but by cutting the burden on new enterprises.

Simplification of the business tax system must be a top priority. We cannot have a tax system that only tax accountants can understand.

We need a simpler Corporation Tax structure.

There are a number of tax reliefs available to companies which, if removed, would allow the Treasury to cut corporation tax by a full percentage point from 30% to 29%. Whilst this proposal is a modest one, it points in the right direction.

There are complex technical arguments about tax avoidance which politicians are ill equipped to deal with. Though I am by no means an expert in this field I can see the conceptual merit in a general Anti-Avoidance Rule which would allow for a massive simplification for businesses, cutting hundreds of pages out of the tax code.

Simplification is good not just for its own sake, but because it would help with the move towards harmonisation of the tax base across the EU, whereby a number of key taxes will operate on the same basis – though not necessarily at the same rate – in member states.

Let me be clear, I am not calling for the harmonisation of EU tax rates. Tax competition within the EU is healthy. But in order for competition to be effective, it must be based on a level playing field.

Business seeking to operate in many different EU countries face a minefield of 25 different tax systems and are sometimes taxed twice in different jurisdictions.

The introduction of a standard set of tax rules in the EU is currently being considered by the European Commission. In practical terms, companies are already moving towards a standard set of “International Accounting Standards”, and the standardised tax rules could follow on from these accounting rules.

Special measures are necessary for small businesses. Most small business failures are caused by cash flow problems rather than an inherent lack of profitability.

It is time for the Treasury to look at an option for small businesses to be taxed on net cash flow not profit. It would be broadly revenue-neutral. It would save on expensive accounting procedures and it would better reflect small business’ ability to pay corporation tax.

All future tax legislation should be subject to pre-legislative scrutiny.

As a party we are also remain open to evolving policy in line with the legitimate needs of business. We understand the concern here in the City about the potential effects of driving non-domiciled residents overseas. We also hear the voices of those in the business community who fear the effects of stamp duty on shares. I look forward to hearing from the business community how further tax reforms might be paid for, but we hear these concerns – and others – and there should be no doubt of our willingness to engage with them over the months and years ahead.

Consultation with those affected and with independent experts can only improve the policy-making process and the end result.

MORE LOCAL

These tax plans are part of our vision for a different Britain.

A Britain that is not only greener, fairer and more productive but more democratic too.

Our commitment to more power for local authorities stems from a belief that decisions about communities and local public services are best taken by people in those communities.

But freedom for devolved and local government is ultimately dependent on freedom to raise and spend money.

Until parliaments, assemblies and local authorities have control over their purse strings, central government will continue to call the shots.

Britain is the most centralised of all the member states of the European Union: 95 per cent of taxation is raised by central government.

Local government in England only raises about 25% of its money locally. This leads to problems with gearing, where small budget increases lead to huge tax rises, and it gives Whitehall the authority to micromanage and interfere, just because it pays the bills.

We need a radical decentralisation of power.

That means councils taking responsibility for a far higher proportion of public spending.

If that responsibility is to be meaningful, a higher proportion of revenue raising must transfer from national to local government.

Liberal Democrats would ensure that local government is responsible for raising the majority of its spending locally.

We already have established policies to relocalise business rates, albeit with safeguards to protect the business community from totally inequitable levels, and to introduce a Local Income Tax in place of the unfair Council Tax. These will raise the proportion of revenue raised locally from approximately 25% to 50%.

Our long term goal is to raise this further, dependent on the pace of devolution of powers to local government.

And we would give elected councils powers to vary the taxes assigned to them and to innovate. I welcome the way in which the Corporation of the City of London has developed a simple tariff system for securing a share of the development. A Liberal Democrat council in Milton Keynes has already adopted this approach, which is much better than the centralised Planning Gain Supplement envisaged by Gordon Brown.

We also support the idea that infrastructure projects such as Cross Rail are more likely to happen quickly if devolved government has discretion to secure development gain.

Local government is subject to a variety of Central Government targets, controls and inspections which cost around £1.5 to 2bn pa according to the Local Government Association.

Giving local councils much more power over discretionary spending would eliminate the excuse for such central government control, and save billions into the bargain.

