The Liberal Democrat Manifesto 1997

The problem: Despite the current pre-election mini-boom, the fundamentals of Britain's economy remain weak. We continue to be held back by instability in economic management, an underskilled labour force and chronic under-investment. Britain continues to consume too much and invest too little.

Our commitment: Liberal Democrats will lock in economic stability, encourage saving and promote enterprise. We will raise the quality of Britain's workforce through additional investment in education and training. As part of our strategy to build a sustainable economy, we will shift the burden of taxation from employment to the depletion of natural resources.
 
Our priorities are to:

• Provide stability in economic management to encourage long-term investment.
• Raise the quality of Britain's workforce and get people back to work.
• Promote enterprise and small businesses.
• Begin to shift taxation from jobs, wealth and goods to pollution and the depletion of natural resources.

Investing in Britain's future
Long-term investment and economic stability are crucial to future economic success.

We will:

• Secure stable prices and low interest rates. We will turn the Bank of England into a UK Reserve Bank, free from political interference. We will charge the Bank with keeping inflation low and make it accountable to Parliament for achieving this goal. Lower inflation and greater exchange rate stability can be better secured by working with Britain's European partners. The best framework for this is a single European currency and it is in Britain's interests to take part in this. However, three conditions must be met before this can happen. First, the single currency must be firmly founded on the Maastricht criteria. Second, Britain must meet those criteria. Third, the British people must have said 'yes' in a referendum. If these conditions for a single currency are in place, Britain should join.
• Ensure responsible economic management. We will keep to the 'golden rule' of public finance: over the economic cycle, total borrowing should not exceed total investment. We will make the government accountable to Parliament for keeping to this rule, and subject it to independent monitoring. We will cut wasteful spending and ensure new spending delivers value for money.
• Build up Britain's capital assets. We will distinguish between capital and current spending in the national accounting system. We will promote effective public/private investment partnerships at both national and local levels, with Councils' borrowing carefully controlled.
• Put Britain's people back to work. We will enable long-term unemployed people to turn their unemployment benefits into 'working benefits' paid to an employer to recruit and train them. We will break open the poverty traps that stop unemployed people from working. Our plans for boosting investment in infrastructure, promoting small businesses and encouraging energy conservation will create hundreds of thousands of new jobs.
• Invest in a highly-skilled workforce. Our investment of an additional £2 billion a year in education and training will improve skills and increase the nation's knowledge base.
• Promote environmental sustainability. We will begin a long-term shift in taxation, reducing taxes on jobs, wealth and goods and shifting them to pollution and resource depletion. We will use new national indicators of progress which include measures of quality of life and environmental sustainability.
• Encourage people to save. Our aim is to extend the advantages of TESSAs and PEPs to a wider range of savers by developing a new save-as-you-earn scheme. We will encourage personal and portable pension plans.

Investing in enterprise
Small business, enterprise and self-employment are the engine of a modern dynamic economy and a vital source of new jobs and growth.

We will:

• Support small and medium-sized businesses. We will encourage the banks to develop new sources of private finance, including grants, equity finance and mutual guarantee schemes. We will seek to expand the sources of 'seed-corn' capital. We will legislate for a statutory right to interest on late debt payments. We will require the banks to develop new codes of banking practice for small businesses. We will cut red tape, for example by stopping European institutions interfering where they shouldn't and by preventing Whitehall departments 'gold-plating' European regulations with extra rules. We will, in the long-term, abolish the Uniform Business Rate and bring in a new, fairer local rating system. We will ensure that government purchasing gives special emphasis and easier access to small and medium-sized firms.
• Boost regional and local economies. We will set up regionally-based Development Agencies to build new partnerships between small businesses, local Councils, Business Links, TECs and local Chambers of Commerce. We will encourage these bodies to come together to provide 'one-stop shops'. We will enable Councils to raise capital for local infrastructure investment, where they work in partnership with the private sector. We will encourage industrial development by promoting geographical centres of industrial excellence.
• Invest in research and innovation. We will expand support for science and research by shifting government funds away from military Research and Development and into civil science and research, and improve specialist research facilities for industry. We will encourage regional technology transfer centres to bring together the resources of industry, universities and government laboratories.
• Promote tourism. We will bring together the marketing and infrastructure work of government, local Councils and tourist boards. We will ensure that local communities are involved in the planning of tourist developments from the earliest stages.
• Build new partnerships at work. We will give employees new rights to consultation and participation in decisions and give companies and their employees access to advice on the forms of partnership which best suit them. We will promote profit-sharing, mutual structures and employee share-ownership schemes. We will extend the benefits of the Social Chapter of the Maastricht Treaty to all UK employees, while resisting the adoption of new rules that unnecessarily harm job opportunities.
• Encourage a culture of long-term business investment. We will require companies to publish information on their long-term investment achievements, including environmental performance, research and development, and training. We will introduce greater shareholder control over directors' pay and appointments.
• Promote British exports. We will make export promotion and commercial activity a higher priority for British Embassies.

Making Britain more competitive
A competitive domestic economy is essential if British companies are to succeed in the global market.

We will:

• Strengthen the law on competition. We will tighten the rules on monopolies and adopt a pro-competition stance on take-overs and mergers. We will combine the Monopolies and Mergers Commission and the Office of Fair Trading into a single powerful body, independent of government and charged with promoting competition.
• Give consumers more power. We will promote the establishment of industry-wide Ombudsmen schemes to improve complaints procedures and consumer redress. We will strengthen customer guarantees, improve product standards and labelling, especially for environmental purposes, and encourage products that are easier to repair, reuse and recycle. We will insist on clear labelling for food products which include genetically modified ingredients.
• Reform the privatised utilities. We will combine the existing regulators into a single Office of Utility Regulation, reporting to a Cabinet Minister responsible for consumer affairs. This new office will contain a regulatory board for each industry and will be charged with protecting the consumer and ensuring that excess profits are used to reduce prices and increase investment in improved services. Starting with the water industry, we will encourage utilities to involve their consumers in ownership and control of their company, through mutual structures.
• Reinforce consumer and investor protection. We will introduce independent regulation of financial services and improve processes for redress (e.g. for mis-selling). We will protect pension and life assurance savings from fraud. We will work to maintain the City of London's pre-eminence as a financial centre and promote effective international banking standards.

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