Trust in People:Make Britain

free, fair and green

Policy paper 76

Contents

Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Trust in People:Making Britain Free, Fair and Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Trust in people . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Free Britain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Fair Britain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Green Britain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Britain in the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Meeting the challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

How can we restore democracy and participation?Decentralisation and accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.3 Decentralising power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.4 Restoring trust in politics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.5 Making the European Union more effective and democratic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.6 Enhancing international institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

How can we create a less divided and unequal society?Fairness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163.3 Reducing inequality: eradicating poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.4 Reducing inequality: increasing opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183.5 Reducing inequality: creating a fairer world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

How can we tackle climate change?Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214.3 Dealing with climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224.4 Building sustainable communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

How can we build an economy for the long term?Prosperity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

5.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275.3 Tough choices on government spending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285.4 Fairer and greener taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285.5 Meeting the productivity challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295.6 Fostering enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305.7 Opening up the global economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

How can we ensure safety without losing freedom?Liberty and security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

6.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336.3 Restoring faith in the criminal justice system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346.4 Tackling the root causes of crime and anti-social behaviour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

6.5 Defending civil liberties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356.6 Defending global security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

How can we rebuild neighbourhoods?Community and family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

7.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407.3 Building communities, supporting families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417.4 The pursuit of happiness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

How can we make public services better?Delivering services locally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

8.1 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458.2 The Liberal Democrat approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468.3 Decentralisation, local accountability and community involvement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478.4 Making services more responsive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488.5 Tackling the causes of inequality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488.6 Efficient use of resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Next steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Foreword

Trust in People: Make Britain free, fair and green sets out what Liberal Democrat ideas meanfor Britain.

At the last general election the public told us that they liked and voted for many of our specificpolicies, but they could not always see the underlying Liberal Democrat theme. This paperaims to set out not so much the details of our policy but the basic approach from which wederive it.

Liberalism means a freer Britain, one in which people and communities are able to exercisereal political power on their own behalf. It means a fairer Britain, where people are notexcluded by a lack of income or wealth or opportunity. And it means a greener Britain, wherethe environment is valued and protected. It means a country built on trust in its citizens.

These are the themes around which we will develop our policy, and our campaigns, for theremainder of this Parliament. This paper provides a guide for the future work of the FederalPolicy Committee, the Campaigns and Communications Committee, and the whole party.

The Liberal Democrats are not like the other two parties, ditching their entire policy prospectuswhen they elect a new leader. We know what we believe in. Trust in People: Make Britain free,fair and green takes as its starting point It’s About Freedom, our 2002 policy paper setting outLiberal Democrat philosophy for the 21st century, and the policies we put forward in the 2005election. It develops them to meet the challenges and opportunities that will face Britain andits government after the next election.

And it is based on the widest consultation exercise we have ever conducted in the party, withits own website, separate conference, dozens of meetings around the country and hundreds ofindividual submissions. To everyone who contributed to the paper, both inside and outside theparty, I extend my thanks.

Trust in People: Make Britain free, fair and green conveys an understanding of the LiberalDemocrat approach that is essential in the run-up to the next election and beyond. I urge youto read it and to use it as a spur to your thinking and your campaigning as we enter the mostchallenging, and the most exciting, period in our party’s history. I commend it to you.

Rt Hon Sir Menzies Campbell QC MPLeader of the Liberal Democrats

Britain at the beginning of the twenty-firstcentury is being failed by its government.

On the one hand, the UK is anincreasingly liberal nation. British peopleare tolerant, energetic, enterprising andcompassionate. Left to get on with it, theyhave the skills and imagination totransform their own lives and the lives ofthose around them. It is this ability thathas made Britain a world leader ininnovation and the creative industries.

On the other hand, it is saddled with afailing political system and governmentthat frustrates this energy and attempts torun people’s lives rather than allow themto take responsibility for their own affairs.Politics today excludes the views of themajority of British citizens. Anincreasingly unequal society excludes toomany people from any real control overtheir own futures. And politicians obsessedwith tabloid headlines and the nextelection aren’t focusing on real long-termneeds, like the environment.

Trust in people

Everyone knows things aren’t working asthey should. Everyone knows governmentis about tough choices. Free market orregulation? Lower or higher publicspending? National standards or local

choices? Of course, such choices are neverclear-cut. There are shades andcompromises between the extremes. Butso often politicians tell us we can have itall, we don’t have to choose. We wouldlike to believe them, but deep down weknow it’s not true. And what people wantto know from political parties is not, ‘willyou promise us the earth?’ but, ‘when thechips are down, where do you reallystand?’

With the two old parties, increasingly it’simpossible to tell. Each disguises itself asthe other: Labour promises another crimecrackdown, Cameron makes speechesabout social justice. Both rely on spin andpublic relations in order to disguise thereality of their policies. Tough talk is usedto pander to the tabloids, often coveringup a lack of action. They haven’t caredabout the widening gap between rich andpoor, the barriers of wealth and incomethat stop people getting a good education,or worthwhile jobs. Obsessed with short-term opportunism, they haven’t faced upto long-term challenges such as climatechange.

What unites Labour and the Conservativesis a refusal to trust people, to allow themto take control of their own lives. Theydon’t treat people as grown-ups.

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Trust in People:Make Britain free, fair and green

Liberal Democrats aim to make Britain a free, fair and green country. The UK is anincreasingly liberal nation. British people are tolerant, energetic, enterprising andcompassionate. But they are badly served by a centralised and failing political system thatexcludes the views of most of them. Britain is also an increasingly unequal society inwhich too many are prevented from making the best of their lives. And it has beenburdened by governments which have failed to face up to long-term challenges such asclimate change. A different Britain is possible – one in which people and communities areable to wield real political power on their own behalf, where people are not shut out by alack of income or wealth or respect, and where the environment is valued and protected. Acountry built on trust in its people.

Liberal Democrats don’t think like this.Throughout its history, the Liberal Partyhas fought to put people in control of theirown lives - widening the right to vote,establishing local government, laying thefoundations of the welfare state to supporteveryone in unemployment, illness and oldage.

Now Liberal Democrats run local councilsthroughout Britain, from big cities likeAberdeen, Cardiff, Newcastle andLiverpool to smaller towns and districtslike Eastleigh and St Albans, and ruralcounties like Cornwall and Somerset. Wehave been in government in Scotland sincedevolution in 1999. We do our best tolisten to people’s concerns, and stay intouch with their lives, and to trust them totake their own decisions.

This is because we believe that individualcitizens, and the communities in whichthey live, are best placed to determinewhat they want; neither governments norbusiness can do it for them. So we want tosee a society where people are trusted -and encouraged - to take control over theirown futures, and government is there toenable them to do so.

We want to build a liberal Britain that isfree, fair and green.

Free Britain

The Liberal Democrat vision of a freeBritain is one which people have thegreatest possible control over their ownlives. This can be achieved throughgovernment that really responds tocommunities’ wishes - where decisions aretaken near to those they affect, byrepresentatives chosen by local people andelected through a fair voting system, withreal power to shape the places they live.Our vision is of public services that workeffectively because they involve those thatuse them - patients, parents, students and

victims of crime - and make full use of thetalents and imagination of their staff.

A free Britain is one in which citizens cantrust their government to act openly,democratically and competently, andgovernment trusts people and communitiesto take more responsibility for theinstitutions that affect them.

A free Britain is one in which the statecannot trample on basic civil liberties,membership of the legislature cannot bebought by a donation to the ruling party,and the country cannot go to war withoutthe consent of its own people. In a freeBritain faith is restored in the power ofgovernment, at all levels, to do good.

Fair Britain

Britain can’t be free unless all of itspeople are. Liberal Democrats want tocreate a much fairer society, which meansa much less unequal one. A fair Britain isone where progressive national and localtaxation, based on people’s ability to pay,redistributes money from the richest to thepoorest. It has public services that workfor everyone, not just the educated and thewell-off.

