Rochdale Liberal Democrats

"I am delighted at Edward's re-election. He has proved a passionate, determined and highly effective campaigner for human rights and democracy.

"As the British Foreign Minister responsible for human rights and a fellow Liberal Democrat, I am greatly looking forward to working with Edward to pursue this agenda, which is so central to the enlightened interests of the UK and Europe as a whole.

"With the Arab Spring continuing and tentative steps towards political reforms in Burma, the presence of strong and credible voices, fighting for human rights and democracy at home and abroad, is absolutely essential.

"I am convinced Edward is the right man to help ensure that we maximise the collective weight of the European Union in defending and promoting human rights and democracy."

"Liberal Democrats in the Coalition Government are committed to delivering a tax system which is fair and progressive for everyone, why should working people who are not married pay more tax?

"Our commitment to increasing the income tax threshold to £10,000 has already resulted in an extra £200 in take home pay for millions of workers last year, with an additional £130 coming this April.

"Tax breaks for married couples would only help 4 million couples to the tune of around £150 year.

"This year, thanks to the Liberal Democrats, over 1 million people will have been lifted out of paying any income tax, rising to 4 million by 2015.

"Giving low earners a tax cut is exactly the kind of policy the Coalition Government should and is prioritising at a time when money is tight and people are feeling the pinch."

Nick Clegg champions Youth Contract

Thousands of companies received a letter this week from the Deputy Prime Minister Nick Clegg calling on them to play their part in getting young people earning or learning.

Nick is urging businesses to sign up to the government's flagship £1bn Youth Contract so that they are ready to offer the jobs to young people in April. He announced details of how employers can access cash to help cover the cost of taking on fresh talent through a 'wage subsidy'. The subsidy will be paid to companies for taking on young unemployed people and is designed to cover costs like National Insurance contributions.

The wage subsidy will pay £2,275 to employers for every 18 - 24 year old unemployed person they employ from the Work Programme and is open to all businesses, voluntary organisations and charities.

Payments for the majority of business will be made after the young person has been employed for 26 weeks. For smaller enterprises these payments will be staggered, with the first payment after eight weeks and the rest after 26. This recognises that smaller businesses need a boost to their cashflow to make the jobs viable.

The wage incentive will also be available for part time positions, with a rate of £1,137.50 if someone is employed between 16 and 29 hours.

"Getting young people earning or learning is my top priority, and that's what the Youth Contract is going to do," said Nick. "This is a long-term boost to help businesses get young people into jobs before long-term damage is done. Employers have a huge part to play in this and the subsidy we're announcing benefits business and young people.

"I have written to thousands of employers of all sizes - from global corporations to small local firms - calling on them to look at what we're offering through the Youth Contract and sign up to offer jobs from April. This is a significant moment and a call to arms for businesses to offer long-term opportunities to young people who are out of work."

Senior Liberal Democrat MEP and Vice President of the Parliament's Budget Committee, George Lyon, who is pushing for the EU budget to be radically restructured and independently evaluated to find further savings, commented after the vote:

"At a time when people across the country struggle to make ends meet, it is important that MEPs show some leadership in keeping the Parliament's costs under control.

"Freezing allowances and travel expenses is a good start. But I believe that we can make many more savings. In order to ensure that taxpayers are getting maximum value for their money, we need to have an independent evaluation of the EU budget to get rid of any inefficiencies and waste.

"I am very pleased that once again MEPs have also voted to push for a single seat of the European Parliament. It is an outrage that Member States still insist that the House travels between Brussels and Strasbourg each month. MEPs are quite right in calling for an urgent evaluation of this situation."

Liberal Democrat MEPs have been on the forefront of the Single Seat Campaign which calls for the European Parliament to be permanently set up in Brussels. Liberal Democrat MEP and Vice President of the Parliament, Edward McMillan-Scott, who co-chairs the Single Seat Campaign and is launching an EU-wide public petition against its controversial 'travelling circus' added:

"The pollution, cost, inefficiency and remoteness of this travelling circus are indefensible. The 1.27 million people who signed up to the OneSeat petition in 2007, calling for the EP to be located only in Brussels, have been ignored by the EU. But Europe's public today cannot be ignored against a backdrop of economic crisis and pressing environmental concerns."

Commenting ahead of a vote on the 2013 EU budget guidelines in the European Parliament in Strasbourg tomorrow, Mr Lyon said:

"At this time of national austerity and budget consolidation, the EU budget needs to be shaken up and restructured to get rid of inefficiencies and waste.

"MEPs need to lead the way in identifying and making important savings. All MEP allowances should be frozen until 2014 and we must cap the travel budget at its present level. We must make our money travel further!

"It is also time we had an independent and thorough evaluation of the European Parliament's budget to make sure that it delivers value for money. For the time being, I want to see a freeze in administrative spending of all EU institutions."

The Lib Dem MEP went on to argue that a major saving within the European Parliament's budget would be the adoption of a single seat for the House in Brussels. He added:

"I urge all MEPs to vote for a cross-party amendment for a single seat of the European Parliament. We need to send a strong signal to Member States that it is time to end the travelling circus between Brussels and Strasbourg. It is down to national capitals that we are still spending around £180m a year on pointless trips between those two cities. This wasteful practice must end now."

The Staffordshire farmer and economic policy expert takes over from Liz Lynne who stood down from Parliament earlier in February after more than 12 years due to the extensive travelling required in the job. Phillip Bennion was elected to second place on the Lib Dem list of candidates at the last European elections in 2009.

Commenting on his new role, Phillip Bennion said:

"I am determined to fight for the vital interests of the whole of the West Midlands region in the European Union and for a more prosperous and democratic Europe. From the shire counties to the manufacturing heart of the nation in Birmingham, this region's economic and environmental future will be shaped by our relationship with the EU.

"Literally hundreds of thousands of local jobs depend on it, so I will do my best to make sure we punch our weight in the corridors of power, whether in Brussels or London.

"I have always been pro-European. I am a strong supporter of a more liberal and democratic EU that concentrates on what it should be doing as simply and efficiently as possible. We are stronger together and would be much poorer apart.

"In our inter-connected world, the financial crisis in all western nations shows that we cannot bury our heads in the sand. If we listen to the siren sceptic voices we will be sleepwalking to disaster.

"Every European country is vulnerable to economic and environmental challenges which individual governments cannot control. Britain cannot tackle these challenges alone but must forge strong alliances with our neighbours. We have to be a strong voice for reform with a seat at the top table.

"I will use my experience as a farmer and independent businessman to work for EU rules that enable European businesses to take on the competition from Brazil, Russia, India and China (the BRICS) and other developing nations. Pointless red tape has to go and pro-active action taken to stimulate investment, trade and new jobs.

"I am committed to doing all that I can to further food, energy and material security in the long term in a way that conserves biodiversity and addresses climate change.

"Liz Lynne did a tremendous job as our MEP. Following her is a huge challenge but I am looking forward to getting to work."

The leader of the Liberal Democrat delegation in the European Parliament, Fiona Hall MEP said:

"Phillip Bennion has been a very active Lib Dem member and campaigner in the West Midlands over many years. He not only knows the region very well, but also has first hand experience of working at a European level through his involvement with the European Liberal Democrat Party (ELDR) and as chair of the Liberal Democrat European Group (LDEG).

"With his background as a councillor, farmer and businessman, I am sure that he will be a valuable addition to the Liberal Democrat team in the European Parliament and we are looking forward to working with him."

Confident Ed stands firm

Strongly backed by Nick Clegg, newly appointed Secretary of State for Energy and Climate Change, Ed Davey was quick to make his mark in his new role when he confirmed his personal commitment to green growth, green jobs and the wider use of wind power technology. "I think that onshore and offshore wind power has a real place in a balanced mix of energy generation so I'm a huge supporter of renewables" he said.

100 Tory back-benchers have tabled a motion calling for a dramatic cut in subsidies for onshore wind farms but Ed is very clear where he stands. "Already we've seen through the subsidies that this government has invested in onshore wind that the price has come down to make onshore more competitive, so we've got money in all sorts of renewables because of the success of these investments.

"There may have been a change at the helm, but there'll be no change in direction or ambition. My priorities are very simple: green jobs, green growth and getting the best deal for energy bill payers."Ed and Nick Clegg were visiting the Building Research Establishment's Innovation Park near Watford, a testing site for green homes, where they met graduates considering moving into green construction jobs. Nick Clegg told them "The race is on to lead the world in clean, green energy. The savviest states understand that going for growth means going green. Low-carbon markets are the next frontier in the battle for global pre-eminence.

"We have every reason to be confident. The combination of enviable wind, wave and tidal power, a world-beating research base and a proud history of engineering give the UK a clear competitive edge. So we're already in pole position. But the reality is: we need to sharpen our elbows if we want to stay ahead." Ed Davey also announced that 155 community energy projects across the country have won a share of £5.1 million of funding from the Local Energy Assessment Fund. The winning bids include projects to demonstrate wall insulation to the public, schemes to check the energy efficiency of homes and events to promote energy efficiency in local communities.

While Ed was getting to grips with his new job, Norfolk North's Liberal Democrat MP Norman Lamb was taking up his new appointment as Minister for Employment Relations, Consumer and Postal Affairs in the Department of Business Innovation and Skills. Welcoming him Secretary of State Vince Cable said "Norman's professional background as an employment lawyer and experience as the Liberal Democrat's Trade and Industry Spokesman make him an ideal replacement. He pioneered our policy to privatise Royal Mail and establish employee share ownership in the business so it is fitting that he will be responsible for implementing that policy."

Norman, who was previously chief political adviser to Nick Clegg, expressed himself particularly delighted to be implementing the Post Office reforms he had pioneered in opposition. These would give employees a stake in the company.

Two other new appointments were announced in the mini-reshuffle. Cardiff Central MP Jenny Willott becomes an Assistant Government Whip and Dunbartonshire East's MP Jo Swinson becomes PPS to Nick Clegg.

Commenting on the ongoing crisis where Italy, Romania, Bulgaria, Greece, Turkey and Germany have experienced reductions of up to 30% in Russian gas supplies from Gazprom over the last few days, Sir Graham said:

"The freezing conditions across Europe highlight yet again the dangers of being so overly-reliant on Russia for a quarter of our gas. Gazprom has - understandably - diverted its supplies to keep Russian homes warm, leaving many European countries short and prices on the rise."

"And we just don't know what Gazprom will do next."

"But the wind is blowing harder than ever in the Scottish Hebrides and it is 15 C and sunny in southern Spain and Greece. If, instead of building gas pipelines, we were building electricity transmission infrastructure and switching from fossil fuels to wind and solar power, this week's energy outlook would be a different story. European renewables are the answer to our energy security."

"Indeed, the sun is also shining bright as ever in the Sahara. Importing electricity from North Africa would in fact be more secure than Russian gas, due to the larger number of potential trading partners and the fact that electricity cannot be switched off like gas. Electricity is the ultimate 'just in time' product: that which is not transmitted today is lost forever."

"The sheer hypocrisy of Labour to point the finger on bankers' bonuses is staggering. Labour presided over the biggest boom in bonuses this country has seen, from £3.1bn in 2001 to £11.5 billion in 2007. At the same time, they sat back and knighted the financial speculators who led this country to the brink of economic collapse.

"The Coalition Government inherited this economic mess from Labour and has taken decisive action to put the country back on track. We've capped cash bonuses at state owned banks to £2,000 and overall, the bonus pool is smaller than last year and considerably less than under Labour.

"In Government, Liberal Democrats are doing the right thing - implementing the Vickers' proposals to make banking safer in the future, continuing our fight to get the banks to lend more and introducing the banking levy which raises £2.5bn a year. All Labour can do is complain from the side lines.

"While Labour spent thirteen years being intensely relaxed about people getting filthy rich, Liberal Democrats have made clear that our priority is lifting the lowest paid people out of paying income tax all together."