CONCLUSION

All major parties are committed to maintaining existing levels of public spending.

But that should not mean that we remain wedded to existing mechanisms of financing.

I reject the Brown-Cameron thesis that the tax system needs no reform, no change. A system established by Gladstone is long overdue for change.

We are not proposing to tax more or less but we are proposing to tax differently.

As the sources of wealth and inequality change, the tax system must evolve.

We must recognise the consequences of fiscal stagnation and regulatory accumulation.

Any party serious about enhancing the productivity and competitiveness of the British economy in the 21st century must be prepared to call time on unnecessary regulation and find ways of reducing the burden on business of administering taxes.

Any party serious about social justice in the 21st century cannot ignore the divisive impact of asset price inflation. Where some can claim tax relief on the sale of a second home, others struggle to find even one affordable home to live in.

Any party serious about action to tackle climate change cannot ignore the need for substantive measures to change behaviour which move the economy in a low carbon direction.

The Liberal Democrats are that party.

And we are serious.

…Serious about competitiveness and efficiency…

…Serious about the environment….

…Serious about fairness…

And serious in our desire to see a prosperous Britain – fairer, and greener – where everyone can flourish.

more … ]]> Liberalism has always been and should be about enterprise, competition, free trade and open markets.

I am part of that tradition whose economic liberalism, of course, we have to balance with a concern for the environmental impact of economic activity, the need for properly funded public services and a fair distribution of rewards.

The Labour Government can reasonably claim to have produced a measure of economic stability, thanks mainly to the decision – which we had advocated and then supported – to make the Bank of England independent.

But it has produced excessive regulation; a mixture of Maoist revolutionary upheaval and poor performance in the public sector which in some key areas – the Home Office, Revenue and Customs, Work and Pensions is appallingly inefficient; a tax burden which is complex and inefficient; and a creaking infrastructure.

Underlying the Government’s growing problems is a fundamentally flawed approach to management which rests on controlling everything from the centre and on obsession with multiple targets that are insensitive to local conditions.

Micro–management by politicians from Whitehall is inefficient and ineffective. No successful business chief executive would try to control every aspect of their operating companies’ activities. But Brown and Blair are both avid centralisers.

Let me now sketch out our approach to several issues. First: taxation.

The assumption which we make is that the overall level of tax should not rise. The Government has raised large sums of money for investment in public services – which we supported – and needs to deliver value for money, but not ask for more.

We propose however to shift the tax system to make it simpler as well as fairer and greener.

We would cut the national income tax base rate from 22 to 20p while also abandoning our earlier plan for a 50p top rate. Raising personal allowances would also allow us to take 2 million workers out of income tax altogether. We would also raise allowances for middle income earners who have been dragged into the top rate. We would pay for our package of tax cuts by raising environmental taxes and by higher taxes on the very wealthy. But we recognise the importance of work incentives and profit making.

Our approach to business tax is to make it simpler, to strip out a lot of the complex reliefs and hand the money back to business in lower corporation tax rates.

Second, there is now general acceptance that this government has allowed red tape to get out of control. The target set by the Treasury in this year’s budget to cut the burden of Revenue and Customs forms by 10% by 2011 is a clear admission by the Chancellor that reform is needed.

But 2% a year is hardly ambitious. Why wait until 2011?

Let me make some suggestions about how to cut regulation.

First, abolish the DTI. It does not add value but complicates the picture. We have seen recently that schemes like the Small Business Support help few companies and increase cost in bureaucratic overheads.

Second, Independent Impact Assessment of new regulation to force Ministers and Bureaucrats to look at the implications of their decisions. Existing Regulatory Impact Assessments (RIAs) are performed inconsistently and usually by the department that is implementing the regulation. These should be performed by a new independent body, to give an objective view to Parliament.

Third, new business rules – such as changes to the Small Firms Loans Guarantee Scheme, or to work permit rules – should be reviewed after two years to assess their effectiveness and to examine any unintended consequences. The RIA board would be able to recommend repeal if necessary.

Fourth, sunset clauses should be standard, with different lifetimes set depending on the nature of the regulation.

Fifth, EU and national processes need to be streamlined EU directives are a major source of unwanted complexity in business regulation, especially when translated and gold-plated by UK civil servants.

