Is the recession over? Is austerity finished?

There’s actually a very quick answer to these questions NO and NO. I am, however, a politician so let me elaborate,

This Country has been in a financial state which was as bad as that which pertained at the end of World War 2. In my view this financial crisis was not just a product of an international problem as members of the Labour Party claim Although that is part of the truth. London is one of the three big financial centres in the world. The problems caused by the bankers were mostly created here and in New York where masculine, testosterone charged Anglo Saxon barrow boy behaviour ran riot. Why? Because the Bush and Blair governments thought that this was good and that this faux wealth created would trickle down to ordinary people.

Absolute rubbish and this is not said with hindsight because Vince Cable warned about what as going wrong. Three months before Northern Rock went belly up Vince was described as Dr Doom by a Liverpool MP who was then Economic secretary to the Treasury. Step forward the far seeing and deeply knowledgeable Ms Eagle!!

Of all the complaints we can make about the last Government – and there are many – the one we should condemn them for most is the drop in manufacturing’s share of GDP. In the 13 years of the labour Government manufacturing dropped from 26 to 16% of GDP. Services alone will not sustain us. That is why the Government has put so much emphasis on improving manufacturing particularly in engineering products like cars.

So in the UK we had a triple lock of debt. The Labour government increased spending to a level where 50% of GDP was public sector. A level higher than any party had ever tried before and no country had achieved it outside Scandinavian countries where there are taxes to match. But it was not only the public sector which borrowed. The private sector was subjected to leveraged buy outs where cowboys borrowed money then paid themselves back by loading the debt on otherwise viable businesses. We all borrowed too much as individuals also went into massive debt. We owe more than £1.5 trillion.

So against that any government will have had to act and reduce public spending. The Government has actually set itself a modest target. When the current round of cuts is complete public spending will still be at the same level as the Labour government had in 2006/7 before they went into a reckless financial expansion. But it has been very difficult to achieve given the triple levels of debt. What Labour want us to forget is that in their last medium term financial forecast as a Government they proposed cuts of £7 for every £8 that this government has taken out.

Last week I listened to the dialogue of the deaf between our Mayor and the Prime minister. Neither admitted the truth about the difficulties that the other still faced in dealing with extreme financial pressures. Our Mayor in particular has gone from brown nosing to public loathing of Tories in two easy stages in just 2 years.

What we need now is far more honesty in the debate from all sides. Liverpool has been unfairly treated by the Government, not by itself but in common with many other urban areas. But under a Labour Government this city would still have faced major cuts. Governments can only cut spending where it is spending. It spends more in Liverpool because it needs to because of the social problems that it faces.

If there was true dialogue between Central and local government – between Dave and Joe the case could be made and listened to that Liverpool is a major wealth creator but that wealth is not kept here. It powers the whole of the Merseyside economy and makes a major contribution to the economy of the North West. We need to be far more assertive about the potential of the city region, of the competitive advantages of our location, workforce, universities and businesses. Liverpool is not an albatross around the neck of the UK but it can lead the way in developing our exports and foreign based service trades. It will not achieve that status if we regress to whinge city.

From 1998 Liberal democrats changed the perception of the city from ‘Boys from the black stuff’ to capital of culture. From a city that no-one wanted to visit to one of the most popular cities in Europe to visit for short breaks and conferences. We must ensure that our city is seen as one where the glass is half full and is a city of opportunity. We must raise the undoubted problems faced by many of our citizens in a way that shows that helping them makes them part of a solution. They want to work – they have the skills to work but we need to be positive if we are to create the job opportunities that they need.

Joe and Dave can you not start again? Don’t hurl abuse at each other with megaphone diplomacy in the local media. Lock yourself in a dark quiet room and share positive thoughts about taking this city and cities like it out of the period of austerity which is finally reaching not the end nor even the beginning of the end but perhaps it has reached the end of the beginning.

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About richardkemp

Leader of the Liberal Democrats in Liverpool. . Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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