"Promoting cycling and green transport is the right thing to do and I am delighted Liberal Democrats in the Coalition Government are taking action.

"This comes at a crucial time. Just five days ago The Times launched a cycle campaign in response to the shocking increase in fatalities among cyclists on our roads.

"It is absolutely essential people should be able to walk to work or cycle to school in a safe environment. The extra £8m for Sustrans will go a long way to achieving this.

"And the £7m for improved rail-cycle links will ensure that we continue to build a transport network which puts passengers first."

Clegg calls time on unfair tax system

At the Institute for Government last Friday, the Deputy Prime Minister gave a major speech on tax and supporting working families.

"The tax system," said Nick Clegg, "should be designed to reward effort, enterprise and innovation... and bear down on those things which are bad for our society.
"Attitudes to tax are a good proxy for our deepest political instincts and the three major political traditions in the UK - conservatism, socialism and liberalism - have very distinct approaches."

"The liberal approach, put most simply, is based on a profound commitment to the value of paid work. Citizens are empowered when they can keep the fruits of their own labour. And fiscal liberalism supports taxes on unearned wealth... precisely to lighten taxes on the incomes of hardworking people.

"So the Coalition is calling time on our unfair and out-of-whack tax system.
We've put up Capital Gains Tax; we've reduced tax breaks on pension funds for the very rich; we've clamped down on avoidance - the steps taken already will raise an extra £7bn every year by the end of this parliament. And our priority in government - from the front cover of the Lib Dem manifesto to the pages of the Coalition Agreement - is freeing the lowest-paid from income tax altogether... and cutting income tax for millions of ordinary workers.

"Whether you call them the 'squeezed middle', 'hard-working families', or, as I have, 'alarm clock Britain'… it's the people who whose incomes are too high to qualify for welfare benefits but too low to provide any real financial security who need this extra help. Over the last few decades wage rises have outpaced the increase in the allowance... so that more people have been sucked into the income tax net.

"At the last election my party promised to raise the personal allowance for ordinary taxpayers to £10,000 and I am extremely proud that the Coalition has committed to doing so over the course of this Parliament. I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance.
Because the pressure on family finances is reaching boiling point … these families cannot be made to wait.

"Delivering the £10,000 personal allowance more quickly will need to be fully funded. But to those who say: we cannot afford to do this. I say: we cannot afford not to do this.

"It is often said that to govern is to choose... and, in particular, to choose whose side you are on. That is especially true when there is no money around. My choice - the Liberal Democrat's choice - is clear: I want to help hard-pressed and hardworking families. If that means asking more from those at the top - so be it.

"We are committed to eliminating the deficit... and eliminate it we will. But I am determined that we do so in a way that is fair...that rebalances our economy...that gives the right people the right rewards.
"People look to the Liberal Democrats to keep this Coalition anchored in the centre ground. They want economic competence, but they want compassion too.
It is our job to make sure this government delivers both."

The ASA ruled that the image used in an advertisement for L'Oréal Paris' Revitalift Repair 10 was altered to change Rachel Weisz's complexion, making it appear smoother and more even. It was judged to be in breach of industry code and "misleadingly exaggerated" the performance of the product.

The advertisement has been banned in its current form and the ASA has warned L'Oréal not to use digital retouching to misrepresent the effect of their products.

Commenting, Jo Swinson said:

"The beauty and advertising industries need to stop ripping off consumers with dishonest images.

"The banning of this advert, along with the previous ASA rulings banning heavily retouched ads featuring Twiggy, Julia Roberts and Christy Turlington, should act as a wake-up call. Thankfully the advertising regulator has again acknowledged the fraudulent nature of excessive retouching.

"The Royal College of Psychiatrists has spoken out about the harmful influence of the media on body image and has highlighted the airbrushing and digital enhancement used to portray physical perfection as an area of concern.

"There needs to be much more diversity in advertising - different skin colours, body shapes, sizes and ages. Studies show that people want to see more authenticity from brands. Images can be aspirational without being faked.

"The Campaign for Body Confidence challenges the narrow ideal of beauty perpetuated by the media and other industries. Tonight the All Party Parliamentary Group on Body Image is hosting a screening of the documentary Miss Representation which explores the impact on society of such an intense focus on women's appearance, instead of their achievements.

"The film shows how media misrepresentation and under representation of women results in a leadership gap and the silencing of difference."

"In 2010 there were 1,850 deaths and more than 200,000 injuries on our roads. That's some 600 every day. With mechanical failure already contributing to a significant number of these, the Coalition Government has made the right decision to keep frequent MOT-tests.

"This will also see the system strengthened through a combination of open public data and stronger regulation.

"Liberal Democrats strongly believe road safety should be central to the Coalition Government's transport strategy. I look forward to working with the Secretary of State to further this agenda."

"Today's figures show that on the whole young people have not been put off by the changes in the student finance system.

"This is due in no small part to the serious effort put in by the Coalition Government and many others in making sure that each young person and their parents knew all the facts about funding higher education.

"In particular, many families clearly now understand that all graduates will pay less each month towards the cost of their university education than they did before.

"There has been a larger drop in the number of older students applying to university. The Government will have to take a serious look at why this has happened, particularly as part-time students for the first time also do not have to pay for their university education in advance.

"However, because mature students have more flexibility in when they apply, there are still good opportunities for people looking to start university this year to put in an application."

More power for Scotland

The Secretary of State for Scotland, Michael Moore, is determined to move Scotland forward towards greater devolution. As well as delivering the Scotland Bill, he is paving the way towards Home Rule.

In an interview with Liberal Democrat News he said: "These are exciting times for Liberal Democrats. We are leading the charge. The central issue at the moment is the independence referendum, which was in the SNP manifesto at their victory last May. We are clear, however, that they do not have the legal powers necessary [to instigate independence]. We are looking carefully as to how that referendum takes place. My job is to work with the Scottish Government to make sure we can devolve powers that are legal, fair and decisive.

"The referendum must be overseen by the Electoral Commission. On timing, we believe that a referendum needs to take place as soon as possible, as the uncertainty is extremely unhelpful to business."

Combining questions on a ballot paper is complex, and devolution is a separate issue to independence. So, while the Secretary of State is consulting the Scottish people on this, the Coalition government's view is that there should be a simple, straightforward, 'yes-no' question on independence.

"The suggestion of a third option, 'Devo-max' question would not resolve the issue and may well end up in the courts," explained Michael. "For instance, 55 per cent of the people could vote for full independence and 75 per cent plus vote for Devo-max. Alex Salmond believes if that was the result, then full independence would carry the day. Most democratic people would strongly disagree."

"This party has always been in the forefront of the debate for Home Rule," continued Michael. "The Liberal Democrats in the Coalition are delivering greater powers in the Scotland Bill. But the Liberal Democrats are not stopping there. Willie Rennie has asked Ming Campbell to set up a Commission to look at what powers Scotland should have within the UK. This would be similar to the Constitutional Convention, the Scottish Parliament and the Calman legislation for the Scotland Bill. In that way you get common ground and consensus before legislation."

There are a number of important questions the SNP has left unanswered: What regulation would be applied to Scottish banks and who would enforce it? Would they be prepared to buy out the UK Government's stake in RBS? Which currency would Scotland adopt? What would happen to Scottish membership of international organisations (including the EU), our armed forces, pension liabilities? What are the bottom line costs of independence?

As Nick Clegg said last Sunday on BBC's The Andrew Marr Show, "You would have thought for a party whose sole purpose in life is to advocate independence, they [the SNP] would have been able to provide answers about what it means for defence, for taxation, for investment, the currency, and that's what I think we should focus on."

Today I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance.

Because the pressure on family finances is reaching boiling point.

Yesterday's GDP figures remind us that the road to the UK's economic recovery will be long and progress will be uneven.

Those GDP figures remind us that we cannot simply ride out these troubles.
Waiting for the good times to roll around again, nor can we return to business as usual.

The financial crash and the recession that followed were unprecedented, and they were global. But the UK's weakness in the face of those events was a damning indictment of the way our economy had been run.
An economy that became closed, elitist, driven by vested interests. Where we prized recklessness and short-term gains, and undervalued stability and hard work.

So picking ourselves up for good means fundamental reform. Hitting the reset button to ensure that not only does prosperity return, but, this time, it's properly shared and really lasts.

The first part of that is clearly deficit reduction.
Filling the black hole; wiping the slate clean;
Preventing years of higher interest rates and fewer jobs;
Ensuring that the next generation does not pay for this generation's mistakes;
Creating the sound public finances, the macroeconomic stability that we know is a prerequisite for lasting growth.

But, beyond that, we must also rebalance our economy: ending our overreliance on financial services and the South East;
Shifting from consumption to investment;
From debt-driven bubbles to sustainable growth.

And there is another element of rebalancing.
Rebalancing our tax and benefits system, because both need to be rebuilt with work at their heart, restoring some sense to the assistance and rewards the state provides.

We cannot pin all our hopes on the traders or the bankers. It will be the millions of hardworking Britons who deliver the nation from these difficult times. So we must now make the most of all of our human capital. And we must help struggling families stand on their own two feet. That means a benefits system that gets more people into work and a tax system that ensures work pays.

Today I want to say a word on each.

First, benefits.

I have always believed in a welfare system that helps those in need - those who cannot work must be protected. And those who have jobs must be confident that, should they lose them, there is a safety net in place.

That is precisely why, in the Autumn Statement last year the Coalition committed to the full uprating for pensions and out-of-work benefits from April - 5.2%, in line with inflation. Not everyone agreed that "the unemployed" should receive the full uplift, certainly not in the current climate. And, if you believed everything you read, you would think that these benefits are, essentially, unlimited handouts for the 'idle poor'.
But that just shows what is so often wrong with this debate.

For one thing, for decades now benefits have been uprated in line with prices while earnings have generally increased at a faster rate. So the value of benefits such as Jobseekers Allowance have actually shrunk over the years compared with the incomes of those in work.

But, even more importantly, abuse of the benefits system by a minority has obscured the needs of a deserving majority.
The older people who have contributed to our society for their whole lives.
Those who cannot work due to disability or serious illness.
And - the group most often forgotten - working people who have been laid off, through no fault of their own. And, most often, for short periods of time.

Yes, sometimes the system is exploited - and that cannot be accepted.
But the majority of people who claim JSA are off benefits within three months.
People who pay their taxes, support their families, but are temporarily down on their luck. So we need a benefits system that helps those who can work into work.

And it is that simple principle that drives the Coalition's welfare reforms. From the Universal Credit, to the benefits cap, to the Work Programme and the Youth Contract.

While the economy was booming. We saw four and a half million people stuck on out-of-work benefits.

The number of young and unemployed hardly changed. There are now 2.6m people on incapacity benefits. 900,000 of them have been parked there for 10 years or more. And where children grow up in homes where no one works they are twice as likely to experience long spells of unemployment themselves.

It isn't right; the country can't afford it. The Coalition is determined to see it change.

Nearly 70 years ago, when William Beveridge designed the welfare state he imagined a system that would give people protection from cradle to grave. Not one that would act as a crutch every day in between. The state must offer security in hard times.
But it should not, he warned, 'stifle incentive, opportunity, responsibility'.
In the words of another great liberal, John Stuart Mill, 'assistance should be a tonic - not a sedative'. I couldn't agree more.

Tax - the different traditions

And it is those same values, that same belief in the potential of ordinary men and women to flourish that needs to be instilled in our tax system too.

My philosophy on tax is simple: The system should reward effort, enterprise and innovation and bear down on those things which are bad for our society.

That sounds like a proposition with which most people would agree. But attitudes to tax are a good proxy for our deepest political instincts. And the three major political traditions in the UK - conservatism, socialism and liberalism - have very distinct approaches.