A fair Britain would regenerate localeconomies which are in decline and losingjobs. It would offer better education andtraining and child care, opening upopportunities for more and better jobs. Itwould guarantee access to justice for all.

A fair Britain is one in which localneighbourhoods prosper, and people canfeel safe in their communities. A fairBritain is one in which people aren’texcluded by a lack of income or wealth orrespect.

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Green Britain

Because we trust people, we know theyunderstand that protecting the environmentis an urgent priority. A green Britain is onewhich provides people with a frameworkwhich allows them to put the environmentfirst themselves - through generating theirown electricity, using good publictransport, or choosing locally produced ororganic food. Green taxes are used tosignal what’s bad for the environment andwhat’s good.

A green Britain in one in whichgovernment makes the investment insustainable energy and transport systemsthat individuals can’t - and one whichgrabs the chance to become a world leaderin green technology and jobs. A greenBritain is one in which government,business and consumers think green ineverything they do. That’s why we have a‘green thread’ running throughout all ourproposals.

Britain in the world

Britain’s government can’t make Britainfree, fair and green by itself. We need amore effective European Union to fightfor the global environment, to cooperateagainst global terrorism, to tame the powerof the transnational corporations, givingconsumers real power. And the EU won’tbe truly effective unless it is moredemocratic and responsive. We also needstronger global institutions and the re-establishment of the framework ofinternational law.

Meeting the challenge

This, then, is where Liberal Democratsstand: clear about our values, sure in ourbeliefs, standing by our liberal principles.We are optimistic about what the Britishpeople can achieve when set free frominequality, bureaucracy and centralcontrol. We trust in people to make Britaina free, fair and green place for all.

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2.0.1 Restoring a functioning democracyto Britain underpins everything thatLiberal Democrats aim to achieve.Successive Conservative and Labourgovernments have shifted power fromlocal government to appointed bodies, andfrom Parliament to the executive.Government has become more and morecentralised, concentrated in the PrimeMinister and Downing Street. The politicalsystem has not adjusted to the emergenceof a more educated and self-confidentelectorate. Fewer citizens now turn out tovote, or have the chance to play an activerole in representative democracy.Consequently governments have beenelected with the support of a smaller andsmaller proportion of the electorate.Liberal Democrats want to reinvigorateBritish democracy, to re-engage the publicin democratic politics.

2.1 Challenges

2.1.1 Over the last 25 years,Conservative and Labour governmentshave degraded the institutions of politics.People no longer trust their leaders. NewLabour came to power partly as a reactionto Tory sleaze, but after scandals such ascash-for-peerages, few now see Labour asany better. The Prime Minister has adoptedan impatiently personalised approach inwhich he claims that his ill-thought-outand heavily spun initiatives are the answerto all problems with the inevitable resultthat expectations are dashed, real butminor improvements are seen as failuresand senior politicians are thought of asliars.

2.1.2 Britain, and particularly England,has become absurdly centralised.Decision-making has been steadily takenaway from local government; rate-cappingintroduced by the Thatcher Government,

has been enthusiastically maintained byLabour. Local services have beensubordinated to central target-setting.Divorced from real wants and needs, thisprocess generally fails, or distortspriorities towards whatever may be thelatest tabloid headline, while alsoundermining the responsibility andinnovation of frontline staff. The result isthat public services becomesimultaneously more expensive and lesseffective. Government itself is increasinglyseen as incompetent and incapable ofperforming its most basic functions.

2.1.3 Despite this, the Blair-BrownGovernment continues to arrogate morepower to the central executive. Labour’sauthoritarian tendencies have been mostrecently obvious through its series ofproposals to undermine basic liberties,through the introduction of near-compulsory identity cards and detentionwithout trial. Centralisation operates evenwithin government, with policy prioritiesimposed on ministers and departments byDowning Street.

2.1.4 Yet while it has pretended it canregulate every aspect of public services,the Government has been spineless in theface of corporate power. Althoughglobalisation has brought many newopportunities, it has also seen thedevelopment of an internationalcommercial and financial system whichcan have decisive impacts on citizens’ day-to-day lives but which seems entirelyoutside their control. Yet at the same timeboth Conservative and Labourgovernments have opposed attempts toincrease the effectiveness and democraticnature of the European and internationalinstitutions which could provide thenecessary balance.

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How can we restore democracy and participation?Decentralisation and accountability

2.1.5 Small wonder that voters display agrowing lack of interest in the politicalprocess. Turnout continues to decline, withless than two-thirds of the electorate nowparticipating in general elections, andnearer one-third for local and Europeanelections. The voting system contributes tothe problem: when voters say there’s nopoint in voting because their vote won’tmake any difference, most of them areright.

2.1.6 These trends are a major concern.If citizens in general, or members ofparticular ethnic communities, lessaffluent economic groups or specificregions in particular, are less likely tovote, their needs and wishes are morelikely to be ignored. If individuals are leftdisempowered by political or economicstructures, they will look for alternativeways to make their views felt. In 2005, thelow turnout, coupled with the unfairelectoral system, meant that the votes ofjust over 20% of the electorate deliveredLabour a comfortable majority in theHouse of Commons. If the politicalsystem loses its legitimacy, anti-democratic and anti-political forces aremore likely to gain ground.

2.1.7 Although people are increasinglyswitching off from elections and partypolitics, they are not, however, losinginterest in issues of public policy. Over thepast 20 years, the British Social Attitudessurvey has shown a marked increase in thenumber of people signing petitions,contacting the media and taking part inprotests. A recent large-scale survey forthe BBC revealed the ‘emergence of adynamic, socially engaged andenvironmentally conscious’ type of voterin substantial numbers. These people aredisengaged not from politics as such butfrom a political system which is seen ascorrupt and ineffective and excludes theview of all but a handful.

2.2 The Liberal Democratapproach

2.2.1 The Liberal Democrat approach isdifferent. The origins of British Liberalismlay in spreading power away from anauthoritarian monarchy, and bringing awidening circle of citizens into politicallife. In the 19th century it was Liberalswho were at the forefront of the expansionof the franchise, and the development ofstrong and accountable local government.As we set out in chapter 1, we believe thatcontrol over people’s lives and futuresbelongs best to individuals and thecommunities in which they live. Werecognise, in common with John StuartMill, that ‘the worth of a state, in the longrun, is the worth of the individuals thatcompose it’, and that the promotion ofactive citizenship, based on a sharedunderstanding of rights and obligations, isthe foundation of a liberal society.

2.2.2 At the core of our approach lies theprinciple of local responsibility: localpeople should control the publicly-fundedservices in their own area, operatingthrough democratically elected andaccountable local government. Powershould be decentralised from Westminsterto local councils, and home rule takenforward further in Scotland and Wales,built on federal principles. Educationshould be geared towards creating self-confident and articulate citizens, able toengage with politics and exercise realpower reinforced by freedom of expressionin the arts and the media.

2.2.3 Clearly not all power can beexercised at a local level. Effectiveinstitutions are needed at national,European and global levels. Manychallenges can only be met effectively bypooling sovereignty among nationalgovernments such as the regulation offinancial markets and transnationalcorporations, measures to limit

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atmospheric and marine pollution, andactions against potential threats to security.

2.2.4 Wherever it resides, government atall tiers local, devolved, UK or European,must be accountable through the ballotbox to those it serves and those it taxes.The systems through which people holdgovernment to account must be fair.Legislators should be elected in proportionto the votes cast for them. Councillorsshould not have to oppose the wishes oftheir residents because central governmentis able to override them. Unelected bodiesshould not be in a position, as they are intoday’s Britain, to approve or reject laws.

