The Rt. Hon. Jeremy Thorpe
"This election will make or break Britain. It is already certain that the Government which takes office after the election will face the greatest peace-time crisis we have known since the dark days of 1931.
The fact that we are committed to two elections in one year highlights the uncertainties and divisions of British politics. Mr. Heath called the first election back in February because his industrial and economic strategy had totally collapsed and he had no alternative. He lost, and relations between the Conservative Party and the Trade Union Movement will take many years to restore.
Mr. Wilson has called the second election because he is not prepared to accept the disciplines of a minority Government. So long as a minority Government governs on behalf of the whole nation it can command a majority in Parliament. At the last election, the electorate clearly refused to give him a mandate for those divisive parts of his programme such as further nationalisation and clearly in calling for an election he has shown he is not prepared to accept that verdict.
Liberals are unashamedly committed to breaking the two Party system in which the Party of Management alternates with the Party of Trade Unionism, each committed to the reversal of their predecessors' policies. Both interest groups represent vital elements in our society. Neither should ever be allowed to dominate the thinking of the government of the day. Instant reversal has brought uncertainty over Europe, over pensions, in the future of industry and has undermined confidence and stability.
As the leader of a national political party it is my duty to warn the nation of the consequences if we fail to overcome this crisis. It is also my duty clearly and firmly to point the way out of our desperate situation.
The first priority must be to promote a sense of common endeavour and national purpose in government. We must persuade all people to lay aside the differences which divide and weaken us as a nation and to unite in pursuit. of a solution to our difficulties. We must persuade ourselves that the survival of Britain is far more important than the advancement of any single individual or party and that we have far more in common as British citizens than the artificial divisions which society inflicts on us.
But this unity will not be enough unless we can also isolate and deal with the fundamental defects - economic, political and social - which have led us to the brink of disaster. The next Government will have, without prejudice or precondition, to set itself to reconstruct Britain on a much fairer basis. It will have to attack poverty at source, redistribute wealth and income so that the rewards of endeavour correspond more closely to the value of the effort involved. It will have to remove the class divisions inherent in our society, particularly in our industrial relations and in the way we allocate national resources between rich and poor.
I do not claim that it can be done overnight but I do say that unless a start is made-and very soon-the new endeavour, which is needed to rescue us, will not be forthcoming.
Now is the time to decide whether we are to continue the steady decline in our national life, or whether we are going to pull ourselves back from the brink. Only with the necessary political will coupled with the concerted efforts of us all can we rescue ourselves. In asking for your commitment to the Liberal cause at this election. I am inviting you to join 6 million voters who support a party untainted by failure in government and unprejudiced by vested interests The Liberal Party can attract the support of all people drawn from every spectrum of our society who want to see a fair and tolerant society in Britain. With 6 million voters on which to build, and 600 candidates in the field, the opportunities open to us are unlimited.
The sort of policies which we are putting forward are fair-they are realistic-they are tough. I claim that they represent a programme which can unite Britain and can achieve the success which as a nation we have so long been denied.
Our greatest asset is that we could become the first post war Government which owed nothing to any sectional group or interest. In the February election, 2 million traditional Liberals were joined by 2 million previous Tory and 2 million previous
Labour voters giving us a total of 6 million votes. It only needs to do this again, and we have united the centre in British politics.
In short, l believe that Liberals can become the catalyst to bind the country together in a new spirit of common endeavour and I ask for your support in this great undertaking."
Unless the next Government deals immediately with these problems any long term aims for the future will be quite unattainable. This Manifesto unashamedly concentrates on the immediate situation and outlines policies to deal with it. We have deliberately refrained from restating our full programme of policies which were set out in last February's Manifesto 'Change the face of Britain' and in the document 'Forward with the Liberals'. Nevertheless they are an integral part of Liberal thinking and our aims and principles remain valid.
The basic principle of Liberalism is a concern for the individual. We do not think in terms of bosses or masses or classes. We start with the individual men and women who make up these vast conglomerations of people.