For those on the philosophical right, taxes are necessary but there is an understandable fear that tax-done-badly can threaten entrepreneurialism and business, strengthening the hand of an intrusive state. That wariness means the right can be less inclined to promote tax as a way of redistributing wealth and opportunity, putting less of an emphasis on using the tax system to tackle inequality, for example, between those who earn their income and those who are asset rich.

For the traditional left, on the other hand, taxes are the principal means of redistribution. Socialists will support a penal rate of tax on the highest earners, simply because it makes them poorer.

For them, tax is a badge of socialist success: the more, the better. They would rather draw money in through the state and then hand it back to people rather than letting them keep more of their earnings in the first place.

The liberal approach, put most simply, is based on a profound commitment to the value of paid work.

Citizens are empowered when they can keep the fruits of their own labour. As Gladstone said, it is better for money to 'fructify in the pockets' of the people who earn it, rather than in the Treasury and fiscal liberalism supports taxes on unearned wealth, precisely to lighten taxes on the wages of the hardworking.

A simple choice

Those principles could not be more important today. Because, in developed economies around the world, in every country now seeking to get back on the right path, where money is scarce, where every day families are tightening their belts, the biggest question we face is this: how is that burden shared?

That's why, this week, we heard President Obama devote his State of the Union Address to greater fairness in the American tax system. It's why tales of tax avoidance are filling our newspapers everyday. And every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?

I know which side of the line I stand on: The UK's tax system cannot go on like this.
With those at the top claiming the reliefs, enjoying the allowances, hiring other people to find the loopholes, while everyone else pays through the nose.

So the Coalition is calling time on our unfair and out-of-whack tax system.

We've put up Capital Gains Tax - Ending the scandal, under Labour, of a hedge fund manager paying less on their shares than their cleaner paid on their wages.

We've reduced tax breaks on pension funds for the very rich.

We've clamped down on avoidance and taken steps to raise an extra £7bn through closing the tax gap.

And our priority in Government, from the front cover of the Liberal Democrat manifesto to the pages of the Coalition agreement, is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers.
Raising the personal threshold to help the squeezed middle

Over recent weeks you will have heard a great deal about fairness at the top, through Vince Cables' reforms to curb excessive executive pay.

You will have heard a great deal about fairness at the bottom, through reform of our welfare system to ensure benefits are fair and reasonable, and to get more claimants into work.

This is about fairness in the middle. More money in the pockets of the people who need it.

Whether you call them the 'squeezed middle', 'hard-working families', or, as I have, 'alarm clock Britain', cutting income tax is one of the most direct tools we have to ease the burden on low and middle earners. The people whose incomes are too high to qualify for welfare benefits, but too low to provide any real financial security. The group whose plight the Resolution Foundation has done so much to highlight.

The working mum whose bills keep rising but whose wages do not.

The father kept awake in the dead of the night, worried tomorrow the company will be laying people off.

The young couple who used to look forward to the holiday they would book or the car they would buy, but who now know that if the boiler breaks or the washing machine packs up, the money just isn't there.

Go back 50 years or so and many more working people were exempt from income tax thanks to a more generous tax-free threshold. But over the last few decades wage rises have outpaced the increase in the allowance. Sucking more and more people into the income tax net. And, while in the early 70s, the Personal Allowance was worth around 28% of average earnings. By 2010 that had dropped to around 20%.

At the last election my party promised to raise the personal allowance to £10,000 for ordinary taxpayers. And I am extremely proud that the Coalition is on track to do so over the course of this Parliament. We'll make sure that anyone earning £10,000 or less will pay no income tax at all and for those on middle incomes, the first £10,000 they earn will be tax free.

For millions of basic rate taxpayers - ordinary, hardworking people - that means paying £700 less in income tax each year, around £60 a month.

In the 2010 Budget we increased the tax allowance from £6,475 to £7,475. This year we have already announced a planned rise of an additional £630 - meaning that a total of 1.1 million more people will no longer pay income tax at all.

But today I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000. Because, bluntly, the pressure on family finances is reaching boiling point.

Compared to those at the top, these families have seen their earnings in decline for a decade and that's got worse since 2008, with lower real wages and fewer hours at work.

Ongoing consolidation in the UK public finances has meant necessary increases in taxation, reductions in spending, restrictions on public sector pay, and higher contributions on pensions.

Last year brought much higher world inflation, some food prices have doubled, some energy prices have gone up by 50%.

And, yes, we are now seeing some moderation in inflation.

But, in just three years, real household disposable incomes have fallen by some 5 per cent, one of the biggest squeezes since the 1950s, since the records began. These families cannot be made to wait.

Household budgets are approaching a state of emergency. And the Government needs a rapid response.

Delivering the £10,000 personal allowance more quickly will need to be fully funded. We cannot just cut taxes by raising borrowing - that is just extra taxation deferred. And it would undermine our success in restoring stability and credibility to the public finances. So we need to find the money. And that will not be easy, of course.

But to those who say: we cannot afford to do this. I say: we cannot afford not to do this. And it is because of the pressure our economy is under that there is now an urgent need to give families more help; an urgent need to rebalance our tax system so it rewards work and encourages ordinary people to drive growth. And that means those who are better off paying their fair share.

In its recent excellent report Divided We Stand, the OECD noted how the incomes of the richest 1 per cent have soared away from everyone else over the last 20 years and showed that these people could be making a bigger tax contribution.

They also made clear that the right way to do this is not to increase marginal tax rates on work any further. This would simply drive many of the rich away to other countries. Or encourage them to use tax avoidance mechanisms more aggressively.
Instead, they suggest, governments need to look at tackling industrial-scale tax avoidance.

As well as at the allowances and reliefs which favour those on very high incomes that is how we can raise the average taxes paid by the very rich, without any further rise in marginal rates.

To that end the Coalition set up the Aaronson Review to look at a General Anti-Avoidance Rule on tax so that the tax industry cannot spend all its time creating ever more contrived schemes, undermining the principles and intentions of the system.

There are a range of other, specific areas where we need to be tough too, not least stamp duty avoidance, particularly on higher end property sales and the transferring of assets and income abroad to avoid UK tax.

We need to look at what more can be done to "green" the tax system. Not just because we care about the planet we leave our children - although that would be reason enough. But because, when the decision is between taxing pollution or taxing hard-graft, the right impulse is obvious.

And, there is another big part of the tax system where I believe we need to be much more ambitious: Serious, unearned wealth.

The eye wateringly lucrative assets so often hoarded at the top. We still live in a society where, for so many people. How much you earn can never compete with how much others own. Our tax system entrenches that divide. And we need to be bold enough to shift the burden right up to the top.

I know the Mansion Tax is controversial, but who honestly believes it is right that an oligarch pays just double the Council Tax of an average homeowner even if their house is worth one hundred times as much?

And who seriously thinks we would kill aspiration through a levy on the 0.1% of the population who own £2 million pound homes? The Mansion Tax is right, it makes sense and the Liberal Democrats will continue to make the case for it. We're going to stick to our guns.

So, to finish as I began: we are living in tough times. And many families are feeling the pinch. We need more of those who can work in work, and real rewards and incentives for those who are.

It is often said that to govern is to choose and, in particular, to choose whose side you are on. That is especially true when there is no money around. My choice - the Liberal Democrat's choice - is clear:

I want to help the hard-pressed and the hardworking. If that means asking more from those at the top - so be it.

We are committed to eliminating the deficit, and eliminate it we will. But I am determined that we do so in a way that is fair.

That rebalances our economy.

That gives the right people their dues.

People look to the Liberal Democrats to keep this Coalition anchored in the centre ground. They want economic competence, but they want compassion too.
It is our job to make sure this Government delivers both.


Thank you.

Between now and the Budget, Nick Clegg and the Liberal Democrats in Government will be arguing for faster tax cuts for hard-working families, promoting work and growth, and rewarding innovation, paid for by increasing the amount paid by the richest.

And the Liberal Democrats in Coalition are already making the difference:

• More than 800,000 working people no longer paying income tax
• 23 million working people have been given a £200 tax cut
• In April this year every worker will be given a further income tax cut of £130
• And by the local elections in May this year, 1.1 million of the lowest paid workers, will no longer be burdened by income tax

---

Imagine a mum who works 3 days a week as a teaching assistant - earning £10,000 a year or just over £190 a week. Under Labour she paid more than £1,000 in income tax and national insurance. Although she wanted to work more days a week she knew it was not financially worth it. Under Labour; once tax, tax credits and housing benefit has been deducted, for every extra pound she earned she was able to keep just 10.5p.
Under our plan she would see her income tax bill cut to zero making her £700 a year better off.

---

The Liberal Democrats are committed to delivering a fairer economy, turning our tax promise into cash in your pocket. It was on the front page of our manifesto and is being implemented because of Liberal Democrats in Government.

As part of this Coalition, Liberal Democrats are calling time on our unfair and out-of-whack tax system.

• We've clamped down on tax avoiders - targeting an extra £7bn every year
• We're taxing the banks by an extra £2.5bn every year
• We've stopped inheritance tax cuts for millionaires
• We've put up Capital Gains Tax
• We're ending the scandal, under Labour, of a hedge-fund manager paying less tax on their shares than their cleaner paid on their wages
• We've reduced tax breaks on pension funds for the super-rich
• We have retained the 50p rate
• And our overall priority is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers

You can read Nick's speech to the resolution Foundation here.

"Lord Patten gets the final word and with it he says what we've all been thinking.

"The BBC won't improve itself by stripping away some of its most valued work. Seven million people listen to BBC local radio across the UK and it is a lifeline for older people and the disabled.

"We can't expect easy solutions to the BBC's challenges but it should be possible to meet them without harming local radio and regional TV."

"This is very welcome news for both the Post Office and Royal Mail and demonstrates our commitment to ensure a sustainable future for both.

"Post Offices are a vital part of our communities and are the lynchpin of our towns and villages. More than 20m people visit a Post Office every week to send letters to loved ones, to manage their finances or to renew passports for holidays and hundreds of thousands of pensioners rely on them every day for their pensions.

"Labour left Royal Mail in a terrible mess and it is Liberal Democrats in the Coalition Government who have stopped closures and put Royal Mail and the Post Office on a secure footing. Our plans mean that we will never see the kind of planned closures that devastated local communities under the previous Government.

"Labour said our plans would lead to more closures as the Royal Mail moved away from using the Post Office network. Today's announcement proves that they were, once again, wrong."

"This announcement shows the Liberal Democrats' commitment to tackle out of control executive pay.

"Liberal Democrats have no problem with people being highly paid but there should not be rewards for failure.

"This problem can only be solved by companies and their shareholders. It's not government's role to micro-manage company pay but there are things we can do to address what is a clear market failure.

"With millions of people experiencing pay freezes and uncertainty about their jobs, the right thing to do is to shine a light on the murky world of executive pay and boardroom behaviour."

"Sharon is one of the most influential thinkers and legislators in Europe on financial services and the Eurozone crisis. Her re-election is good news for Europe and the UK.

"As party leader, I am proud that we have a leading Liberal Democrat in such a prominent and powerful position on the international scene. As UK Deputy Prime Minister, I am delighted and relieved to know that the EU financial services brief is in such expert hands.

"In the wake of the financial crisis, it is absolutely right that we undertake a complete overhaul of the rule book governing global finance and banking at the European, national and international level.

"Ministers and industry figures must now redouble our efforts to re-engage across Europe, pro-actively work with our partners to shape EU legislation that builds a more responsible, safe and successful banking sector, and deploy our financial expertise to help resolve the ongoing Eurozone crisis.

"I look forward to working with Sharon over the coming months in addressing these overwhelmingly important issues for the UK and Europe as a whole."

"Private members' bills are rarely passed, and it's even rarer that they do so with the unanimous support of every MP as happened today.

"The current system has had a deadening effect on the performance of live music in small venues. At the moment, the landlord of a small pub could face a big fine and imprisonment for letting a customer play a piano without a licence.