2.2.5 An important part of what we wantis a change in the style of politics, nomore pretending that an inspired leaderhas all the answers, no more obsessionwith the next tabloid headline, no morecentral diktats from an arrogant andincompetent bureaucracy. Instead, we wanta system that treats its citizens as grown-ups, capable of understanding and makingdifficult choices. This means decentralisedgovernment, capable of experimenting andinnovating and of listening to its citizens,and it means a renewed belief in the powerof government to do good. What we aimto achieve is the construction of a politicalsystem that engages and mobilises thetalents of all the citizens it serves and thattrusts the people.

2.3 Decentralising power

2.3.1 Liberal Democrats have longargued for a series of reforms to returnpower from central government back tolocal people. Power exercised locally willbe exercised more in tune with genuineneeds and wishes, thereby being not onlymore democratic but also more effective.Our existing policies would take majorstrides towards this, through:• Reducing the ability of central

government to dictate the activities oflocal government, and treating the

latter not as merely a delivery agentfor central government but as anelected body with its own mandateaccountable to local people;

• Extending the powers of elected andaccountable local councils to controlcurrently unaccountable publicservices, such as local health servicesand, at the appropriate tier, the police;

• Further decentralising law-makingand tax-raising powers to the ScottishParliament and National Assembly forWales, at the same time as replacingthe Barnett formula for fiscaltransfers with a new needs-basedassessment.

2.3.2 Our detailed proposals for localgovernment in England have already beenupdated and are being presented toconference in policy paper 73, YourCommunity, Your Choice. Proposals forensuring local government is as fairly andlocally funded as possible are included inpolicy paper 75, Fairer, Simpler, Greener.The main proposals of these papers are:• Ensuring that all communities have

the right to set up their own decision-making structures;

• Introducing a concordat for localgovernment in England that definesthe rights and responsibilities of localgovernment and limits the powers ofcentral government to interfere inlocal decision-making;

• Giving councils enhanced powers sothat they can address the needs oftheir residents;

• Increasing the share of local authorityrevenues raised locally from 25% to50% by re-localising the business rateand replacing Council Tax with localincome tax;

• In the longer term, raising the share oflocally raised revenue towards 75% byfurther shifting income tax fromnational to local level.

2.3.3 With home rule established for theother nations of the UK, the issue of howEngland-only law is made needs to be

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revisited. The current situation isinequitable and breeds resentment. We willtherefore develop policy further to ensurethat the post-devolution constitutionalsettlement is robust and provides thenations and regions of the UK withresponsive and democratic governmentbased on federal principles. The Report ofthe Steel Commission, Moving toFederalism, commissioned by the ScottishLiberal Democrats, has been well receivedand is helping to inform policy on thefuture shape and financing of the federalUK which Liberal Democrats want to see.

2.4 Restoring trust in politics

2.4.1 At a UK level, we aim to restorethe faith in the political system thatLabour and the Conservatives have doneso much to undermine, to make it fairer,more accountable and more transparent.Our existing policies include:• Ensuring that MPs are elected in

proportion to the number of votesthey receive, through STV;

• Making the second legislativechamber, the House of Lords,predominantly elected;

• Ending extensive powers beingexercised outside Parliamentaryscrutiny under the Royal Prerogative;

• Enshrining the rights of individualcitizens in a written constitution.

2.4.2 Recent developments haveunderlined the power of the executive tooperate without the effective scrutiny ofParliament and of the Prime Minister tooperate without any real accountabilityeven to his own cabinet. The Treasuryunder Gordon Brown has become an ever-more centralising force throughoutgovernment. We will develop proposals to:• Restore the power of Parliament to

ensure effective scrutiny andaccountability of the executive (boththe cabinet and the Prime Minister),and restore the collegiate nature ofcabinet government;

• Enhance the effectiveness andmaintain the impartiality of the civilservice.

2.4.3 Political parties are essential to thefunctioning of any political system,providing the means to put before theelectorate a coherent set of policyproposals built round a core of values andprinciples. Yet the recent decline of trust inpolitics in general has much to do with theincreasing disconnect between politiciansand the electorate, and the behaviour ofpoliticians once elected. The cash-for-peerages scandal in particular hasreopened the issue of the funding ofpolitical parties. We will investigate waysin which parties can become more openand responsive to the electorate, anddevelop proposals to introduce a fair andbroad-based system for party funding. Wewill review and update our commitment tocommunity politics - the belief that ‘ourrole as political activists is to help andorganise people in communities to takeand use power’.

2.5 Making the EuropeanUnion more effective anddemocratic

2.5.1 An effective EU is needed morethan ever before. As well as helping tomanage affairs between the member states,the EU is particularly required to tackleglobal problems that individual memberstates cannot deal with alone. Theseinclude taking a lead on climate change,exploring ways in which to regulate globalmarkets, and providing a strong voice onthe world stage. Yet the EU cannot developin this way while it remains insufficientlyaccountable and democratic. This is whyLiberal Democrats support a newconstitutional settlement in the EU, to:• Define the powers of the EU,

reflecting Europe’s diversity,preventing over-centralisation andensuring that the principle ofsubsidiarity is applied, so that EU

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powers are exercised only wherenational action alone would be lesseffective;

• Enhance democratic accountability, byensuring that the democraticallyelected European Parliament plays afull part in the legislative process andholds the Council of Ministers andEuropean Commission to account;

• Provide for national parliaments toscrutinise proposed Europeanlegislation more effectively.

2.5.2 After defeats in the French andDutch referendums in 2005 governmentsdecided that the proposed EuropeanConstitution should not proceed. We needto develop new proposals on the futureinstitutional structure of Europe, whichwill underpin our platform for theEuropean elections in 2009. These willaim to increase the effectiveness of theEU, and the power of individual Europeancitizens, through greater openness,democracy and accountability.

2.5.3 A major challenge for the EU overthe next few years will be making a realityof taking effective joint action. We set outelsewhere in this paper plans to developour policies across a range of areas wherethe EU is central, including reshaping theEU’s spending priorities away fromagriculture and towards regionaldevelopment, energy and environment, andimproving cooperation on justice andhome affairs.

2.6 Enhancing internationalinstitutions

2.6.1 For much the same reasons as weargue for an effective and democratic EU,Liberal Democrats are wholeheartedlycommitted to a multilateral approach toglobal governance. We support moresophisticated international frameworkswhich go beyond a reliance on nationalsovereignty to ensure that effectiveinternational action can be taken. In

particular, we support:• A central role for the UN in

sanctioning international militaryaction;

• Effective and well-resourcedinternational environmentalagreements, such as the KyotoProtocol on climate change;

• The reform of international economicinstitutions, including the IMF, WorldBank and WTO, to better incorporateenvironmental and social objectives.

2.6.2 The principle of multilateralism isunder threat following the disregard forinternational law shown in the invasion ofIraq, and the increased reliance onbilateral trade deals instead of multilateralagreement through the WTO. Furtherdetails are set out in this paper andspecific proposals on international law areset out in policy paper 74, Britain’s GlobalResponsibilities: the international rule oflaw. They include:• Reform of the Security Council in

order to strengthen its authority andlegitimacy in addressing threats tointernational peace and security;

• Reform of the General Assembly toenable it effectively to scrutinise andhold accountable the agencies andbodies within the UN system;

• Providing the Secretary General withgreater resources to investigate andreport to the Security Council onemerging crises, and enabling him toensure that any non-militarypreventive action required by the UNis carried out rapidly and effectively;

• Effective protection for human rights,including ensuring that the UNHuman Rights Council encourages itsmembers to maintain the higheststandards of human rights.

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3.0.1 One of the most serious outcomesof the past 25 years of failed governmenthas been the reversal of the trend towardsgreater equality that characterised the1960s and 1970s. Inequalities in wealthand in standards of health are widening,while rates of social mobility are falling.Just as the country is burdened with apolitical system that excludes its citizensfrom decision-making, it suffers from aneconomic system that shuts out many fromthe chance to shape their own futures. Thisunequal society undermines communitiesand political institutions and fosters crimeand anti-social behaviour. We aredetermined to reverse this trend and toremove the inequalities created by thestructures of society. We are determined tocreate a fairer Britain.