The great issue facing all nations in this century is how to combine the collective activity of the state, necessary for the welfare of the people with democratic freedoms and an opportunity for individual initiative in economic enterprise. The Liberal Party's great claim is that it approaches this problem with no doctrinaire prejudices, no class inhibitions and no sectional interests.
We seek to redistribute so that all may own and so that none may be impoverished. We seek to create an individual partnership between capital and labour. We seek to devolve power to Scotland, Wales and the regions of England. We seek to decentralise by ensuring that every act of government is carried out at the lowest level consistent with intelligent administration.
Through participation we want to see ordinary men and women having a say in all that goes on around them. And just as we seek to break down concentrations of political power, we seek in the same way to break down monopolistic concentrations of economic power.
In the world sphere we are essentially internationalist. We oppose narrow, self-interested policies by nations or power blocs. We welcome the opportunity to transform the European Economic Community into a Liberal, outward looking federation of free people with sovereignty, pooled in respect of vital political and economic tasks, but with equally clearly defined powers and responsibilities for the constituent states and regions.
All these themes have one end. To serve the individual and to create the conditions in which he can develop his personality to the full. But these aims are endangered by the immediate problems which we now face.
Unless the British people unite to overcome our common difficulties our future prosperity as a democracy will be in grave jeopardy. The remainder of this Manifesto examines the immediate crisis and outlines the Liberal solution.
The Economic Crisis
This Election is being fought against the threat of economic disaster, caused by stagnation and high inflation. The rapid upsurge in world commodity prices has resulted in balance of payments deficits for almost the entire Western World.
Britain has been particularly hard hit. Our cost of living soared by 16 per cent. in 1973 alone and is currently rising at the rate of 20 per cent. a year, which means that our money will buy only four-fifths of what it could buy a year ago.
Unemployment is again increasing rapidly. Thousands of people are losing their jobs every month-35,OO0 in August alone. If present trends continue, three-quarters of a million people could be out of work by the end of this year.
We are borrowing astronomical sums of money abroad. This year alone, our balance of payments is in deficit by £4,500 million. Our share of world trade is steadily declining and no amount of North Sea Oil, or any other panacea, will repay these debts in the foreseeable future.
In short, we are living beyond our means and this unpalatable truth must he communicated to the people, whatever the political consequences. As Jeremy Thorpe has said: 'It is time for Britain to wake up and realise that only a total change of course in our politics, our economy and our national aspirations can save us from disaster'.
The Political Crisis
Before any Government can begin to get to grips with the economic situation, it must regain the confidence and respect of the electorate.
Our present electoral system is a fraud. Far from ensuring representative government, it polarises power between two extremist parties representing opposed classes and prevents a proper representation of alternative view-points. At every Election less than half the voters get the candidate of their choice returned to Parliament.
Many people are frustrated by the lack of success which is apparent, regardless of the party in office. The prospects for success are continually undermined by the fact that, once a party becomes the Government it feels obliged to cancel much of what its opponents had previously done in office. Time and time again it is ultimately obliged by events to readopt these policies. This constant vacillation causes the most devastating uncertainty in our political and economic life.
The class war produces deep and irreconcilable differences between the Conservative and Labour Parties, but these differences stem, not from a substantial issue of principle, but from preconceived dogma which has no relevance today. Class-based parties, above all, are responsible for the partisan nature of British politics and the divisions in society between rich and poor, manager and worker, householder and tenant.
It is impossible to conceive of a Labour Party dependent on the trade unions for 90 per cent. of its funds being able to operate an effective incomes policy, when its paymasters, the union leaders, object to wage control.
Conversely, how can a Conservative Government take effective action to control prices and stamp out restrictive practices in industry when it is dependent on big business for over a million pounds a year?
Yet these are precisely the policies we need at the moment if we are to overcome inflation.
Nor will any policy achieve lasting progress without the consent of a large majority of the population. Since the war, neither of the other two parties has won the support of more than half of the electorate. Neither can achieve the necessary degree of unity because each is incapable of appealing to any significant number of the other's traditional supporters. A Labour Government instinctively raises the suspicions of business; a Conservative Government immediately alienates the Trade Unions.