"The support received this afternoon from all MPs from all political parties just goes to show how important live music is in our country and the overwhelming support for changing our obstructive licensing laws.

"We're now only one step away from the Bill becoming law and creating an even more vibrant and successful live music culture. This will benefit hundreds of small pubs, restaurants, schools, churches and community halls, and strengthen the British music scene immensely."

A more liberal capitalism

In a major speech on the economy at the Mansion House on Monday, Nick Clegg set out a "liberal diagnosis of what's wrong; and then a liberal remedy."

The UK's capitalism is in crisis, Nick argued, because there is a crisis of power. "We now have an economy driven by immensely powerful vested interests that politicians have abjectly failed to stand up to. The remedy, put most simply, is a redistribution of power."

"It's easy to throw rhetorical rocks at directors, bankers and businesses. But, if we are honest, this is as much a failure of politicians and regulators, the authorities too often cowed by corporate power.

"There's nothing new about it. The agricultural landlords of the 19th Century and early 20th Century were happy for working people to pay more for their food because of protective tariffs. What Lloyd George in 1906 memorably called 'stomach taxes'. So long as their own profits were protected.

"For liberals - from Gladstone to Grimond - the role of the state has always been to break up unaccountable, opaque concentrations of power. To protect the national interest from those vested interests. That is why, as well as the moves the Coalition government is making to bring greater transparency to government contracting and lobbying, we need real reform of party funding to reduce the influence of those interests in politics. We need tougher border controls between the political class and the corporate world. And we also need a better distribution of power within our economy.

"In an open society, a liberal society, people don't just hold more power in politics, but in the economy too. And, over time, empowering workers can have a hugely transformative effect over corporate culture.

"Employee ownership has been a touchstone of liberal economic thought for a century and a half. Because we don't believe our problem is too much capitalism: we think it's that too few people have capital. We need more individuals to have a real stake in their firms - more of a John Lewis economy, if you like.

"Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better: lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages, they weathered the economic downturn better than other companies.

"Is employee ownership a panacea? No. Does it guarantee a company will thrive? Of course not. But the evidence and success stories cannot be ignored, and we have to tap this well if we are serious about growth. It won't happen at all without government taking a lead, so I am kickstarting a drive in government to get employee ownership into the bloodstream of the British economy.

"As the debate on a more responsible capitalism moves forward, Liberals will remain set on that goal: an end to crony capitalism, where vested interests trump the national interest; a better balance of power, in the economy - and between politics and business.

"That is the route to a safer, more stable, more prosperous economic future. This is how we will spread wealth and share rewards - a more responsible capitalism, a more liberal capitalism."

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To read more and subscribe to Liberal Democrat News, click here.

"I have been in the European Parliament twelve years and I think that is time enough. I have thoroughly enjoyed my time and it was truly a huge privilege; especially to serve as a Vice President of Parliament for the last five years. However, I think all of us, whatever our professions, need to turn a new page from time to time.

"At the mid-term of parliament many members come and go, so accordingly this moment following upon my unsuccessful bid for the Presidency is a good time to take stock. I undertook that bid for reasons that I deeply believe in but such a course of action is bound to lead to reflection. I want to take a break from politics and to take time and assess what next.

"I have been at the service of the people of Yorkshire and the Humber for twelve and a half years. I will always be grateful for the trust that was placed in me to carry out this role, but now is the time for someone with fresh eyes to take over.

"I remain a committed pro-European Liberal Democrat."

Fiona Hall, Liberal Democrat Member of the European Parliament for North East England and leader of the Liberal Democrat MEPs said:

"Diana has been a high profile Member of the Liberal Democrat delegation in the European Parliament, which she led from December 2001 until June 2004 and again from June 2006 to January 2007. She was an outstanding and hard working Member and ALDE coordinator of the Legal Affairs Committee. In her 5 years as a Vice President of the European Parliament she made a name for herself as a champion of transparency. In this role, she negotiated the new joint lobby register of the European Parliament and Commission and the new Code of Conduct for MEPs and was a driving force behind greater access to parliamentary documents. A great believer in participatory democracy, Diana was also very much committed to engaging people with the EU legislative process. Her work on the new European citizens initiative ensured that the admissibility criteria and checks were as open, unbureaucratic and citizen-friendly as possible.

"This resignation is an entirely personal decision by Diana. Being an MEP is a very demanding and time-consuming job and after 12 years and having achieved so much, I can understand that she might want to turn the page.

"On a personal note, I am very grateful to Diana for all the help and support she offered to me personally even before I was elected as an MEP"

TVs, mobile phones, computers and other electrical equipment are the UK's fastest growing waste stream, with more than one million tonnes generated annually. Despite already existing EU laws, only about one third of e-waste is currently disposed of in an accountable and sustainable way. The rest is either dumped in landfills or shipped - often illegally- to non-EU countries.

UK Liberal Democrat MEP Chris Davies, who negotiated the original EU legislation on waste electrical and electronic equipment (WEEE), said:

"MEPs fought hard to set a higher target for the recovery, recycling and re-use of e-waste. When treated properly our old electrical equipment needs not be rubbish but a valuable raw material.

"The new rules will make clearer what used items can be legally exported. This will help to curb the criminals who ship electronic gadgets overseas where it is dismantled by children and the poor often in hazardous and toxic conditions.

"Our waste must not become anther person's poison."

According to the Environmental Investigation Agency, the UK has a persistent problem with e-waste trafficking with up to half of all discarded computers in the UK entering the illegal trade streams.

"It is disappointing but inevitable that the inquiry has been shelved.

"We must get to the bottom of these allegations of mistreatment as soon as possible. The credibility of our intelligence services depends on it.

"I am pressing the Justice Secretary to announce how soon a new inquiry will be established once the police investigations into the Libyan allegations are complete.

"I am also questioning whether, in the interim, there should be an enhanced role for the Independent Reviewer of Terrorism Legislation to investigate the Intelligence Services."

Sarah Ludford commented:

"Havel's democratic and human rights credentials underpinned his whole life, while Fraga never renounced or apologised for the repressive standards of the Franco regime he served. Linking the two was a cheap trick, presumably to head off an MEPs' protest."

"Buzek has done some good work as President, and it is a pity for him to go out on a sour note. But the suspicion that he orchestrated this twinning deliberately to please his political friends is confirmed by his airbrushing of Fraga's fascist past out of his tribute."

"The EU was founded as a reaction to the horrors of dictatorship. It is an insult not just to Havel's memory, but to that the millions of people who suffered and died at the hands of authoritarian regimes like Franco's."

More than two-thirds of participants are female and a third are from BME backgrounds. Furthermore, a significant number of participants are disabled, openly LGBT, under 30 years old and/or from a lower socio-economic background.

Download the Candidate Leadership Programme Participant Profiles document here.

Commenting, Nick Clegg said

"The Leadership Programme is now ready to start changing the face of the Liberal Democrats. For too long, our party in Westminster has been too male and too pale.

"If we want to represent all of the country then we must have all of the country represented in us. That is why the Leadership Programme has sought out talented Liberal Democrats from across the country to ensure that over the coming years we will together change the makeup of the party.

"I know this excellent Leadership Programme will support them as they seek selection for a seat all the way until they sit in the House of Commons. I am proud to have met them all this weekend and I know we will be hearing a lot more from them in the months and years to come."

Another week, another speech about the evils of capitalism. Let me start by asking: who here is in favour of irresponsible capitalism? Because you won't find many people arguing for more recklessness, more short-termism or greater rewards at the top. On the contrary - the growing consensus is that we need the opposite: a more sustainable economy; a more balanced economy, where rewards are proportionate and relate to real success.

That consensus, emerging among the political parties, has attracted a little cynicism.
I can understand that. It is, after all, bonus season in our banks. But there is a more generous interpretation of the shifting political mood. One that says: perhaps the penny has finally dropped.

Liberal Democrats have been arguing for a more balanced capitalism for many years. Vince Cable warned in 2006 that bank lending levels were "recklessly irresponsible" at a time that "bad debts were growing." We saw the gulf emerging in our economy between a small number of winners and everyone else. And we warned against the corrosive effects. So we welcome the new political vogue - although it is not so new for us. And we want to seize on growing support for so-called 'responsible capitalism' and actually deliver it.

To do that, as this debate moves forward, we need to be clear about what we mean.
Because, whether you call it a new economy, an ethical economy, moral markets, responsible capitalism, there is a big difference between having strong views on bonus culture or excessive top pay and wanting real change in the practices and principles that guide corporate life. A bit of wrist slapping or moralising at the worst offenders will not be enough. This should not be a war of words but a real contest of ideas about how to reform our economy.

So this morning I want to offer a liberal diagnosis of what's wrong; and then a liberal remedy.

First, diagnosis. Why is our capitalism in crisis? I will argue that this is, at root, a crisis of power.
That we now have an economy driven by immensely powerful vested interests. Interests that politicians have abjectly failed to stand up to.

The remedy, put most simply, is a redistribution of power. Last month I set out my vision for an Open Society and I talked about the need to disperse political power to create strong citizens.
Today I want to talk about dispersing economic power to that same end.

Before I say any more, I want to make one thing clear: Capitalism may be today's political punchbag, but let's take a long view: it's one of history's great success stories. No other human innovation has driven progress - and raised living standards - so consistently. Markets catalyse ideas, invention and experimentation. When they work well, they are meritocratic and liberating.
And they generate the wealth to support the most vulnerable and needy in society.

Liberals believe strongly in the virtues of the market. But only if it is a market for the many, not a market for the few. Our economy is in danger of becoming the latter, monopolised by a minority, serving narrow and sectional interests.

I am not here to take a cheap shot at big business - this would hardly be the right crowd.
Big British firms are the backbone of our economy: our employers, our wealth generators, leaders in our society. And I am grateful to many of our major firms, particularly, for the commitment they are showing to greater corporate and social responsibility.

Just last week over 100 large companies signed up to the Coalition's Business Compact, opening their doors to young people from all backgrounds in order to improve social mobility.
I'm delighted to see some of them represented here today.

And I know many people in this room will agree: our economy is now seriously out of whack. It simply cannot be right that, right now, because of the crash and the recession, millions of ordinary people are struggling to get by. Yet relatively little has changed for those at the top.
It cannot be right that, for example, for most people, on average, wages are falling, by around 3% a year, yet executive pay is rising - on average, by 13%. Over the last 25 years, top Chief Exec pay has shot up by 1200%.

That is a gross imbalance, with wealth and influence hoarded among the few. It's socially destabilising. Morally, it cannot be justified. And it's bad for the economy too.

Our problem is what Jesse Norman has called crony capitalism. It's easy to throw rhetorical rocks at directors, bankers and businesses. But, if we are honest, this is as much a failure of politicians and regulators, the authorities too often cowed by corporate power. Whether that is political parties of all stripes in hock to vested interests or regulators struggling to stop supermarkets from putting the squeeze on small suppliers, whether it's politicians kow-towing to media barons, the problem is endemic.

There's nothing new about it. Kings have always bestowed privileges on their favourite merchants. Corporations will naturally seek a dominant market position. It's one of the reasons liberals from John Bright to the present day have been such fierce advocates of free trade. The agricultural landlords of the 19th century and early 20th century were happy for working people to pay more for their food because of protective tariffs. What Lloyd George in 1906 memorably called 'stomach taxes'. So long as their own profits were protected.

This has always been capitalism's greatest danger: a tendency for the rule makers and the money makers to get too close. And we saw the consequences of that closeness play out in the most dramatic fashion right here, in the City, just three years ago. It was a political failure; a regulatory failure; and a market failure too.

Political failure, because Whitehall became so dependent on City revenues. That politicians would not see the problems that were brewing. Instead, they hoped the goose would keep laying golden eggs.