3.1 Challenges

3.1.1 Despite the growing wealth of theUK as a whole, consecutive governmentshave created an increasingly dividedsociety. After falling in the 1970s incomeinequality grew in the 1980s and 1990s.Despite some improvement in recent yearsthe poorest fifth of the population still paya higher percentage of their gross incomein tax than the richest fifth. Furthermore,wealth distribution remains more unequalthan that of income: in 2001 the poorerhalf of the population owned just 5% ofthe country’s wealth, down from 8% in1976. In 2004, based on the widelyaccepted Gini Index measure, the UK wasthe most unequal country in the EU.

3.1.2 On top of this, the UK suffers fromlow and declining social mobility. A 2005study showed that the chances of childrenborn into low-income groups moving intohigh-income groups as adults were lowerin the UK than in the Nordic countries andGermany, and the chances of upward

movement were significantly lower forpeople born in 1970 than for those born in1958. There is a far stronger relationshipbetween educational attainment and familyincome than in other European or NorthAmerican countries. Young people withparents with higher professional jobs, forexample, are four times more likely to goto university as those with parents inroutine manual employment.

3.1.3 The practical effect of this is thedifferences in the opportunities and qualityof life available to individuals. Too manypeople lack the chance to take control overtheir lives. This creates a divided societyto which those at the bottom have noreason to feel much attachment, withknock-on effects such as rising rates ofanti-social behaviour and crime.

3.1.4 Inequalities in income and wealthfeed through into a huge range of socialoutcomes. Inequalities in standards ofhealth and in mortality rates are stillrising. In 1997-2001, male life expectancyat birth was 71 years for unskilled manualclasses compared to 79.4 for professionalclasses. In 2005, average male lifeexpectancy in the Calton area of Glasgowwas 8 years less than in Iraq after 10 yearsof sanctions, war and insurgency.Inequality also has an influence on theextent to which communities functioneffectively. People’s involvement incommunity life, and engagement inpolitical institutions, is highest whereinequality is lowest. Inequality underminestrust, neighbourliness and mutual support,the most unequal societies are also themost unhappy societies.

3.1.5 Age, gender, ethnicity anddisability can all reinforce inequality.More than 2 million pensioners live belowthe poverty line, of whom two-thirds are

How can we create a less divided and unequal society?Fairness

women. In 2005 hourly earnings were17% higher for men than for women infull-time jobs, and 38% higher in part-time jobs. There is an increasingpolarisation between well-educated andless-educated women, particularly loneparents. Ethnic minority households aremore likely to have lower incomes, evenafter correcting for gender, age andqualifications. Half of all families ofBangladeshi and Pakistani origin haveincomes 50% below the national average.Unemployment rates for people withdisabilities are about twice as high asthose of the general population.

3.1.6 The Government acknowledges theproblem of poverty, but its attempts to dealwith it have been half-hearted and haveignored the human dimension. Labour hasfought shy of any serious redistributive taxmeasures, such as replacing the regressiveCouncil Tax with a local tax based onability to pay. Poverty has been seen insimplistic economic terms, so that ifpeople can be moved above an arbitraryincome level, through targeted use ofbenefits, the problem is regarded assolved. The complexity of the tax creditsystem has led to wrong payments andpoor take-up. The Government’s relianceon means-tested benefits has underminedincentives to save and has created veryhigh marginal rates for tax and thewithdrawal of benefits for the low-paid.Child poverty remains a major problem; in2004-05, 3.4 million children were livingin relative poverty (in households on lessthan 60% of the median householdincome). Labour has failed to reverse thesteady slide towards an increasinglyunequal and unfair society.

3.2 The Liberal Democratapproach

3.2.1 Tackling inequality is importantbecause inequality limits freedom. Inmodern Britain, where you are from, whatyour parents did, the school you went to,

your physical ability, your ethnicity andgender still in large measure determineyour chances in life, your educationalattainments, your work prospects, evenhow long you will live. The pursuit of amore equal society, not as an end in itself,but as a precondition of freedom, will be amajor political goal for the LiberalDemocrats in the approach to the nextelection and a major plank of ourcampaign.

3.2.2 We want to build a fair society, inwhich everyone has the opportunity tofulfil their potential, free from the barriersimposed by poverty and inequality.Improving social mobility lies at the heartof our commitment to fairness. We believethat the effects of poverty, inequality andlack of opportunity are interlinked,requiring a coherent strategy focusing notonly on income and wealth, but also onissues such as access to education,employment, health services, child care,culture and the arts.

3.2.3 We also understand that a fairersociety is a stronger society, with citizenswho feel greater attachment to socialstructures, stronger communities andhigher levels of political engagement. Theproposals we make elsewhere for thedispersal of political power, thedecentralisation of public services andsupport for local communities will bothhelp to reduce inequality and in turn bereinforced by a reduction in inequalities ofincome and wealth.

3.2.4 This collection of challenges goesto the heart of much of what is wrong withBritain today. Consequently, tacklinginequality is one of our top two politicalpriorities. Creating a fairer society meanscreating a freer society. Liberty andequality are not a zero-sum game; on thecontrary, the ability to enjoy theopportunities provided by a democraticsociety is increased by the redistributionof wealth and power.

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3.2.5 Tackling inequality in this way isan immediate priority, but there is alonger-term need to attack the roots of theproblem, and build a society which reliesless on social status and more oncooperation and mutual respect. Status andcooperation have their roots infundamentally different ways of resolvingthe problem of competition for scarceresources. Status is based on peckingorder, coercion and privileged access toresources, while cooperation rests on amore egalitarian basis of social obligationsand reciprocity. This shift is, clearly, amajor undertaking and, furthermore, onein which government’s role is not entirelyclear. We will work with outside expertsand think tanks to explore the possibilitiesand limitations of government in this field,and to produce more detailed proposals forfuture policy.

3.3 Reducing inequality:eradicating poverty

3.3.1 If inequality is to be tackledeffectively, crucial starting points arereducing both absolute poverty andinequalities in the distribution of wealth.Part of the Liberal Democrat approach topoverty has been to develop policiesaimed to help specific groups in societywho are worse off than others, including:• Tackling poverty among pensioners

through a more generous Citizen’sPension - which also tackles some ofthe inequalities faced by women in thecurrent pensions system;

• Introducing a maternity incomeguarantee for mothers on the birth ofthe first child in a family, equivalentto the adult minimum wage for a full-time working week, for the first sixmonths.

In the light of the Turner Commissionrecommendations, we also recognise theneed for later retirement ages to ensurethat pension commitments are financiallysustainable.

3.3.2 No strategy for reducing inequalitycan be taken seriously unless it includesmeasures to ensure that the wealthiestmembers of society contribute more tohelping the poorest than they do atpresent. We are therefore committed tomaking the tax system more progressive.Detailed proposals for reform are in policypaper 75, Fairer, Simpler, Greener. Itsoverall approach is to raise income taxthresholds and cut rates at the bottom end,paid for by removing tax reliefs whichbenefit the well-off and by increasing thetotal raised from environmental taxes.

3.3.3 The paper sets out an overallrevenue-neutral package for the shortterm. It will significantly lift the taxthreshold for national income tax byremoving the current 10% starting rate andcutting the basic rate of income tax,removing some Capital Gains Tax reliefs,providing income tax relief on pensionscontributions at the basic rate only, andincreasing environmental taxes, especiallyon aviation. We also reaffirm ourcommitment to replace the highlyregressive Council Tax with a localincome tax. (See further in chapter 5.)

3.3.4 More detailed rates and figures forchanges in tax levels will be set out, aspart of a costed package, in our manifestofor the next general election. We cannot,of course, accurately forecast the fiscalsituation that will prevail at the time, butwe are clear that if we propose anyincreases in taxation on the wealthiest, therevenue will be used directly to help thepoorest, for example, by cutting orremoving taxes for the lowest paid. Otherreforms that are important but which donot necessarily target the poorest insociety will be funded through generaltaxation or from savings in existingbudgets.