The time has come for stability in Government and an end to class confrontation based on fear and mistrust. This country can no longer be ruled from the extremes of right and left, setting people against each other; it must be run by a Government whose integrity is not in doubt, whose policies are fair minded and whose politics are not governed by vested interests. It is the unique characteristic of the Liberal Party that it can provide such a Government because it is without doctrinaire prejudices, class inhibitions or sectional interests.
The next Government must he honest with the public and admit that in the present circumstances a statutory prices and incomes policy is absolutely necessary as an essential weapon against inflation.
The Liberal Party has consistently advocated statutory controls; the other parties have studiously avoided them until forced into action by an adverse situation. When they have taken action both have pandered to vested interests to the detriment of the population as a whole. They have been fearful of embarking on long-term policies to control inflation for fear of denting the profits of the big corporations or the wage packets of the strongest unions. Their timid attempts at controlling inflation have been undercut by promises of an ultimate return to a free-for-all. As a result, their policies have failed because the nation was unprepared for such measures and the necessary restraint was not forthcoming.
No policy will gain acceptance unless it is seen to be both effective in its operation and fair to all concerned. Inflation divides society; it punishes and deprives the weak and protects and rewards the strong. It encourages a situation where the rich get more and the poor go to the wall, where wealth is illusory but poverty is real. Therefore, it is dangerous to attack inflation without at the same time protecting those who are most vulnerable to its effects.
The Liberal Party believes that this can only be done by means of a fundamental redistribution of wealth and resources. We understand the fear of inflation that motivates moderate-and not so moderate-men to press for higher and higher wages. We are prepared to resist these claims when we feel they are unjustified and against the national interest. But we also recognise that even the most efficient policy will be breached unless the causes of inequality are removed.
We, therefore, advocate, as an essential prerequisite to the introduction of statutory prices and incomes control, a programme of social reform.
In effect, this would be an agreement between the people of this country and the Government of the day. In return for immediate measures to alleviate poverty and industrial uncertainty and unrest, the next Government could count on positive acceptance for a measure of restraint. Such a programme should contain four minimum proposals:
First, a policy for creating and redistributing national wealth.
Second, measures to encourage true competition and power-sharing in industry.
Third, a review of our public expenditure programme with priority being given to maintaining and expanding social welfare provision.
Fourth, the reform of our electoral and governmental structures to reflect more accurately the will of the electorate.
Creating and Sharing Wealth
Our primary task in the immediate aftermath of the Election will be to establish an agreed attitude towards managing the economy. This must include a statutory policy for prices and incomes, which will only allow personal wealth to expand at a rate which the nation can afford. At the same time it must effect a redistribution of incomes and a far greater degree of social justice. The present grossly inequitable distribution of incomes is starkly illustrated by the plight of those engaged in the health, social and public services, many of whom are women. The next Government should legislate immediately to introduce a statutory minimum earnings level, corresponding to two-thirds of the average wage, for a normal 40-hour working week. This would mean guaranteed earnings of £27, at current rates, for the 44 million working people who earn less than this amount, the figure automatically increasing with rises in average earnings. If phased in over a three year period it would add 3 per cent. per annum to the national wage bill, and would necessitate a corresponding cut-back in the expectation of above-average wage earners. Such people will have to be content with pay increases which cover only rises in the cost of living.
At the same time the Government should undertake to implement in full the principle of parity with equivalent jobs in the private sector for those working in the nationalised industries and public services.
A similar selective policy for prices must he evolved to protect the family from excessive price increases at a time of wage restraint. The present supervision of prices, dividends and profit margins should be continued and middle-sized companies should be obliged to submit applications for price increases in the same way as top companies. More positive efforts must be made to break up monopolies and price fixing and to recreate a genuinely competitive economy. The Monopoly and Mergers Commission should be given powers to investigate and regulate monopoly companies. The Government should stimulate competition where it can still be made to work, break up and control monopolies, prevent non-productive mergers and stamp out restrictive trade practices, so that profits are made fairly, in truly competitive circumstances.