Regulatory failure, because the Financial Services Authority failed spectacularly in its duties. Regulators are meant to guard vigilantly against industry excesses. But they turned soft - either captured by or intimidated by those they were supposed to keep in check. And, just like the politicians, just like the industry, the FSA ignored the alarm bells ringing.

And market failure, as short-termism and recklessness eventually consumed our banks, taking the whole economy to the edge of a cliff.

Politicians in the pockets of vested interests, regulators asleep at the wheel, an unrestrained economic elite. The primary symptoms of crony capitalism.

I welcome much of what Ed Miliband said last week on the need for a more responsible capitalism. Although, like others, I think it is difficult for Labour to be credible on the economy until they fully acknowledge the mistakes they made as the party sitting in government while our economy became so dangerously unbalanced. And, Ed Miliband cannot credibly claim to be a crusader against vested interests when he is in hock to one of them: the trade unions, who won him the leadership - and now pay for his party.

For liberals - from Gladstone to Grimond - the role of the state has always been to break up unaccountable, opaque concentrations of power. To protect the national interest from those vested interests. That is why, as well as the moves the Coalition Government is making to bring greater transparency to government contracting and lobbying, we need real reform of party funding to reduce the influence of those interests in politics. We need tougher border controls between the political class and the corporate world.

And we also need a better distribution of power within our economy.

The three main political traditions in Britain - conservatism, socialism and liberalism - bring different instincts to the question of where power in the economy should lie. Right now, I think liberals have the best argument.

The traditional conservative right has a strong faith - at worst, a blind faith - in the capacity of markets to correct themselves. To automatically ensure real competition and a level playing field.
This means that the role of the state is, as far as possible, to get out of the way. But markets left to their own devices can generate huge concentrations of economic power: monopolies and cartels that cripple competition and act against the interests of ordinary people.

The traditional left is historically suspicious of market outcomes but has a deep belief in the economic wisdom of the state. So while socialists abhor concentrations of economic power in the market, they want to draw economic power towards the state.

But an overly intrusive state crowds out the dynamism that makes markets so successful, both in terms of raising living standards and liberating consumers.

Liberals, alternatively, believe the role of the state is to hold power in balance so that it is neither hoarded in the market, nor wielded, unduly, by the state. Liberals don't want to substitute state power for corporate power. But we will use the power of the state to ensure power is properly distributed within the market. Breaking up monopolies and fiercely defending open, free and fair competition. Liberal economics is not laissez faire economics - it's fair economics.

Let me take wage inequality as an example - and quite a topical one. The right-wing view is that soaring executive pay will be corrected by the healing power of a competitive labour market.
The left-wing view is that the state will have to set maximum wages or impose penal tax rates, that politicians will have to take matters into their own hands. Liberals take a more balanced approach. We understand that the market for executive pay can become closed, uncompetitive and self-serving. And that the state can and should intervene to clamp down on egregious excesses.

That's why, for example we want new rules to stop an executive serving in one company from sitting on the pay board at another, so that directors' salaries are no longer, effectively, decided by their mates. And we see an extremely important role for the state in redistributing wealth through income tax. In fact, one of the Coalition's most significant reforms is our changes to income tax. Making it more progressive - so that lower earners keep more of what they earn.

But liberals also recognise that narrowing wage inequality is not solely a task for the state. We also need to put much more power in the hands of other stakeholders in the economy - shareholders and employees - when it comes to setting top pay. Trusting not the unfettered market, nor the interventionist state, but trusting people.

That is the core of a more responsible capitalism: power in the hands of people. Strong economic citizens able to keep vested interests in check. So let me say a word on the Coalition's approach to empowering two groups in particular: shareholders and employees.

First, shareholders. Part of the challenge is getting more of them to behave like business owners rather than absentee landlords. If they are unhappy, we don't want them just to sell up and move on, we want them to throw their weight around so that the company improves: but we need to make sure they have the right tools at their disposal and they know how to use them.

The Coalition has said we will introduce binding shareholder votes to curb executive pay as part of a package of measures to moderate boardroom behaviour. Vince Cable will set out that package next week but I can tell you today that we are going to overhaul the way shareholders - and others - can access information.

Often, the reason investors are passive is because they can't see the reasons to act. Take annual and pay reports. Shareholders should be able to use them as a kind of report card so they can see how well their money is being spent. But, you've read them, many - not all, but many - are impenetrable texts: obscuring rather than illuminating. Hundreds and hundreds of pages of facts, figures, charts and graphs. Plenty of information but nowhere - nowhere - a simple, clear single figure showing who gets paid what; Or a simple summary of where the money goes - how much is spent on directors, how much on dividends, or re-invested into the business.

That information is absolutely essential for any investor trying to calculate value for money. Some companies do much better on making it transparent and easy to understand, but not enough.
And where companies bury it - that is deeply cynical.

So the Coalition will force companies to open up their books, so that investors don't need an accountancy degree to decipher them. We are looking at a range of ways of increasing transparency, but here are two very simple changes:

One: shareholders will only need to look at one number, not a dozen, to see how generously top executives are being paid, and they will need a clear policy in place for departing CEOs so that, if they deviate from that policy, and if a hefty payment is made for failure, that decision is up in lights.

Two: the way money is spent will need to be crystal clear. So if a company is spending too much on boardroom pay compared to the amount being reinvested in the business, they will have to explain why: show investors where their money is going. That's how to unlock shareholder power.

But it's not just shareholder power that matters. Ultimately investors seek profits, just like executives expect high pay. Some enlightened shareholders might see the benefits of a well-rewarded workforce, but the people best placed to look after the interests of staff are staff. And that is what, so far, has been missing from this debate: ordinary people.

In an open society, a liberal society, people don't just hold more power in politics, but in the economy too. And, over time, empowering workers can have a hugely transformative effect over corporate culture. People want to work in companies which are dynamic, but they also value stability. They want firms that secure big profits, but not at any cost. They believe that effort and achievement should be rewarded above all else.

Aren't those precisely the values everyone is now clamouring for businesses to hold?

There are, of course, a range of ways employees can be given a louder voice.
More rights, for example: like the new right to request flexible working and more flexible parental leave - to name just two.

But today I want to focus specifically on employee ownership, a touchstone of liberal economic thought for a century and a half.

John Stuart Mill hoped that employee-owned firms could end what he called the 'standing feud between capital and labour' and liberals have been championing it ever since. Because we don't believe our problem is too much capitalism: we think it's that too few people have capital. We need more individuals to have a real stake in their firms.

More of a John Lewis economy, if you like.

And, what many people don't realise about employee ownership is that it is a hugely underused tool in unlocking growth.

I don't value employee ownership because I believe it is somehow "nicer" - a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes. Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better: lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.

Is employee ownership a panacea? No. Does it guarantee a company will thrive? Of course not. But the evidence and success stories cannot be ignored, and we have to tap this well if we are serious about growth. The 80s was the decade of share ownership. I want this to be the decade of employee share ownership.

Now that's a big ambition, I know. And it won't happen overnight. But it won't happen at all without Government taking a lead, so I am kickstarting a drive in Government to get employee ownership into the bloodstream of the British economy.

We're already doing this in the public sector, though the work of the Mutuals Taskforce, under Julian le Grand, and work being led by Francis Maude. And, of course, the radical reform of the Royal Mail - on that, I'd like to pay special tribute to Ed Davey. Governments have been grappling with the future of the Royal Mail for decades. Under Ed's stewardship it will finally be transformed into an organisation in which staff have a meaningful stake. And now I've asked Ed to turn his hand to employee ownership in the private sector too.

Working with professional bodies and businesses, the Coalition is going to find out where the barriers are, so that we can knock them down. Do staff and business owners know enough about employee ownership? Are the accountants and lawyers who advise them taught enough about it? Is there red tape we can cut? Does the tax system treat these firms fairly? Do we need an off-the-peg model so that more ordinary people take this up?

We'll appoint an independent adviser - an expert in the field - to help us find the answers and solutions to these kinds of questions, which will be brought together at a Summit I will chair in the summer.

Crucial to all of this, of course, will be encouraging take up. One option, to give you an idea, could be giving employees a new, universal "Right to Request" shares. Imagine: an automatic opportunity for every employee to seek to enter into a share scheme, enjoying the tax benefits that come with it, taking what for many people might seem out of their reach, and turning it into a routine decision. Clearly the details of that kind of policy need to be properly thought through. We need to establish which companies would and wouldn't benefit - it might not be feasible for microbusiness, for example. But we need to start by thinking big: not asking 'why?', but asking 'why not?' Looking across the board - tax, regulation, simplicity, awareness - to help more of these companies flourish, in order to put more employees at the helm.

And that brings me to the thought I want to end on today: economic power in more hands.

As the debate on a more responsible capitalism moves forward, Liberals will remain set on that goal:

An end to crony capitalism, where vested interests trump the national interest. A better balance of power, in the economy - and between politics and business. That is the route to a safer, more stable, more prosperous economic future. This is how we will spread wealth and share rewards.

A more responsible capitalism. A more liberal capitalism.

Thank you.

"Ed Miliband is confused and inconsistent. He now says that he supports Government cuts, having spent the last 18 months opposing and voting against almost every single one.

"He says he wants to clamp down on vested interests while his party is bankrolled by the unions, and end crony capitalism when it was his Government that let the banks run riot and allowed corporate pay to spiral.

"But most notably he still refuses to admit that Labour got it wrong on the economy.

"While Ed Miliband talks, Liberal Democrats are cleaning up Labour's mess and delivering in Government what we championed for years in opposition.

"We're cutting taxes for the lowest earners, protecting pensioners and giving every child a fair start through the pupil premium, whilst targeting unfairness at the top by clamping down on tax avoidance, corporate pay and hitting the banks with a £2.5bn bank levy."

"After nearly two years of opposing every saving the Coalition Government has made at least Ed Balls has finally admitted there is a deficit problem.

"However, he still refuses to take any responsibility for Labour's 13 years in power where they failed to balance the books and get to grips with reckless behaviour in the City, even when he was City Minister.

"Liberal Democrats in the Coalition Government are doing the right thing, taking the difficult decisions to protect Britain from the same fate as some euro zone countries while at the same time pursuing progressive policies such as reducing taxes for the lowest earners, making sure pensioners get a fair deal and providing a fair start for every child through the pupil premium.

"Ed Balls' admission is better late than never, but he and Labour still owe Britain an apology for 13 years of poor government and 18 months of lies in opposition."

"Britain should play an active role in Middle East diplomacy at this dangerous moment in the region's history. Iran's nuclear programme poses a real threat to regional stability and David Cameron's visit to Saudi Arabia is a welcome part of seeking to reduce that risk.

"It is important for the Coalition Government to promote British trade wherever this is appropriate as is part of our long-term plan to clear up Labour's economic mess.

"This visit also gives the Prime Minister the opportunity to highlight concerns about human rights within Saudi Arabia. Liberal Democrats are very worried about the Saudi kingdom's terrible record on human rights including those of women, religious minorities, foreign workers and political opponents of the regime.

"The Coalition Government did the right thing to champion Arab democracy throughout the Arab Spring and we must not send out mixed messages now."

Europe must stay united - Clegg

Leading Government Ministers, Party Leaders and European Commissioners from Liberal Democratic parties across Europe met in London on Monday at the invitation of the Deputy Prime Minister Nick Clegg, who asserted the importance of European countries working together.
In a statement following the event, the participants reiterated their view that resolving the European economic crisis is the urgent priority. "This clearly requires greater fiscal coordination, discipline and solidarity. But our problems cannot be solved through austerity alone. Unless we can tackle another underlying cause of the crisis - Europe's lack of global competitiveness - this crisis will be the first of many.

"…the Single Market Programme of the 80s and 90s was a truly remarkable liberal achievement, tearing down trade barriers within Europe and unlocking unprecedented levels of new jobs, growth and prosperity. We need to build on the progress made to date, in particular through Mario Monti's 2010 report on the Single Market and the Commission's Single Market Act, to recapture this level of ambition.