3.3.5 These reforms to the taxationsystem need to be placed in the context ofa coherent, long-term and wide-ranging

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strategy, aiming to help peoplepermanently to escape the poverty cycleand gain independence. Changes intaxation alone can have relatively littleimpact on the very poorest in society, whopay little or nothing in direct taxation. Areformed and simplified benefit system istherefore needed, aiming to protect themost vulnerable and acting as a ladder intoemployment and self-sufficiency for theyoung and the unemployed.

3.3.6 In particular, child poverty todayremains a major barrier to a more equalsociety. We will develop proposals aimedspecifically at breaking the cycle ofpoverty from generation to generationthrough reform of the benefit system.Access to education, particularly pre-school, and health care, are also key to thisobjective, and are dealt with in chapter 8.

3.4 Reducing inequality:increasing opportunity

3.4.1 Reducing inequality is about morethan redistribution and tackling poverty,vital though these are. There are manyother proposals in the Liberal Democratprogramme which have an impact oninequality, including:• Improving access to higher education,

reforming secondary education to givepupils the chance to mix academicand vocational learning, andimproving access to child care (seefurther in chapters 7 and 8);

• Introducing a Single Equality Act tooutlaw all unfair discrimination,including on the grounds of race,gender, religion or belief, sexualorientation, disability, age or genderidentity;

• Improving access to housing, byaltering the VAT regime, reformingstamp duty and building affordablehomes on public-sector land;

• Reforming the asylum system,including supporting common EUstandards, and ending asylum-seekers’

dependence on benefits, allowingthem to work so they can pay theirown way.

3.4.2 Further action is needed in theareas of employment policy and regionaldevelopment. Competition from low-wage-cost economies among the newentrants to the EU and from rapidlyindustrialising economies in thedeveloping world, particularly China andIndia, are leading to the loss of some typesof investment - most notably, in recentyears, in car manufacturing. Immigration,while bringing clear benefits to the UKeconomy, also tends to exert downwardpressure on wage levels amongst unskilledworkers.

3.4.3 We believe that government can domore to support individual workers, andentire regions, adversely affected by suchdevelopments. One of its most importantroles is to ensure that the education systemprovides a good grounding for all in basicdisciplines like literacy, numeracy andscience, so that those affected by painfulchanges are better able to adapt. We willalso bring forward proposals to:• Refocus employment policy so that it

gets more people into real jobs ratherthan the revolving door of New Dealschemes;

• Intervene more actively in the labourmarket, including greater provision oftraining and reskilling and childcare,making it easier for people to developnew skills and move jobs withoutbeing forced to take lower-paid andlower-skilled work;

• Promote regional development policyaimed at assisting localities affectedby the loss of entire industries - basedon the successful experience of someBritish cities and regions, notably inScotland.

3.4.4 We also need to create a moreequal society at work. Again, inequality,this time in the ability to make your voice

heard, has an impact. Studies of healthstandards in the workplace show thatpeople are healthier, with lower deathrates, where they have more control overtheir work. We will develop proposals foremployee participation and shareownership, and support for cooperativeenterprises. We will also developproposals to reduce the substantialinequalities in wage levels experienced bywomen.

3.5 Reducing inequality:creating a fairer world

3.5.1 Our commitment to reducinginequality is not limited to Britain’sshores; we aim also to contribute tocreating a fairer global society. With a fewmajor exceptions, notably China, theincome gap between rich and poor nationsis still increasing. The UK, and the EU,must make a major contribution toachieving the UN MillenniumDevelopment Goals, which include

tackling extreme poverty and hunger,providing universal primary education, andcombating HIV/AIDS, by 2014. We willincrease UK development aid to 0.7% ofGNP by 2011 at the latest, and focus itparticularly on supporting environmentallysustainable development and promotinggood governance. Tougher action againstcorruption, in which companies and banksfrom developed nations are oftencomplicit, is also needed.

3.5.2 No developing country, however,has ever been lifted out of poverty by aidalone. Access to international trade andinvestment is crucial to long-termdevelopment, but the current model ofWTO-led trade liberalisation is not servingthe poorest countries well. More aidshould be focused on assisting the leastdeveloped countries to compete in worldmarkets, and they should be allowed moretime to open up economic sectors forliberalisation at their own pace. (Seefurther in chapter 5.)

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4.0.1 Treating the environmentalchallenge seriously is one of the mosturgent priorities for government.Catastrophic climate change is currentlythe most significant threat to humanprosperity, and even survival. Yet here, asin other areas, Tony Blair professes theright sentiments, but his actions belie hiswords. Under David Cameron, theConservatives have tried to jump on thegreen bandwagon, but have failed toproduce anything of substance. LiberalDemocrats believe urgent action is neededin particular to promote renewable energy,energy efficiency and public transport. Wedo not pretend this is possible withoutchanging the way individuals behave, butthe threat is too serious for difficultdecisions to be sidelined any longer.

4.1 Challenges

4.1.1 Humans are living beyond theability of the planet to support life. In2003, the first report of the UN’sMillennium Ecosystem Assessmentshowed that 60% of the basic ecosystemsthat support life on Earth are beingdegraded or used unsustainably. Of all thelikely outcomes, the predicted impacts ofcatastrophic climate change are the mostserious. They will include rising sea levelsand damage to coastal areas, highervariability in weather patterns (with moredroughts and severe storms), the spread ofdiseases such as malaria, the extinction ofhabitats and biodiversity, and growingnumbers of refugees from countries toopoor and too vulnerable to adapteffectively.

4.1.2 After relatively steep falls in UKemissions of carbon dioxide (the maingreenhouse gas contributing to climatechange) in the 1980s and 1990s, recentperformance has been less impressive:

emissions are now higher than they werein 1997. The Government’s original targetof a 20% reduction in carbon emissions by2010 (from 1990) is already unachievable- indeed, it is not clear that it will evenmeet the UK’s Kyoto target of 12.5%.Renewable energy has expanded tooslowly (except in Scotland, thanks toLiberal Democrats in government) andenergy efficiency levels have risen onlymarginally. Although about 50% of UKcarbon emissions emanate from theoccupation of buildings, still almost halfof the energy used in them is wasted, andalthough minimum energy efficiencystandards are rising in theory, they arevery rarely enforced in practice.

4.1.3 An increasingly car-based economyhas seen out-of-town shopping replacelocal facilities - the UK has lost 40% oflocal shops, banks and sub-post officesover the last ten years. Increasing car usemeans more pollution and morecongestion, with accompanying health andeconomic impacts. Decades of under-investment in public transport, followed bythe badly managed rail privatisation of the1990s, have done little to achieveenvironmental objectives. From 1997 to2005, the real cost of motoring fell by 9%,while the cost of bus and coach travel,relied on by the poorest, rose by 15%. Thecost of rail travel rose by 5% and is nowthe highest in Europe. Foreign travel hasbecome far more commonplace and, as aresult, aviation is responsible for a rapidlygrowing share of greenhouse emissions.

4.1.4 Britain consumes more resourcesand produces more waste than theenvironment can afford. Despite south-eastern England experiencing the driesteighteen months for the last eighty years,water companies still lose 15-35% ofsupply through leakage, and investment in

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How can we tackle climate change?Sustainability

improving supply remains inadequate, duein part to their desire to protect theirshareholders. Britain’s total output ofwaste is still rising; the UK has a poorrecycling record compared with otherEuropean countries. British biodiversity isat risk from pollution, waste, and loss ofhabitats, caused by urbanisation,deforestation and agriculture andexacerbated by climate change.