Our immediate aim is to restore confidence and stability in industry, to encourage an even flow of investment and to distribute wealth more widely. Policies for nationalisation are irrelevant to the problems of industry. As the Court Line disaster has shown, the merest hint of nationalisation is sufficient to drive away private investment, leaving the long-suffering general public to foot the bill. There is a role for private and public enterprise but a clear line of demarcation should be drawn between them. And both must change their mode of operation if confidence and stability in industry is to return.
A national programme for industrial development ought therefore to contain four basic objectives, namely: The reform of Company Law to induce a far greater degree of public responsibility in industry and make the management of companies responsible to shareholders and employees on an equal basis. Then there must be a concentrated attack on monopolies on the lines of the American anti-trust laws. Nationalisation will not solve the problems of high prices or monopolies. As we have seen in so many nationalised industries, the public either has to suffer high prices or subsidise non-profit making industries. Either way the consumer pays more.
Next, the Government should consult with industry to establish the prospects for investment. Where the economic advantages to the nation would be enhanced by investment in certain industries, the Government should also be prepared to underwrite the necessary finance for a limited period of time, if necessary. An essential prerequisite to this policy must be a commitment by Government to refrain from further nationalisation except where there is no other viable alternative, and liquidation would be detrimental to the nation, as, for example, in the case of Rolls-Royce.
Finally, a phased introduction of worker-participation and co-partnership schemes at all levels of industry from the shop-floor upwards, should involve union and non-union workers in the exercise of power. We would require legislation to set up works councils in all industries above a certain size and to establish the principle of worker representation at board level. The introduction of approved profit-sharing schemes (or, in the case of the nationalised industries, a dividend for each industry, based on productivity) is also essential if the necessary co-operation is to be achieved at plant level.
The key to a successful programme of industrial development lies in a continuous flow of investment capital, a stable and contented work force and a steady increase in output. These must be our objectives.
Public Expenditure and Family Needs
The most vital provisions any Government can make for its people are to ensure that they have a decent roof over their heads and an adequate income. In the immediate period of low or non-existent economic growth, we cannot assume that our expenditure on these programmes will be paid for by greater production and economic expansion. Therefore we must find the money from other sources. We must now learn to live within our means. Strict economies in non-essential expenditure must now be made if our public services are even to be maintained at their current standards, let alone expanded.
The indexation of savings against inflation would protect those dependent on their savings and encourage greater investment. This should be accompanied by a far greater degree of austerity and care in the deployment of public money.
At local level there must he a radical overhaul of the rating system as quickly as possible, so as to redistribute the burden fairly between ratepayers and to raise the finance necessary to ensure the continuation of essential services. Liberals would introduce site value rating to replace the current rating of property by a rate geared to the value of the land on which the building stands. This would redistribute the burden of rates more fairly between domestic and industrial rate payers.
To reduce the burden on local authority expenditure, teachers' salaries should be paid through the Exchequer, thereby saving local authorities £570 million a year. Local authorities should also be given limited scope for raising revenue independently through appropriate local taxes.
Our priorities in the field of social welfare must be twofold; to reform and expand the provision of family welfare and to stabilise the chaotic system of housing finance. In general, the aim must be to recast existing programmes as far as possible rather than incurring further expenditure. In the case of the National Health Service, however, only a massive injection of capital can save it from imminent collapse and this will have to be done almost immediately.
The other major exception to this rule must be old age pensioners. In spite of the recent increase, the basic State pension is still pitifully inadequate, and over two million pensioners are forced to draw Supplementary Benefit in order to exist. The next Government should give an immediate commitment to tie the pension to a stated percentage of national average earnings. This would provide an automatic index against inflation and ensure that pensioners are not left behind in the wage race. The target to be met, over a three-year period, ought to be 50 per cent. of average earnings for a married couple and a third for a single person. At present wage rates this would work out at £21 and £14 respectively. The total cost would be £1,400 million, which can be raised by transforming the present contributory National Insurance system into a fully graduated Social Security Tax. This would be paid by employer and employee on a ratio of two-thirds to one-third, and would be much fairer on the low paid and self-employed. At present they pay a higher percentage of their earnings in National Insurance contributions than the above average wage earner. In addition Liberals will take the initiative in seeking all-party agreement on the creation of a second pension structure for all those in full-time employment. This would end the uncertainty and instability in the Occupational Pensions field caused by the changes in policy of successive governments.