"We therefore call on all European leaders and institutions to use the January 2012 European Council meeting to kick start and drive forward an urgent and ambitious plan for jobs and growth in Europe."

Nick Clegg was unequivocal: "We can only address these problems by pulling together. The one lesson we have learnt over and over again in Europe, to our cost, is that we are stronger when we are together and weaker when we are apart.

"It is immensely important to work as liberals, in all our different countries, in all our different ways, to promote unity over disunity and to promote co-operation rather than needless rivalry and isolation."

President of ELDR and co-host of the event, Sir Graham Watson said the meeting was both constructive and impressive: "Three prime ministers, five deputy prime ministers, numerous government ministers, four EU Commissioners - and ten hours of talks.

"We noted how the EU is currently dominated by a centre right government (the European People's Party) which is failing."

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The businesses - employing over two million people in Britain with a turnover of more than £500 billion - have signed up to the Deputy Prime Minister's Business Compact on social mobility. This is an unprecedented partnership between business and government to spread opportunities across our society and, crucially, to create culture change in other companies.

Signatories to the Compact include:

• nearly 20 major finance firms including Barclays, HSBC and Santander
• more than 10 high street retailers including Asda, Tesco, Sainsbury's, Marks & Spencer, and Morrisons
• 11 well-known consumer brand manufacturers including Coca Cola, P&G and Nestle
• 10 major law firms including Allen and Overy and CMS Cameron McKenna
• eight high profile energy firms including BP, Shell and E.ON.
• 
  

Deputy Prime Minister, Nick Clegg, said:

"This is an important step towards a society where it's what you know, not who you know, that counts. Working with the Coalition, the biggest hitters in British business are helping lead the way to a fairer, more open society.

"By opening their doors to young people from all walks of life, this marks the start of a culture shift among major employers, driven by the belief that ability and drive should trump connections and privilege.

"I'd like to thank the companies and organisations who have already signed up to the Business Compact. Today's success makes me even more ambitious. This great news is just the beginning - I will be doing everything I can to bring even more businesses on board."

Today the Deputy Prime Minister will also write to a further 50 of the biggest companies in the UK asking them to sign up.

The Business Compact forms a key part of the Deputy Prime Minister's Social Mobility Strategy, launched in April 2011, which sets out the Government's determination to ensure every individual is free to achieve, regardless of the circumstances of their birth. Businesses and organisations which sign up to the Compact must agree to:

• support communities and schools to raise aspirations through, for example, reading and mentoring schemes or encouraging their staff to go out to schools and inspire pupils about their careers.
• open opportunities to all young people by advertising their work experience places through schools, online and in other public forums, rather than just giving places to informal contacts.
• make access to internships open and transparent, with financial support such as providing expenses or accommodation, or by treating the internship as a job that can be paid under National Minimum Wage law.
• recruit fairly and without discrimination, using application forms that don't allow candidates to be screened out because they went to the wrong school or come from a different ethnic group (including through using name-blank and school-blank applications where appropriate).

The Deputy Prime Minister will be holding a reception tonight to thank all of the businesses who have signed up to the Business Compact.

Read the full article with editor notes here.

"This is great news for the whole country, but especially for Sheffield and the great cities of the North.

"For too long governments have spent too much time concentrating on London and the South East. This is a big investment that will link North and South so that everybody can share in the prosperity of the future.

"It will take some years to build but this is the right thing to do. It is a long-term investment to help heal the North-South divide.

"Liberal Democrats have long supported High Speed Rail and I am proud that the Coalition is making it happen."

"While Ed Miliband talks about delivering fairness in tough times, Liberal Democrats have been doing it.

"Labour hit the poorest workers by scrapping the 10p tax rate; Liberal Democrats have lifted a million of the poorest workers out of tax altogether and given 23m workers a £200 tax cut.

"Labour insulted pensioners with the 75p pensions rise; Liberal Democrats raised it by £4.50 this year and will raise it by £5.30 next year.

"Labour let the banks do as they please; Liberal Democrats hit them with a £2.5bn a year tax.

"But the most unfair thing Labour did was wreck the economy and Ed Miliband is still in denial about it. Liberal Democrats in the Coalition are determined to do the right thing by cleaning up Labour's mess and making Britain a fairer, greener and more liberal country."

"I'm very pleased the Prime Minister has come on board with Liberal Democrats plans to clamp down on executive pay. Liberal Democrats have been calling for action against this explosion in salaries and bonuses for years. Now we are delivering on it in Government.

"People who work hard, pay their taxes and play by the rules are rightly outraged that those at the top can pay themselves as much as they like, whether their company is doing well or not. It is unfair, unacceptable and has been allowed to continue under successive governments for too long.

"Vince Cable has already made clear that he would like to see more action on this, such as giving shareholders a binding vote on pay packets. We look forward to the Coalition doing the right thing and bringing forward concrete proposals to ensure an end to these unethical practices once and for all."

Backing for the plan to tackle youth unemployment comes from The Confederation of British Industry (CBI), British Chambers of Commerce (BCC), British Retail Consortium (BRC) and Federation of Small Businesses (FSB), who will also urge their members to back the initiative.

Liberal Democrats in the Coalition Government are determined to tackle the growing problem of youth unemployment, which Nick Clegg described as "an economic waste and a slow burn disaster". The aim of the Youth Contract is to ensure that all jobless young people are earning or learning again before long-term damage is done. Over three years, the Youth Contract will provide at least 410,000 new work places for 18 to 24-year-olds into work.

The Youth Contract includes:

• 160,000 wage subsidies and 250,000 new work experience placements.
• There will be at least 20,000 more incentive payments to encourage employers to take on young apprentices.
• And there will be a new programme to help the most disengaged 16 and 17-year-olds - getting them back to school or college, onto an apprenticeship or into a job with training.

Nick Clegg said:

"Supporting people into work is my priority for 2012 and helping young people get proper, lasting jobs is especially important.

"The Youth Contract will make sure every unemployed young person starts earning or learning again before long term damage is done.

"But government can't do this alone, we need businesses to play their part too. That's why the support of the Confederation of British Industry, British Chambers of Commerce, British Retail Consortium and Federation of Small Businesses is such good news."

The Deputy Prime Minister is today [Thursday] hosting a roundtable discussion with business leaders, including senior representatives from some of the UK's top businesses including Marks and Spencer, John Lewis, BT and Asda, to hear from them about how they offer young people work, training and apprenticeships in their organisations and discuss the Youth Contract.
Nick Clegg will also launch a new website - dwp.gov.uk/youth-contract for employers across Britain to sign up to the Youth Contract.

John Cridland, CBI Director-General, said:

"The Youth Contract is good news for young people up and down the country. It will encourage firms to give a young inexperienced person a chance so that the scourge of youth unemployment can be tackled.

"We sincerely hope that employers of all sizes looking to hire staff will see the Youth Contract as a real incentive to invest in our young people."

Dr Adam Marshall, Director of Policy at the British Chambers of Commerce (BCC), said:

"Youth unemployment is a huge challenge for Government and business alike. Firms up and down the country are concerned about the record numbers of young people currently out of work, and tell us they are ready to do their bit.

"That's why we warmly welcome the Youth Contract, which will help growing businesses offer more young people real jobs and work experience. We will work closely with the Government to ensure that these initiatives help to overcome the obstacles that stop young people and potential employers from connecting."

Director General of the British Retail Consortium, Stephen Robertson, said:

"Nearly a million young people are employed by retailers in the UK and they're keen to take on even more. The sector employs a quarter of all 20 to 24 year olds who are in work and the proportions are even higher for teenagers. Retail also has an excellent record on staff development and is one of the highest spending sectors on training per employee.

"The Government's focus on helping young people into work and training has the potential to make a real and very welcome contribution to reducing youth unemployment. There needs to be an accompanying set of initiatives to drive growth which will help create new jobs for people of all ages."

Mike Cherry, Policy Chairman, Federation of Small Businesses, said:

"Youth unemployment continues to be a major problem and so we welcome the Government's Youth Contract initiative. Small businesses want to create jobs but need help overcoming the risks associated with taking on staff, especially in the current climate. We also need to see enterprise education in schools and colleges so that young people are given the skills and knowledge they need to thrive in the world of work."

"It is a great relief that after so many years people have been brought to justice for the tragic death of Stephen Lawrence.

"Many lessons have been learnt and changes made as a result of this case, but there is much more to be done before all Londoners have trust and confidence in the police."

On the request of the police, Brian Paddick acted as an intermediary for Duwayne Brooks, Stephen Lawrence's best friend, during the trial. Duwayne and Brian have been friends for several years, having first met while Brian was Borough Commander of Lambeth. Duwayne is now a Liberal Democrat councillor in Lewisham.

Co-chair of the Liberal Democrat Parliamentary Party Committee on International Affairs, Martin Horwood, and Lord (Monroe) Palmer, are also pressing for changes to the way medals are awarded and how those awarded by other nations can be worn. They are calling for the Honours and Decorations Committee, which controls the awarding of medals, to meet in public and to be reconstituted under an independent chair, with a membership recognised by veterans as being truly independent.

Commenting, Martin Horwood said:

"A National Defence Medal would be a small token of appreciation for the huge debt that everyone in Britain owes to the brave members of our Armed Services, past and present.

"For too long decisions about medals have been made behind closed doors. We need to bring the debate and consideration into the public gaze, so that veterans and current service personnel can contribute their views and see how decisions are reached."

Commenting further, Lord Palmer said:

"We achieved significant success in the House of Lords by getting Government agreement that the Pinjat Jasa Malaysia medal, which could be accepted but not worn, can now be worn. We must now go on to make the whole decision making process more transparent.

"I hope that as part of the review, a National Defence Medal can be instituted which can be applied for by all those who have served in the armed forces since 1945."

Latest research from the Department for Energy and Climate Change (DECC) shows that so far this financial year companies have announced plans for almost £2.5bn of investment in renewable energy projects in the UK, with the potential to create almost 12,000 jobs across the country.

A separate report to the European Commission on renewable energy progress that showed that the UK:

• Achieved a 27% increase in renewable energy consumption from 42.6TWh in 2008 to 54TWh in 2010 - representing 3.3% of total energy consumed.
• Increased wind generation by 46% from 7TWh in 2008 to 10.2TWh in 2010, and in 2010 achieved 5GW of offshore and onshore wind capacity; and
• Saw a threefold increase in the use of biofuels in transport from 1% of total road transport fuel supply in 2007/8 to 3.33% in 2010.

Commenting, Chris Huhne said:

"Renewable energy is not just helping us increase our energy security and reduce our emissions. It is supporting jobs and growth across the country, and giving traditional industrial heartlands the opportunity to thrive again.

"Our renewable target is less demanding than other EU member states, but the effect is bringing real jobs and investment.

"I do not want the UK to be left behind by turning our back on the green economy. The agreement to negotiate a global deal secured at Durban has reinforced major nations' commitment to cutting carbon. We cannot afford to stand alone while the world wises up."

For more information, visit the DECC website here.

We have had to make some very difficult decisions, but they've been the right ones for the long term good of our country.

But that economic rescue mission is not over yet. That's why, thanks to the Liberal Democrats, the Coalition has been helping people get through these difficult times with measures to make life fairer and easier.

2011 was the year we lifted nearly a million low paid workers out of paying income tax altogether and cut taxes for 23m people - because I believe putting money back into peoples pockets makes all the difference.

It was the year more than a million children got a fairer start in life, with extra support at school through our Pupil Premium and free early years education for toddlers - because I believe that helping the youngest take their first steps in life makes all the difference.

It was the year we guaranteed pensioners a decent increase in their pension - because I believe dignity in retirement makes all the difference.

Throughout, we have taken big long-term decisions that will change the way our economy works for the better - rebalancing it away from the City of London towards stronger, more sustainable growth.