Europe may be the source of some irritation for business, but the positive effects of the European Union and the single market are substantial.

Enlargement has been a major economic success. Of course, Europe needs to liberalise, and there are sectors like energy and agriculture where the EU remains shockingly protectionist.

I lead a pro-European party. But we are hard-headed about our commitment and voted against the recent budget deal because the Prime Minister failed to deliver on his negotiating objectives: to secure reform.

Market based reform is essential.

In this, business – as a truly European constituency, has a crucial role to play. I fully support the initiative of Martin Sorrell and Michael Rake in setting up Business for New Europe.

The EU will have a key role to play in another area crucial to the future direction of the British economy: environmental policy as through emissions targets under the European Emissions Trading Scheme. The requirement to cut our carbon emissions significantly will shape the growth of the economy in future.

But rather than waiting for targets to bite, we need to imagine what a low carbon economy looks like and start taking decisions to move the economy in that direction.

A low-carbon economy is both an opportunity and a challenge. Properly handled, it can offer both greater security of supply and competitive costs.

The move towards green technologies heralds the possibility of several new emerging markets. Britain should be ahead of the curve.

It is encouraging to see thirteen major companies arguing the case for lower emissions targets in order to boost innovation as they did last week.

We see no justification however for the Prime Minister’s strong enthusiasm for a new generation of nuclear power stations. The Cabinet Office in 2003 produced a review endorsed by the Prime Minister at the time outlining a non-nuclear strategy. Liberal Democrats share that vision. Our policies would deliver energy security through investing in renewables, energy efficiency, micro-generation and carbon capture technologies, without the need for new nuclear power.

Significant questions remain unanswered about the commercial viability of a new generation of power stations and about the management of the financial and environmental risks.

No private company will invest in nuclear power without massive public subsidies or a rigging of the market.

No sensible government should guarantee to meet unknown decommissioning costs when the present generation of nuclear power stations may cost up to £90 billion to clean-up. But the alternative is equally damaging: business would pay a heavy price in a rigged market that passed these costs on to energy consumers.

Investment in nuclear will discourage investment in other technologies that could supply capacity.

There is little doubt in my mind that a decision to ‘go nuclear’ will crowd out investment in renewable energy sources to the detriment of the country and the renewables industry.

In his rush for a legacy the Prime Minister is in danger of hanging several mill-stones around the neck of the British economy. Nuclear power is one, timidity on pensions reform is another.

Of the five tests set by John Hutton for “a pensions settlement for the 21st century”, only one is likely to be fully met.

Their proposals do not promote fairness in the system – unless there is a dramatic increase in the number of people entitled to receive a full state pension the indexing of pensions from 2012 will only benefit the wealthiest pensioners.

Their proposals do not radically simplify the system – means testing will be extended over the next 6 years consolidating greater complexity in the system. The continuation of the contributory principle for the state pension will only maintain the high level of complexity in the system, making pension entitlement in each year very unclear.

Their proposals do not do enough to promote personal responsibility- means testing will not be reduced- and the system will continue to act as a disincentive to save for many. The plans put forward by Labour are not sustainable and fail to deliver a settlement for the 21st century.

A decent Citizen’s Pension means that we could move away from mass means-testing of pensioners, and make sure that every pensioner gets their full entitlement. Scrapping mass means-testing will create much more simplicity and transparency for people planning for their retirement.

Basing the pension on residency and not contributions would be simpler and would extend coverage, especially to women.

Equally, with a stable Citizen’s Pension as a base, employers should find it easier to determine an affordable and sustainable approach to their own occupational pensions schemes.

We want to see as many people as possible with an additional, personal pension, which is not controlled by the state.

We support the use of the power of inertia to boost pensions, by requiring all employees ultimately to be opted into a pension, which they would be able to opt out of.

And public sector pension schemes must be put on a fair and sound footing not given an unfair advantage over private sector.

New Labour has had mixed success managing the economy but for the sake of competitiveness and efficiency, we now need a breath a fresh of air.

A return to liberal principle of fair competition in the economy, without unnecessary government interference, but also without government bail-outs,

In short, a return to liberal common sense.