In the field of housing, we must accept that we cannot continue indefinitely to subsidise the Building Societies in a vain attempt to keep interest rates down. If subsidies are necessary, they should be paid to individuals on the basis of need. In the short-term, our immediate priority should be to enable those who wish to buy their homes to overcome the twin barriers of inflated house prices and high interest rates. In ten years the price of an average new house has risen three times, the cost of a mortgage has risen five times whilst the proportion of an average family's income spent on mortgage repayments has increased from 25 per cent. to 50 per cent. The average price of a new house at over £10,900 is well beyond the reach of over half the population and unless steps are taken soon to alleviate the situation, home ownership will become a thing of the past.
This problem can be overcome without any extra governmental expenditure by the introduction of flexible mortgage schemes for all those buying their own home.
The Liberal proposals were discussed with the Building Societies prior to being incorporated in a recent pamphlet, and provide for three new schemes:
For those whose earnings are linked to the cost of living, through, for example, threshold agreements, an index linked mortgage would be appropriate. Under this scheme repayments begin at a lower initial value but rise automatically with increases in the cost of living index.
For those who are near retirement and wish to buy their first, and probably their last, home, the equity mortgage scheme would enable them to do so. Here the Building Society would buy a share of the house by contributing an interest-free grant, thus reducing the cost of the mortgage, in return for a share of the capital value when the house is sold. These schemes have already been discussed with representatives of the Building Societies and there is no practical reason why an enterprising Government could not introduce them immediately.
We must make far better use of existing accommodation. Wherever possible local authorities should purchase unsold properties for use as council houses, rather than leaving them to lie empty. If builders could be sure of selling their houses, there would be much greater incentive to press ahead with new contracts. Our proposals would achieve this at minimal cost to the Government.
In making adequate provision for low income families the next Government ought to take steps to ensure that financial aid goes to those in need and is not wasted. This can be achieved in two ways. Firstly, the wasteful and indiscriminate food subsidies should be scrapped and the £700 million thus saved spent on increasing family allowances and extending them to the first child. This would cost £340 million in a full year and would be far more effective than reducing the millionaire's loaf of bread by 2p. The remainder of the money saved could be put towards implementing the Finer Committee's recommendation, that an adequate allowance should be available to single parents with families to support, and assisting the disabled and other needy people.
Secondly, the first steps should be taken towards overhauling the entire Social Security system, eliminating most of the 44 means tests and replacing the unnecessary duplication between the Inland Revenue and the Department of Health and Social Security. Liberals would introduce a full scale tax-credit scheme which would encompass all existing allowances and welfare benefits. It would also replace all tax reliefs on mortgages, rent allowances and rent rebates by a single housing allowance paid to tenants and house buyers alike. The essence of the scheme is simple and was set out in our Manifesto last February. A Government commitment to phase in such a scheme over a five-year period is essential if the necessary agreement from those on low pay for a statutory prices and incomes policy is to emerge.
Implicit in all our objectives in the field of social policy is a commitment to ensure full and equal rights for women in every sphere. Liberals were the first to initiate legislation against sex-discrimination and there will be no let up in our campaign for equality between the sexes.
Once a minimum programme of social reform is agreed, we believe that any Government has the moral authority to ask the nation to exercise restraint in its economic aspirations in order to control inflation. But experience has shown that voluntary restraint is inadequate; there are always those who will break the rules either through force of habit or because they have the economic power to get what they want. Therefore, a statutory policy with tough sanctions on those who break it is essential. Liberals would control inflation through a combination of industrial reconstruction and a prices and incomes policy enforced by penalties on those whose actions cause inflation. We propose that prices and average earnings within a company should be limited to an agreed annual rate of increase. Any company which increased prices faster than that rate would suffer an extra surcharge on its Corporation Tax payments equivalent to the amount by which its prices had exceeded the agreed norm.