And next year we will do more. The world's first Green Investment Bank putting millions into green jobs and growth; our youth contract to get every young person out of work earning or learning; more apprenticeships than this country has ever had before; and we will take further steps to make our tax system fairer too.

What we're doing as a party, and as a Coalition, it's not easy, but it's right. We are putting the interests of the country first, and we have taken the first steps towards building a fairer, greener and more liberal country.

The next year will be one that poses many great challenges for everyone in Britain, but I know we must continue to do what's right for our country.

And with that, I wish you all a very happy New Year.

Nick Clegg MP
Leader of the Liberal Democrats and Deputy Prime Minister

Making UK banks safer

Business Secretary Vince Cable confirmed this week that the Coalition government is now committed to implementing the Vickers report recommendations in full, in line with the timing suggested by that report.

The Coalition set up the Vickers Commission, as advocated by Vince, to deal with the unsafe structure of UK banking. It reflected a long-standing Liberal Democrat criticism of banking that caused: financial instability - the biggest financial crisis of modern times; unfairness - pay and bonuses reaching record levels; and inefficiency - credit failing to reach the productive parts of the economy.

Vickers was a vital part of the Coalition response to Labour's financial crisis, alongside reform of financial regulation, a permanent Bank Levy (raising more each year than Labour's Bonus Tax), and the most transparent pay regime of any major financial centre.

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The Vickers measures include:

Ringfencing:

• The primary and secondary legislation required for ring-fencing essential financial services from risky investment banking will be in place by 2015
• Our reforms make ring-fenced banks safer. If they do fail, the situation can be easily resolved without putting the economy at risk
• Ordinary depositors money isn't subsidising risky investment banking
• Banks to start implementing the reforms in 2015 - the last aspects of the reforms will be done by 2019.

Capital

• Banks must issue far more loss-absorbing capital than before, and more than international standards require them to have, meaning less risk to taxpayers

Competition

• Banking will be made genuinely competitive by making it easier to switch accounts; making bank regulation a driver of new competition; the creation of a powerful new entrant to banking - the Co-op is buying 600 Lloyds-HBOS branches

"We're going further than any other major country in the European Union - or the United States - to make our banking system safe by separating the retail and personal lending from the casino banking," said Vince. "Britain is much more exposed to a banking crisis than any other major country - the balance sheet of the banks is about 500 per cent of British GDP. That's extraordinarily large, that's where we've got to act."

Co-chair of the Lib Dem Parliamentary Treasury Committee, Stephen Williams said:

"Vince was the voice of reason when the financial crisis almost broke the country three years ago. Now, he and the Liberal Democrats have worked to put British banks on a sound footing and limit the risk to the taxpayer of any future banking problems."

"We all know that times are tough for Government finances. In order to sort out Labour's mess there has to be a mixture of increasing tax revenue and restricting the growth of spending. At the same time the taxman must collect all the tax that is due. Special treatment or even the perception of special treatment for big corporations is simply unacceptable.

"It is sometimes understandable in highly complex tax disputes that HMRC settles out of court. But when it comes to public money being lost through vast tax settlements, the taxman needs to be more transparent. The public must be able to see they how they are negotiating with big companies so they can see if special treatment is being given."

Stephen Williams has tabled an Early Day Motion calling for a general anti-avoidance rule within the next Finance Bill. It has been sponsored by David Laws, Simon Hughes, Tim Farron, Lorely Burt and Tom Brake.

First, let me thank Demos and the Open Society Foundation for inviting to me to speak. I can think of no better moment to talk about the open society, and the urgent need to rally to its defence.

The values of the open society - social mobility; political pluralism; civil liberties; democracy; internationalism - are the source of my liberalism. And reflecting on the events of the last year, it is clear to me that they have rarely been more important than they are today.

Because we are at a critical, and potentially dangerous, moment - both in the world at large and here in the UK. History teaches that, at times of deep economic uncertainty, societies become more exposed to the forces of division - populism, insularity, separatism, an 'us versus them' mentality.

Rather than remaining open to the world and facing the future, societies can begin to turn inwards and lose confidence in progress.

The danger in the UK is that the forces of reaction and retreat overwhelm our instinct for openness and optimism. That we succumb to fear - the greatest enemy of openness - in these dark economic times.


So today I will set out my vision of an open society - at the heart of liberal politics - and identify the key battles that we face to promote fairness, liberalism and openness in these difficult days.

We British are an open-spirited people. But we are hobbled by closed institutions. By instinct we believe in fair play and giving everyone a fair chance in life.

But our politics and economy are distorted by unaccountable hoards of power, wealth and influence: media moguls; dodgy lobbyists corrupting our politics; irresponsible bankers taking us for a ride and then helping themselves to massive bonuses; boardrooms closed against the interests of shareholders and workers. The values of the hoarders are increasingly out of touch with the spirit of openness alive in the UK.

It is not often you'll hear me say this, but I agree with Tony Blair. In his words "the big difference is no longer between left and right, it is between open and closed".

So what is an open society?

It is a society where powerful citizens are free to shape their own lives. It has five vital features:

1. social mobility, so that all are free to rise;
2. dispersed power in politics, the media and the economy;
3. transparency, and the sharing of knowledge and information;
4. a fair distribution of wealth and property; and
5. an internationalist outlook

By contrast a closed society is one in which:

1. a child's opportunities are decided by the circumstances of their birth
2. power is hoarded by the elite
3. information is jealously guarded
4. wealth accumulates in the hands of the few, not the many; and
5. narrow nationalism trumps enlightened internationalism

Closed societies - opaque, hierarchical, insular - are the sorts of society my party has opposed for over a hundred and fifty years.

That's why Gladstone fought for a liberal internationalism; why Lloyd George battled the House of Lords; and why liberals from Cobden to Grimond sought to break up the monopolies and cartels that allow economic vested interests to trump the interests of ordinary citizens.

I will shortly say more about each of the five features of an open society. But first, let me demonstrate how this liberal vision of an open society is distinct from the philosophies of both left and right.

There are three main political traditions in Britain: socialism; conservatism; and liberalism.

Socialists support the idea of the good society, typically judged in terms of equality of income. In order to bring about this end they use the state quite aggressively in terms of labour market regulation, centralised public services and through tax and benefits.

Conservatives support the idea of a big society, with responsibility shared throughout society - people are responsible both for themselves and each other. The emphasis is naturally on non-state institutions such as marriage, the family, churches and voluntary organisations.

The liberal ideal is of the open society, where power is vested in people, not in the state or other institutions. This means that individuals need the capabilities and opportunities to chart their own course through life, and to hold institutions to account. So while the good society needs a strong state, and the big society needs strong social institutions, the open society needs strong citizens.

Of course these three political streams of thought will sometimes overlap. The Prime Minister's particular approach to the big society, for example, is broadly compatible with the liberal concept of an open society.

Making users of public services more powerful; shifting power down to voluntary or community groups; and encouraging people to take responsibility for themselves: none of these do violence to the principles of the open society. Quite the opposite.

But there is nonetheless an important philosophical difference here. Advocates of both a big society and an open society will be sceptical of state power - and aware of the dangers of state oppression. But open society champions are more alive to the way in which society and social institutions can be oppressive, too. A culture of intolerance can destroy liberty even when the state has liberal laws. Societies can oppress, as well as states. As Isaiah Berlin reminded us, 'To be deprived of my liberty at the hands of my family or friends or fellow citizens is to be deprived of it just as effectively.' That is why the constitution of my party warns that people can be enslaved not only by ignorance and poverty, but also by conformity.

The institutions of our society are constantly evolving. Just look at the way the roles of men and women, and attitudes to marriage and divorce, have changed over the last century.

We should not take a particular version of the family institution, such as the 1950s model of suit-wearing, bread-winning dad and aproned, homemaking mother - and try and preserve it in aspic.

That's why open society liberals and big society conservatives will take a different view on a tax break for marriage. We can all agree that strong relationships between parents are important, but not agree that the state should use the tax system to encourage a particular family form.

It is clear that one of the most important differences between the three traditions is in our attitudes towards change. Open society liberals are progressives: we believe that the future can and ought to be better than the past.

Conservatives, by definition, tend to defend the status quo, embracing change reluctantly and often after the event.

Socialists see themselves as progressives, with a vision for a better future. The problem is: they have a fixed blueprint for what that better society looks like.

Like the conservative right, the socialist or left-wing social democrat view is that "we - either the elite or the state - know what is good for you". Liberals pay people the compliment that they know what is good for them, without ideological instruction.

So liberals are optimistic about the potential of people, collectively and individually, to lead good lives and shape good communities. And we value diversity, as societies experiment their way forward. Open societies are raucous, noisy, and sometimes unpredictable - but that is a price eminently worth paying for our freedom. The open society is not for those who want a quiet life.

Let me now turn to the five key features of an open society.

First, in an open society there should be no unfair barriers to people's talent and aspiration. All roads must be open.

In a closed society, the routes to advancement are blocked by an elite who hoard opportunities for themselves and their children. A series of 'glass floors' ensure that the children of the affluent maintain their standing relative to other groups. A closed society is one in which people 'know their place'. In an open society, people choose their place.

A social mobility approach to fairness is different to Labour's 'good society' agenda, which focuses more on inequalities in terms of current income. Labour's approach was based on a snapshot view of current income levels, rather than long-term life chances.

But real fairness is about real opportunities. Inequalities become injustices when they are fixed; passed on, generation to generation. So our focus must be on equipping people to flourish, and get on in life.

That is why I have made clear that intergenerational social mobility is the principal objective of the Coalition's social policy. And why I have been so determined to increase our investment in the vital early years, including, recently, by extending the new two-year old offer to an additional 130,000 toddlers in working families.

Even in these lean times, we have found an additional £1 billion for a Youth Contract to head off long-term youth unemployment, which can scar life chances.

But Government cannot do this alone. Some of our key professions still need to do a much better job of opening their doors. To take one example, the legal profession remains woefully unrepresentative.

More than two thirds of all high court judges and top barristers are privately-educated. Nine out ten QCs are men. Nineteen out of twenty are white.

I know that us politicians have to get our house in order too. Not least my own party, which is too male and too pale. We are working hard to fix that. But my message to the legal profession, and especially to the bar, is: you are not doing enough either. It cannot be right that justice for the many is overseen by the representatives of the few.

Both the law and politics must, above all, represent the nation as a whole. But the nation is not represented in them. We've had years of warm words and incremental progress. It's time for a step change.

The second distinguishing feature of an open society is a wide dispersal of power: both political and economic.

In terms of politics, this means maximum devolution and localism, including real financial decentralisation. That's why we are giving much more power to local authorities, taking away central government financial controls and giving borrowing powers.

That's why we are striking deals with our major cities, so that they can once again be the real engines of growth in our economy.

In public services, dispersing power means more flexibility, more personalisation and more choice. More personal budgets in health and social care, for example. These are a perfect example of the way that more power can lie in the hands of the users of universally-provided, taxpayer-funded public services.

Opponents of localism brandish the phrase "post code lottery" to dramatize differences in provision between areas.

But it is not a lottery when decisions about provision are made by people who can be held to democratic account. That is not a postcode lottery -- it is a postcode democracy.

Of course it is challenging for central governments to give away power. To give credit to the Labour party, there were some real achievements in terms of devolving power during their early years in office. Devolution to Scotland and Wales and the creation of the London mayoralty were big, positive steps. But after that initial flourish, Labour reverted to centralising, conservative (small-c conservative) type.

And there is still much more to do to open up our political system, not least reform of party funding to loosen the hold of vested interests; a register of lobbyists; the right to recall MPs; and, finally, real reform of the House of Lords.

The Lords is perhaps the most potent symbol of a closed society. Because we are in the process of building support for a Lords reform package, I am sometimes advised not to be too outspoken on this issue. But I'm afraid this is one boat that urgently needs rocking.