4.1.5 The Government’s environmentalrecord is poor. Green taxes, such as fuelduty, or the Climate Change Levy, havebeen held down. They now account foronly 2.9% of GDP, down from 3.6% in1999 - an important reason why carbonemissions are higher now than in 1997.Labour and the Conservatives’ support fora new generation of nuclear power stationsis perverse, ignoring the unresolved issueof waste disposal and the technology’svery large long-term costs. If the £700million cost of a new nuclear plant wasspent instead on improving the energyefficiency of buildings, it would save moreelectricity than the plant would provideand leave no nuclear waste to dispose of.

4.1.6 Successful sustainable developmentrequires a comprehensive and coherentapproach across all governmentdepartments, business and the public. Itneeds to alter the economic and socialframework within which choices are made,in turn promoting both technological andbehavioural change. Although in a fewareas the Labour Government has presidedover improvements, in almost every casethey are insufficient - and in someinstances, like transport policy, glaringlyinadequate – to meet the real challenge ofbuilding a sustainable economy andsociety.

4.2 The Liberal Democratapproach

4.2.1 The Liberal Democrats placeenvironmentally sustainable development

at the heart of our approach - as defined inthe 1987 Brundtland Report, ‘developmentthat meets the needs of the present withoutcompromising the ability of futuregenerations to meet their own needs’. Thisrequires changes in the way in whichpeople live their lives and in particular inthe machinery, appliances and vehiclesthey use and the houses they live in.Above all, it means changing investmentchoices to make future patterns ofeconomic activity sustainable. This affectsevery area of government policy - hencethe thread of green proposals which runsthroughout this paper.

4.2.2 It also requires the participation ofevery level of government - local andnational, regional and European, and ofthe Scottish Parliament and the NationalAssembly for Wales. In Scotland, LiberalDemocrats have put our ‘green thread’ intoaction, going further than the rest of theUK in introducing a tough new system ofstrategic environmental assessmentapplying to all public sector plans andstrategies. Liberal Democrat ministershave also had a real and beneficial impactin dramatically improving recycling rates,supporting renewable energy anddeveloping green jobs.

4.2.3 In order for environmental policiesto be accepted and implemented asbroadly as possible, we need todemonstrate how households andcommunities can exist and developsustainably, allowing people to enjoy ahigh standard of living while minimisingthe environmental impacts of theirlifestyle. Implementing our commitmentto putting individuals and communitiesmore clearly in control of their own liveswill help to achieve this objective. As localauthority recycling rates show, peoplegenerally respond well when they aregiven appropriate tools (such as householdcollection of recyclable waste). People areincreasingly aware of the manyopportunities available to reduce their own

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impact on the natural environment,including buying electricity fromrenewable sources, walking, cycling orusing public transport instead of cars, orpurchasing organic or locally producedfoodstuffs. We aim to expand and raiseawareness of these opportunities andincrease their payback, for example, byrequiring electricity supply companies tobuy back surplus power from consumerswho have installed micro-generationtechnologies.

4.2.4 This approach will help tostimulate innovation and mobiliseindividuals’ activities and investmentcapital. It is limited, however, partly bypeople’s awareness and income levels andpartly by the fact that many aspects of themove towards sustainability can only beachieved by national governments or theinternational community as a whole. UKgovernment must therefore play a moreactive role in steering the market towardssustainable solutions, for example byusing green taxes and emissions tradingsystems, and in setting the rightframework through planning policy. Itmust also make the direct investment, forexample in public transport, which isneeded to reach sustainable solutions.

4.2.5 Government action can also ensurethat greener policies lead to faireroutcomes. The poorest individuals andhouseholds are generally those least ableto take advantage of environmentalincentives, but are also those most likelyto be affected by environmentaldegradation - living in inadequate housingin polluted areas and relying on publictransport that is too often unreliable andunsafe. Liberal Democrats recognise thatenvironmental policies will fail if theyexacerbate levels of inequality anddeprivation.

4.2.6 It is also clear that action needs tobe taken at international level, buildingmore effective environmental agreements

and integrating environmental prioritiesinto all relevant international institutions,such as the World Bank and WTO. Theinternational structure provided by theKyoto Protocol does not yet provide anadequate framework for reducinggreenhouse gas emissions. The UK andEU need to take urgent action to take alead in reducing their own emissions,demonstrating commitment andencouraging action worldwide. In manyareas the EU already leads theinternational environmental debate, but itsspending priorities undermine itsenvironmental credentials and must befurther reformed.

4.3 Dealing with climatechange

4.3.1 Political parties used to talk aboutenvironmental policy as an aspect of‘quality of life’. Although this is still true,the issue of climate change is far moreserious, posing a real and direct threat tothe survival of human societies. The lackof effective action to avert climate changeis the greatest failing of the last twentyyears on the part of both the internationalcommunity and the domestic politicalsystem. Furthermore, it is clear that it isnow too late to avert many of the impacts.Although the effort to reduce greenhousegas emissions is still urgent, policies toadapt to the effects of climate change arealso important. Consequently, we placeclimate change as one of our top twopolicy and campaigning priorities(alongside creating a fairer and lessunequal society; see chapter 3).

4.3.2 We remain committed to thenecessary longer-term target of a 60%reduction in UK greenhouse gas emissionsby 2050. This is challenging but notunachievable, as long as appropriate policyframeworks are firmly put in place in thenext few years. We will develop proposalsincluding:• Mechanisms to accelerate

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significantly the development ofrenewable energy and investment inenergy conservation measures,particularly for housing, wherestandards are still very low;

• No replacement for nuclear stations;compared to the alternatives, nuclearpower is hugely expensive, far morevulnerable to terrorist attack andposes unresolved problems of wastedisposal;

• Promoting a decentralised energysystem based more on micro-generation, using solar panels, smallwind turbines and combined heat andpower units to make buildings netgenerators of electricity - reducingreliance on the centralised and highlyinefficient (in terms of transmissionlosses) system of major power stationsplus the National Grid;

• Development of the Kyoto Protocolprocess, centred around the principleof ‘contraction and convergence’ as afair way of allocating emissions levelsbetween countries, and proposals forsupportive initiatives such as, forexample, an EU-China technologyagreement, together with a radicalshift in EU spending priorities fromagriculture to energy and transport.

4.3.3 Reducing emissions from transportis an urgent priority if we are to meet ourclimate change targets. Once again, a widerange of policies is essential, aimed atimproving public transport, reducing theenvironmental impact of motor transportand aviation, and reducing the need totravel in the first place. We will developproposals to:• Expand and improve rail services

within and between cities, includingtram and urban light rail systems. Thiswill require substantial investment,including using innovative forms offinancing such as issuing bonds orapplying the principle that those whobenefit from development, through

increased land values, should supportthe cost;

• Improve bus services using, whereappropriate, the London model ofcompetitive franchises for servicenetworks, determined on social aswell as economic grounds;

• Extend congestion charging, initiallyto those cities which want them, andin the long term nationwide, as part ofa national road-user charging scheme;

• Develop a planning framework whichincorporates targets for energy andcarbon reduction, and minimises theneed to travel.

4.3.4 The Scottish record in recent yearsshows how much can be done. Undersuccessive Liberal Democrat TransportMinisters, 70% of transport investment isnow directed at public transport, includingrail and tram systems. Indeed, while raillines continue to close under Labour inEngland, Scottish ministers are investingin new railways, such as the BordersRailway, that will undo the damage of the1960s’ cuts and reconnect one of thelargest areas in Britain currently without arail system.

