The UK needs to find ways to improve the lives of justifiably angry people who voted for Brexit, writes Liberal Democrat peer Malcolm Bruce.
The Brexit referendum opened deep divisions within the UK between those who feel ignored, frustrated and forgotten, and an apparently indifferent establishment.
Globalisation has left many better off. However, it has also led to rapid change which, for many people, has meant the decline of their communities whose economic reason to exist has moved elsewhere. We may have record numbers in employment, but many people find themselves stuck in low-paid, insecure jobs.
People are angry, and justifiably so. People have seen their pay cut and opportunities diminish while those driving the economy got richer even when it was their decisions had made millions poorer. The excesses of capitalism must be addressed. We must enact economic reforms to ensure a fairer society. Liberal democracy is based on markets, free trade and free enterprise. But these need to be servants, not masters of a liberal society.
One major issue is the UK economy is consumer driven. We inflate the value of our real estate, borrow against these assets and buy goods and services which mostly we don’t produce.
One way to tackle this would be to introduce land-value taxation. This would not only discourage speculative land hoarding, but it is an initial step in introducing taxes on wealth rather than income. It ensures that those individuals with high-value net worth contribute fairly to the community. Land and property speculation should no longer be the principal driver of our economy.
In Germany, their economy is driven by investmentand skills and company ownership is held more through direct investors and workers, rather than institutional shareholders looking for short-term gains.
The Liberal Democrats have long called for workers representative on boards, the encouragement of worker share ownership, and partnerships and supervisory boards with wider responsibilities than just shareholder return. Liberal Democrats believe that it is vital that everyone is given a stake in our economy, that we can only be united and competitive as a country if the rewards are reaped by all.
The UK still suffers tension between the roles of the state and the private sector, instead of the promotion of creative partnership. People are also being confronted with utilities raising prices ahead of inflation whilst delivering poor service. Rail services are equally expensive and unreliable.
To answer this, Labour has revitalised its Marxist-Leninist credentials and is proposing wholesale nationalisation. To a younger generation with no memory of the Soviet Union or the tussles over Clause 4 of the Labour Party constitution, it might seem attractive to bring gas, electricity, water and the railways back into public ownership.
After all, wouldn’t that mean fuel bills would be kept down and the trains would run on time with lower fares? Not necessarily. British Rail was famous for dreadful food, poor timekeeping and under-investment.
How would Labour pay for the shares and how would utilities and railways secure funding in competition with health, education, and welfare? Seizing the assets would destroy investment and collapse pension funds. It would be far better to give consumers and rail passengers a more direct role in the running of these companies, rather than having to own them.
Much of the inequality in the United Kingdom can be attributed to where you live. Therefore, it is vital we unlock the positive energy of our communities.
In Scotland, having our own Parliament with significant powers gives us control of our domestic affairs to address our distinctive needs and culture. We should be using those powers to pursue policies to improve our quality of life and strengthen our economy, which remains too dependent on the public sector. That does not mean we should cut public sector funding or privatise sectors. Rather we should seek to grow the private sector and with it the tax base.
However, we have seen over the past year what little regard the Conservative Government has for devolving powers. The Brexit process has been abused with powers being taken to Whitehall that should have been devolved. The loss of £8.9 billion of European Structural and Investment Funds is only likely to make the problems faced by disadvantaged areas worse.
Local authorities must have their powers and sources of funding guaranteed. Local autonomy with real financial muscle is the only sustainable answer to the regional divide. That is why the Government must support our call to devolve more decision-making power over key levers of economic development including transport, housing and skills. We must do more to tackle regional inequality; where you are born should not affect your chance of prosperity.
All of this makes clear that it is time for a new People’s Contract. We must end the politics of division, espoused in various forms by the Tories, Labour and the SNP and bring the country together. When looking at the referendum vote, we must not only call for a People’s Vote to end the Brexit chaos in the short term, but we must address why people voted leave in the first place. If we are to achieve a fairer, less divided society we must reform our economy so that everyone has the means to get by and the chance to get on.
Malcolm Bruce is the Liberal Democrat’s spokesperson for Northern Ireland & Scotland in the House of Lords