Lloyd George described the House of Lords as being "a body of five hundred men chosen at random from amongst the unemployed". To be honest, it might be better if it was. Of course among our peers there are those with valuable experience and expertise.

But a veneer of expertise can surely no longer serve as an alibi for a chamber which legislates on behalf of the people - but is not held to account by the people. The Lords as currently constituted is an affront to the principles of openness which underpin a modern democracy.

So we will have a House of Lords reform Bill in the second session of this parliament. I am hopeful that we can secure a significant degree of cross-party consensus on this, and indeed support from Lords themselves. But let there be no doubt: if it comes to a fight, the will of the Commons will prevail.

Turning to the economy, there are hoards of power in the City of London; in certain industries; on the boards of large corporations. The result of this power imbalance is an economy that is lopsided: too reliant on London and the South East, too in thrall to financial services, delivering unequal rewards in terms of wages; and promoting short-termism over the long-term investment necessary for our shared prosperity.

And I understand the anger that people feel at the bonuses still flowing to bankers, especially those who have been bailed out by the taxpayer.

If we are serious about tackling wealth inequality; serious about responsible capitalism; serious about ensuring everyone contributes fairly to the government's coffers, then we cannot be neutral on this issue.

We took a tough line on bank bonuses last year, particularly in the banks where the government is the biggest shareholder. We ensured that the bonus pools in RBS and Lloyds shrank; that all bonuses paid to chief executives and executive directors were entirely in deferred shares, not in cash; and that a limit of £2,000 was placed on cash bonuses.
The profound impact of the banking implosion on our economy, and on our society, has since become even clearer. There has been no lessening of public anger towards the banks - and there will be no let-up in the Government's determination to keep the clamps on bonus payments.

So, on the eve of bonus season, let no-one be in any doubt about our determination to use our clout as the major shareholder in these banks to block any irresponsible payments, or any rewards for failure.

I share the view of many that we need a more responsible capitalism. The question is what we do about it. Typically, for those on the left, building a more responsible capitalism means more state regulation. While for those on the right, it is principally a question of individual morality.

Judicious regulation and individual responsibility both have a part to play, of course. But we cannot rely on moral individuals to deliver a responsible capitalism. Nor can responsibility be mandated from on high, by the state.

For liberals, the key issue is here is the distribution of power. Shareholders with real power over boards. Workers with a real stake in their businesses - for example through employee ownership. Only by rewiring the power relations in our economy can we build a responsible capitalism. (I'll have more to say on this subject in a speech in the New Year.)

The third characteristic of an open society is the sharing of knowledge and information. In a closed society the elite think that, for the masses, ignorance is bliss. But in an open society there is no monopoly of wisdom. So transparency is vital.

That is why the Freedom of Information Act was a quintessentially open society measure. It is unfortunate that Blair now says he regrets passing it. The Coalition Government is extending FOI to other bodies, and also reducing the 30-year rule to 20 years.

Transparency is not just necessary in government activities. There is a good case for it in a range of areas within the private sector, too - such as bonuses, gender pay gaps and environmental activities. And indeed earnings differentials, to help restrain excessive top pay.

That's why the Coalition Government has recently completed a call for evidence on options in this area, and we'll be looking very hard at the results in the next few weeks.

We also need a positive approach to the freedom of our press. A free press is absolutely central to an open society in which information is dispersed, corruption is exposed, and the powerful are kept honest. That is why we are already taking far-reaching action to reform England's libel laws, so that public-spirited journalists are not muzzled by the threat of litigation by big businesses and wealthy individuals.

But we must also remember that media outlets serve commercial interests. So this calls for, firstly, a credible approach to media regulation and governance. The Leveson Inquiry must be enabled and encouraged to do a thorough job.

Second, ensuring diversity of ownership. A corporate media monopoly threatens a free press almost as much as a state one. We must be just as vigilant against vested interests in the media as in politics or business, and ensure genuine plurality.



The fourth feature of an open society is a fair distribution of wealth. Wealth underpins independence. There is a reason for the phrase 'independently wealthy'. Wealth and property can act as a buffer against difficult economic times. And it gives people a real stake in society.

Wealth inequality is very much greater than income inequality, and widening. The bottom third of households hold just three per cent of the nation's wealth. The top third hold three-quarters of it. This inequality of wealth then cascades down the generations, potentially widening the opportunity gap.

To give you a practical example, those people without financial help from the 'bank of mum and dad' now have to wait until their mid-30s before they can buy their first home.

Eighteen months ago, speaking as a guest of Demos then too, I argued that the liberal approach to tax distinguishes between earned income, and unearned wealth. That's why we've put up capital gains tax while cutting income tax for ordinary working families. And, of course, I'd like to go further in pursuit of this fiscal liberalism. Lower taxes on work and effort, a greater contribution from the wealthy: an open society approach to tax.



The final feature of an open society is an intrinsically internationalist outlook - in contrast to a politics that clings solely to the nation state.

In my lifetime, the world has been sliced up and labelled in a number of different ways: "East" and "West"; "developed" and "developing"; "north" and "south"; "Christian" and "Muslim", and so on.

But for me, the most important divide has always been between open societies and closed societies. Open societies choose democracy and freedom at home, and engagement and responsibility abroad. Closed societies favour protectionism in economic policy, and detachment from foreign affairs.

The temptation to turn inwards has been understandably strong over the last decade, given economic turbulence. The contagion that can spread across the world's financial system was demonstrated in dramatic fashion a couple of years ago. But there are more positive forms of contagion too. Investment flows across borders continue to increase, tying the fates of nations more closely together.

And it is simply no good attempting to be a closed nation in a more open world. Just as it is better to share power within a nation, it is often better to share power between nations.

And, when it has counted most, Europeans have stood together. Recognising that we are stronger shoulder-to-shoulder than we are apart. Now, we must do the same again. There is self-evidently a deep crisis in the eurozone. We had a disappointing outcome from the summit ten days ago.

This does not mean that the UK should step away from our European partners. So we will be re-engaging on a whole host of vital issues: staying open to the rest of the world, not least our Eastern and Southern neighbours; showing bold European leadership on defence and foreign affairs; pushing ahead to complete the single market.

So, to conclude. An open society is a liberal society, with five key features, from social mobility to internationalism. Open societies are challenging, fluid, progressive and innovative. They require energy and enterprise and courage.

Right now the fight for openness, against the forces of reaction and retreat, is as important as ever. But for liberals, there is no option of ducking this fight. For as Karl Popper himself wrote: "If we wish to remain human, then there is only one way, the way into the open society."

Power to the cities

The Deputy Prime Minister announced last week a dramatic shift in power from Whitehall to the core cities of Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield. In a speech to IPPR North in Leeds, Nick Clegg gave details of the proposed plan.

The 'City Deals' will see government offer greater freedom and autonomy. In return, cities must guarantee that they will provide adequate leadership and accountability, improve efficiency and be innovative in their approach.

No more waiting for Whitehall approval, cities will get one consolidated capital pot to direct as they see fit. The Coalition has committed to localising business rates and introducing Tax Increment Financing to allow councils to borrow against those revenues to invest in development. The bulk of business rates should be back in local hands by April 2013.

Cities will also get the right to offer business rate discounts. So, for example, if a particular city would benefit from more creative industries, to compete with its neighbours, or to make the most of its colleges and universities, it will be able to adjust its rates to attract companies working in design, fashion, music, the arts.

On transport, under the new arrangements cities will only have to show that a specific scheme is feasible, achieves value for money, is transparent and accountable, and contributes to growth. Cities will be able to be ambitious about what they can deliver for their area. Instead of Transport for London, it could be Transport for Leeds or Birmingham, or Bristol.

Housing and regeneration decisions that used to lie with Regional Development Agencies and were then sucked up into the Homes and Community Agency will finally be will be handed down to the cities. Cities can then get developers building and businesses locating in the parts of town that need them most.

On broadband, £100m of seed funding will be available for them to work with Virgin, BT and other suppliers, in order to become truly digital.

Currently many small companies say they would like to take on an apprentice but they can't afford it or they find the national scheme too bureaucratic. Cities will be able to create New Apprenticeship Hubs, bringing together businesses looking for an apprentice and Colleges who can refer their students. There will be research funding to establish where skills gaps lie - whether in engineering, or IT, or management, - so cities can work with the colleges to prioritise filling those gaps.

Cities will also be able to bring local services together so that instead of being passed from pillar to post between the job centre, the town hall, the careers adviser - all of that can be done under one roof where it makes sense to do so.

"We are launching a series of deals to recast the relationship between central government and our cities," said Nick, "in what we hope will be an unprecedented transfer of power, to unleash city power, to boost entire regions and to get our national economy growing. To begin correcting the dangerous imbalance in the economy.
"Our cities will need to shoulder some of the risks - where big projects are involved, for example, government will not do all the underwriting. We will expect you to work together and we will need to see results.
"The Coalition wants to give cities the key to their future," concluded Nick. "We know the UK's prosperity depends on it and we stand ready to do our bit."

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"A number of faiths have made it very clear to me and others that they want to allow same-sex couples to have their civil partnership ceremony in their places of worships.

"As a Liberal Democrat, I strongly believe that we should make this possible and that is why the Coalition Government is doing the right thing in allowing these faiths to celebrate the love that two people have for each other.

"From the outset, we made it clear that we would not force any faith to do so and the House of Lords have today recognised that there are appropriate safeguards.

"I look forward to working equally constructively with all interested people and organisations as we move ahead with the Coalition Government's plan to open up marriage to same-sex couples. Our commitment to equality runs deep, as next year's consultation on equal marriage will show."

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"Although Iraq has slipped down the British political agenda it should never be forgotten that the cost of the disastrous decision to join the United States in military action against Iraq was and remains enormous.

"Unjustified optimism based on inadequate intelligence and unthinking determination to remain close to the Bush administration led the United Kingdom into one of the most ill-advised foreign affairs decisions in living memory.

"The only hope is that we have learned lessons from a badly judged venture. The implications of the Iraq decision should inform every policy decision to commit British troops in the future."

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At a press conference in Strasbourg, UK Liberal Democrat MEP Edward McMillan-Scott, Chairman of the Brussels-Strasbourg Seat Study Group, said that in 2012 a new SingleSeat.eu campaign to involve the public would begin, possibly including the launch of a petition under the new Citizens' Initiative. This process allows more than one million citizens to achieve legislative changes through the European Commission and would build on the OneSeat legacy, which secured more than 1.2 million signatures within a short time.

McMillan-Scott said: "Under the Lisbon Treaty, the EP now has the right formally to propose Treaty changes. The new President of the European Parliament should accept this and speak out on behalf of the majority of its members and European citizens. It is time the EP had an open debate about this". In June MEPs voted by an absolute majority of 373 - 285 for a single seat in a non-binding motion.

McMillan-Scott added: "I am also delighted to have the support of Burson-Marsteller working on the campaign for a single seat. Burson-Marsteller is a top international firm with massive scope and experience. This arrangement complements the legal advice we already receive from Sidley Austin, one of the largest law firms in the world".

Alexander Alvaro (FDP, Germany), Vice-Chair of the Parliament's Budgets Committee, who today convened a well-attended seminar on 'The autonomy of the European Parliament after Lisbon', commented: "The EP has a great deal of autonomy within the existing yearly budget process, but its democratic rights are still limited when it comes to the power to decide its own working arrangements.

McMillan-Scott also announced that a leading public affairs and communications agency, Burson-Marsteller, will support the campaign for a Single Seat for the European Parliament.The firm has previously provided services to the Campaign for Parliament Reform, which embraced the OneSeat campaign.

David Earnshaw, CEO of Burson-Marsteller Brussels, added: "It is a privilege to be retained to work on this campaign, which addresses one of the key EU institutional issues of our time: the right of MEPs to choose their working arrangements".