4.3.5 A more ambitious use of greentaxes is an important part of our agenda,and a cost-effective way in which tochange people’s behaviour. Following theprinciple of ‘taxing differently, not taxingmore’, we will implement a significant‘green switch’ in taxation, away fromwealth and jobs and on to resource use andpollution. Increased revenue from thegreen taxes outlined below will be used tocut taxes in other areas (see chapter 5).Emissions trading can also be used moreeffectively to control carbon emissions.We will:• Reduce emissions from road

transport, and reward clean cars, bygraduating vehicle excise duty muchmore steeply against the fuelefficiency of the vehicle, and

increasing fuel duty in line withinflation;

• Reduce emissions from aviation byreplacing the existing tax onpassengers - Airport Passenger Duty -with an aircraft tax based on theemissions of each aircraft. This willcover freight aircraft as well aspassenger services, and will becharged on each departing flight,scaled by the emissions capacity ofthe aircraft rather than individualpassengers (current necessaryexemptions in the Highlands andIslands will be retained). We will alsoaim to include aviation emissions inthe European Emissions TradingSystem as soon as possible;

• Promote renewables and energyefficiency, through reforming theexisting Climate Change Levy onbusiness use of carbon fuels, which isover-complex and has not beenindexed. Initially we will index it toinflation, and then reform it into asimpler carbon tax applying upstreamto primary fuels;

• Reduce industrial emissions bytightening the unambitious cap onemissions set by the EU, and pressingfor member states to be allowed tohold back a part of the nationalallocation for sale to the highestbidder at auction;

• Investigate the use of tradablepersonal carbon allowances toencourage consumers and businessesto reduce their own activities whichgenerate carbon emissions.

4.3.6 The impacts of climate change arenow increasingly visible, and will becomemore so even if action to reduce emissionsis successful. We will develop policiesdesigned to adapt to the impacts of climatechange in the UK, which include greaterwater shortages in southern and easternEngland, changes in crop growing patternsand pressure on vulnerable wildlife. Wewill also aim to increase aid spending on

the most vulnerable poor countries,particularly island and coastal nations.

4.4 Building sustainablecommunities

4.4.1 Climate change is not, of course,the only area where environmental policyis important. Key Liberal Democrat policycommitments currently include:• A long-term goal of zero municipal

waste through waste minimisation,reuse and recycling;

• Opposition to commercial growing ofGM crops in the absence of sufficientevidence of their environmentalsafety;

• More widespread reporting of theenvironmental impacts of governmentand commercial behaviour, andstricter enforcement of environmentalregulations;

• The use of central and localgovernment procurement policy toboost the market for green productsand services.

4.4.2 We need to take thesecommitments further and demonstrate howhouseholds and local communities canexist and develop sustainably. We willtherefore develop proposals to:• Ensure all new building is to the

highest environmental standards,together with a programme of retro-fitting existing buildings when theyare sold or tenancies changed - aimingto minimise their use of non-renewable energy and of treatedwater;

• Enable local communities to developtheir own initiatives to reducepollution and resource use, forexample through community-ownedrenewable energy generation or water-saving initiatives;

• Promote sustainable consumption,including using stricter productstandards to remove the mostdamaging products from the shops,

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environmental labelling, and improvedproduct design to maximise productlife and durability;

• Encourage businesses, particularlysmall and medium-sized enterprises,to follow up environmental reportingwith policies to minimise waste andresource use - which is good for theirbottom line as well as for theenvironment.

4.4.3 Planning policy is key to many ofour aims, and should be reformed so thatsustainable housing and transport systems,economic and leisure opportunities whichminimise the need to travel, and improvedprotection of habitats and biodiversity canall be more effectively pursued. Thesystem should be reformed so that eachcase is considered entirely on its meritsand in line with local need.

4.4.4 Many environmental issues,including climate change and itsassociated impacts, such as watershortages, need concerted internationalaction if they are to be tackled effectively.Specific proposals for reforming

international law as it affects the globalenvironment are being put beforeconference in policy paper 74, Britain’sGlobal Responsibilities: the internationalrule of law. They include:• Improving international environmental

institutions, including boosting theresources available to the UNEnvironment Programme and GlobalEnvironment Facility, and encouragingthe development of effectiveenforcement mechanisms inenvironmental treaties;

• Integrating environmental prioritiesinto the policies and practices of keyinternational institutions such as theWorld Bank and World TradeOrganisation;

• Ensuring that the drive to tradeliberalisation, particularly indeveloping countries, does not impedethe development of effective domesticenvironmental policies, for examplefor the sustainable management ofnatural resources such as timber orfisheries.

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5.0.1 Sustainable economic prosperity isneeded to underpin all our goals -extending individual freedom, deliveringeffective local public services, endingsocial exclusion, building a just andequitable world and investing in thetechnologies that reduce resource use andpollution. The Labour Government has putright some of the problems it inheritedfrom the Conservatives, but has not yetlaid the foundations for real and lastingprosperity.

5.1 Challenges

5.1.1 In some important respects, the UKeconomy has performed well over the lastdecade. Whereas for many years cycles ofgrowth and inflation used to characteriseBritain’s economy, it is now, in the wordsof the OECD, a ‘paragon of stability’. Jobgrowth has been strong and unemploymentrates fell from the mid-1990s until 2004.The major reform of moving the power toset interest rates away from politicians tothe Bank of England, originally proposedby the Liberal Democrats, has played animportant role in cementing in lowinflation and economic stability.

5.1.2 Despite these achievements, thereare still daunting economic challenges thatplace continued prosperity at risk. Britain’seconomy suffers from a number ofimbalances. Growth has been over-dependent on consumer spending, whichcannot be sustained indefinitely, andbusiness investment has been far frombuoyant. Personal debt levels, includingmortgages, are uncomfortably high andrising. People now pay out nearly £1 inevery £5 of their take-home pay inservicing debt. Unemployment, while stilllow by European standards, has beencreeping upwards since February 2005.

5.1.3 Despite recent improvements,average productivity still lags behind otherwestern countries. In 2004, output perhour worked was 19% higher in France,15% higher in the US and 5% higher inGermany than it was in Britain. Britishworkers tend to be less skilled than theircounterparts. A third of 25-34-year-olds -a much larger proportion than in any otherlarge rich economy - have few or noformal qualifications beyond compulsoryeducation. Skill shortages throughout theeconomy hold back business developmentand reduce the ability to create wealth.They also increase the vulnerability of theeconomy to external competition,particularly from the new entrants to theEU in eastern Europe and from newlyindustrialising countries, particularlyChina and India. Unable to compete onwage costs, British workers need higherlevels of skills and greater flexibility toadapt to changing markets.

5.1.4 The long-standing belief that theUK has a strong science base has beenundermined by large-scale closures ofuniversity science departments and thecurrent crisis in the supply of science andmaths teachers in schools. There is also apatchy record in research anddevelopment, patents and innovationactivity compared to other EU countries.Between 1998 and 2000 the UK wasahead of just two EU15 countries (Spainand Greece) in the Community InnovationSurvey. Britain has very few largetechnology-based companies.

5.1.5 The economy is still a long wayfrom achieving environmentalsustainability. This is dealt with in moredetail in chapter 4, but the failure tointegrate environmental costs and benefitsinto prices and decision-making alsoplaces pressures on the UK’s economic

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How can we build an economy for the long term?Prosperity

infrastructure and ability to improve itsproductivity. Higher traffic levels, forexample, mean that Britain has the mostcongested roads in the EU. The failure toinvest in renewable energy and energyefficiency has led to a growingdependence on global oil and gas markets,presenting future challenges for energysecurity.

5.2 The Liberal Democratapproach

5.2.1 Liberal Democrats believe thateconomic prosperity - the creation ofwealth and a better standard of living - ismost likely to be assured through theoperation of markets that liberate theenergies and talents of individuals andpromote enterprise and innovation. If theyare to work, markets need an environmentthat is consistent and predictable. A keyrole of government is therefore to maintaina framework of stable prices, low interestrates and responsibly managed publicfinances. A rules-based and non-discriminatory international tradingsystem helps realise the benefits of themarket system, and spreads prosperityaround the world.

5.2.2 At the same time, we recognisethat markets can fail, for instance wheremarket dominance is abused. TheGovernment, for example, has allowed ahandful of retailers to build up near-monopolies in local and regionaleconomies which threaten consumerchoice, as well as social cohesion andlocal economic sustainability. There is nowan enormous gap between the preferentialtreatment given to large internationalbusinesses, in taxation, planning and otherhidden subsidies, compared to the forestof bureaucratic hurdles thrown in the pathof the next generation of small businesses.