If average earnings per person (including fringe benefits) within a company rose faster than the agreed annual rate, then both the employer and the employees concerned would have to pay an extra surcharge on their graduated National Insurance Contributions, again on a sliding scale according to the amount by which earnings had exceeded the norm.
Of course, there must be provision for appeal if confrontation with those who have a special case is to be avoided. This would be best achieved by the compilation of ad hoc reports on earnings levels and pricing policies in particular industries, along the lines of the old National Board for Prices and Incomes. Such reports would also cover changes in relativities and wage differentials, which will have to be narrowed considerably, and Parliamentary consent would have to be obtained before reports could be implemented. The Relativities Board would be retained for this purpose. Thus instead of countering inflation by increasing everybody's taxes, as Mr. Powell and the Labour Party advocate, our policy would tax only those who cause inflation and control the supply of money into the economy without having to resort to the blunt instrument of brutal cuts in expenditure on social services which, once again, hit the poor hardest of all.
A great merit of this policy is that it would enable wage bargaining to take place without direct government intervention and inevitable accusations of partisanship. Yet it would still enable the Government to maintain overall control of the economy.
The next Government must face up to the problem of domestic inflation immediately on assuming office if we are to avoid the perils of bankruptcy, poverty and unemployment. We believe that this programme is the minimum that will generate the necessary consent for a tough anti-inflation policy.
The need for agricultural expansion
As long as our agriculture industry is allowed to decline we shall become increasingly dependent on the vicissitudes of the world market. Therefore we must become more self sufficient through greater domestic food production.
Farmers have had a raw deal recently and badly need an injection of confidence. The next government should undertake to introduce a temporary guaranteed price for beef and an increase in the milk subsidy. The pig subsidy should also be extended through the winter.
The Government should also seek a radical change in the Common Agriculture Policy of the Common Market in order to secure a reasonable return for the farmer and more stable prices for the consumer. This can only he done from within the community by a government committed to our continued membership. World food prices now exceed those pertaining in Europe and it would he totally against our economic interests to withdraw, regardless of the political considerations involved.
There remains the political crisis; this must also be faced now if our democracy is to survive and our government to is regain the confidence of the electorate.
Two major reforms must be introduced by the next Government. First it must replace the present antiquated electoral system, in which 19 million people have no influence on the choice of government. Liberals favour a fully proportional system using the single transferable vote in multi-member constituencies. Second, there must be a substantial devolution of power from Westminster, initially to Parliaments in Scotland and Wales, along the lines advocated by the Kilbrandon Commission on the Constitution. These Parliaments should have substantial legislative and budgetary powers-nothing less will satisfy the aspirations of the people of Scotland and Wales for full self-government, which Liberals support. Ultimately, Liberals want a Federal system of Government in Britain with Assemblies established in the regions of England.
Unless these reforms are carried out very soon the process of alienation from Government will become so deep seated as to he beyond redress.
A similar feeling of antipathy will soon be felt towards the European Communities unless there are direct elections to the European Parliament. This has been part of Liberal policy for a very long time and a government led initiative would help restore confidence in the European idea as well as being an indication of continued faith in our membership of the Community.
The above measures constitute the minimum social, economic and political programme which can save this country from the immediate crisis. We cannot afford another five year period in which major problems are swept under the carpet while politicians pretend that inflation does not exist. The next Government must be prepared to implement substantial radical changes in policy which will lay the groundwork for future economic prosperity. In doing so it must have regard for the long term, as well as the immediate, future. For only if we build on the foundations laid will we reap the rewards that economic self-restraint can produce.
Only a new political alignment can provide the momentum for economic stability. At the last Election, 6 million people supported the Liberal Party as the vehicle for this new momentum. Many others stood on the brink but their traditional allegiances and the understandable fear of breaking with the past prevented them from committing themselves fully. Yet the seeds have been sown, and after the election a strong Liberal Party in Parliament could break up the confrontation of the two class parties and create the conditions for a broad based radical alliance led by Liberals. Over 47 per cent. of the electorate would like to see a Liberal Government. If this support is translated into votes there will be a Liberal Government.