5.2.3 Where this occurs, governmentintervention is justified. It is for thisreason that Liberal Democrats support

tough legislation to prevent monopolies,cartels and other market distortions and toprotect the rights of consumers. Someinterventions can achieve a number ofobjectives: our ten-point plan to tackleconsumer debt, for instance, can be seenas a measure both to protect consumersand to promote economic stability. Marketregulation is particularly important -though correspondingly difficult - atinternational level, where majortransnational companies can exercise morepower than governments of smallcountries. At the same time, we recognisethat heavy-handed interventions can makeit difficult for business to create wealth,and wherever possible we want to avoidburdening companies with additionalregulation.

5.2.4 Markets also fail where the valueof social or environmental goods (onwhich it is often hard to put a price) arenot reflected in prices. As set out inchapter 4, we aim to ensure thatsustainable development lies at the heartof economic policy. This requires a mix ofregulation and market-based measures,such as green taxes and emissions trading,to ensure that environmental costs andbenefits are factored in to decisions takenby businesses and consumers. It alsorequires direct investment in areas such aspublic transport and renewable energy.

5.2.5 Markets also often fail to preventwealth being concentrated in too fewhands or to prevent situations in whichpoverty and economic disadvantage hinderpersonal freedoms and prevent peoplefrom playing their full role in society.Government needs to address this throughspending on public services, such ashealth and education, which will, in turn,strengthen human capital. Taxes have alegitimate role in promoting a fairersociety, by redistributing wealth fromricher individuals and communities tothose who are worse off. LiberalDemocrats believe in a progressive tax

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system in which those with a greaterability to pay are required to make agreater contribution. At the same time,taxes should not be punitive, and shouldbe kept as low as possible whilstdelivering adequate revenue to fund whatneeds to be financed from generaltaxation.

5.3 Tough choices ongovernment spending

5.3.1 Labour claims that it is committedto following the ‘golden rule’ forgovernment finances, to balance thecurrent budget over the economic cycle.After building up big fiscal surplusesduring its early years in office, spendingincreased by just under 4% per year in realterms between 1999 and 2005, while theeconomy also faced a structural shortfallin tax revenues over the same period. Asthe fiscal situation has steadilydeteriorated, the golden rule has beenstretched to breaking point. Over the nexttwo fiscal years, the Government intendspublic spending growth to slow to around3% a year, and from April 2008, it will beheld back still further, to only 1.9% a yearin the three years to 2010/11.

5.3.2 In keeping with our commitment toeconomic stability and responsible fiscalmanagement, Liberal Democrats supportthe golden rule and will ensure that it isconsistently applied - and, just asimportantly, subjected to independentassessment, for example by the NationalAudit Office. Total public expenditure isprojected to rise by 41% in real terms overthe period 1996/97 to 2007/08.Consequently, there is little public appetitefor substantial increases in taxes orspending, which means that there will belimited room for commitments to higherpublic expenditure other than those whichcan be funded from the proceeds ofeconomic growth.

5.3.3 Recognising this at the 2005general election, Liberal Democrats wereable to fund most of our proposals frombudget savings. We proposed to:• Keep both public spending and

taxation at broadly the same totallevels as proposed by theGovernment;

• Move around £5 billion of spendingfrom lower priority areas (such asunjustifiable business subsidies, theChild Trust Fund and ID cards) intoimproved pensions, policing and earlyeducation;

• Ensure more independent scrutiny anddiscipline in fiscal policy.

5.3.4 Since the election, the Governmenthas continued to put forward policieswhich will consume large amounts ofpublic spending for wasteful outcomes -for example, identity cards, or new nuclearpower stations. We will opposeunnecessary expenditure and continue totake tough choices on public spending,demonstrated through a costed alternativeprogramme. Whenever we propose toincrease government expenditure forspecific purposes, we will seek to ensurethat the revenue comes from cutting backon lower-priority areas. To facilitate this,we have established a spending review toidentify approximately 3% of totalgovernment spending (£15bn a year) thatwe consider to be misdirected, or of a lowpriority, which can be reallocated toLiberal Democrat policy priorities.

5.4 Fairer and greener taxes

5.4.1 Whilst we do not propose increasesin the overall level of taxation, LiberalDemocrats seek major reforms to thestructure of the tax system, for fivereasons. First, as noted in chapter 3, toaddress fundamental unfairness in thesystem. Second, as explained in chapter 4,green taxes can be used much moreambitiously to tackle climate change.

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Third, as set out in chapter 2, we want tostrengthen local autonomy by givingdemocratic local government more powerto raise and spend revenue. Fourth, wewant to make the system moreeconomically efficient, improvingincentives to work and save. And fifth, thetax and benefits system has becomeunnecessarily complex and inefficient as aresult of Gordon Brown’s meddling andtinkering.

5.4.2 Our ideas for reform are set out inPolicy Paper 75, Fairer, Simpler, Greener.Our overall approach is to raise incometax thresholds and cut rates at the bottomend, paid for by removing tax reliefswhich benefit the well-off and byincreasing the total raised fromenvironmental taxes. The paper sets out anoverall revenue-neutral package for theshort term. It will significantly lift thethreshold for national income tax byremoving the current 10% starting rate andcutting the basic rate, removing CapitalGains Tax taper relief, providing incometax relief on pensions contributions at thebasic rate only, and increasingenvironmental taxes, especially on aviation(our ‘green switch’ - see further in chapter4). It also proposes to simplify businesstaxation by reducing the level ofcorporation tax, funded by removingreliefs. We reaffirm our commitment toreplace the highly regressive Council Taxwith a local income tax.

5.4.3 In the longer term, we intend toraise the income tax threshold even further- our intermediate objective would be toraise the threshold to the annual equivalentof the National Minimum Wage for a full-time worker. We aim to enlarge the taxbase, tax unearned economic rent andstabilise the property market by furtherdeveloping policies for land valuetaxation. We also plan in the long term tomerge the system of employee andemployer National InsuranceContributions as the contributory principle

becomes obsolete, and to overhaul thesystem of taxing transport and congestionto reflect the potential of road-userpricing.

5.5 Meeting the productivitychallenge

5.5.1 For all its rhetoric, the Governmenthas failed to address the UK’s underlyingeconomic weaknesses. According to DTIfigures (March 2006), on average workersin the UK have to work nine hours toproduce the same output that workers inGermany achieve in eight, and workers inFrance in seven. Tony Blair promised thathis government would be about‘education, education, education’ and yetemployers are often frustrated at the lackof basic education and skills amongst theiremployees.

5.5.2 We will bring forward proposals toaddress the UK’s skills gap, including:• Ensuring that pupils up to age 14 have

satisfactory attainments in the ‘threeRs’, and also in the ‘fourth R’,‘articulation’ (speaking and listeningskills), and a good grounding in thefull range of other subjects;

• Reforming 14-19 education to givepupils a personalised curriculum witha choice of both academic andvocational learning;

• Addressing the funding inequality in16-19 further education betweenschools and colleges;

• Enhancing opportunities for adultlearning and work-based training;

• Making training providers moreresponsive to employers;

• Increasing the linkages and cross-overs between vocational andacademic education, promotingbusiness and management skills.

(See further in chapter 8.)

5.5.3 UK productivity also suffers fromfailings in infrastructure, particularly intransport (see chapter 4) and innovation.We welcomed the additional investment inscience in the 2006 Budget - but Britain’sspending on research and developmentstill lags behind that of France, Germany,Japan and the United States. On the basisof current government policies, the UKwill not start to close that gap for nearlyanother decade. During this Parliament,we will bring forward policy proposals toimprove the UK’s record in science,research and innovation.

5.6 Fostering enterprise

5.6.1 Liberal Democrats want Britishbusinesses to be able to succeed atcreating prosperity and jobs, inn