Economic Theory

What next for the Lib Dems – Unfinished business from The Orange Book?


Monetary Policy

The government has got itself into a muddle over its policy on banks and lending.

Press Release

New IEA research released

New IEA Journal released

Eight years on from The Orange Book’s release, a new publication looks at the unfinished business of the Liberal Democrats’ policy development and sets out a wide range of new areas on which the party should now concentrate.

This new research, Eight Years since the Orange Book: Have the Liberal Democrats ‘reclaimed’ liberalism?, argues that The Orange Book helped lay the foundations for the coalition, increased professionalism and centralisation, gave Nick Clegg the ability to seize power, and provided much of the basis on which the two parties could find common ground.

The Lib Dems have successfully argued for the privatisation of the Royal Mail and for more freedom in education. In creating a more liberal environment the authors variously argue that the Lib Dems should now focus on:

  • Reducing the size of the state to below 40% of GDP

  • Tax simplification and tax reduction across the board

  • Lower marginal tax rates

  • Allowing for-profit providers to deliver state-funded education

  • Further rises in the personal income tax allowance

  • Introducing more competition in energy markets

  • Successfully completing the privatisation of the Royal Mail

  • A substantial shift away from government decision-making to personal choice and freedom

Commenting on the publication, Mark Littlewood, Director General of the Institute of Economic Affairs, said:

“The Orange Book marked the first step towards the Liberal Democrats rediscovering something of their classical liberal roots. Although this has borne some fruit, eight years on the Lib Dems need to mark out a distinctive, consistent and credible agenda which puts economic and social freedom at its heart. They need to develop new policy prescriptions in the fields of health, education and welfare which will promote liberal values and not social democratic values. They must resolve their identity crisis decisively in this direction.”

David Laws MP (and co-editor of The Orange Book) writes:

The Orange Book was not written in order to make a Lib Dem-Conservative coalition possible, but without the policy changes which the book and its authors anticipated, it is much more difficult to imagine the present coalition being formed and sustained.

“Future UK governments should consider a further substantial real rise in the personal allowance, along with lower marginal rates of tax at all income levels….even after the existing fiscal consolidation, state spending will account for some 40% of GDP, a figure that would have shocked not only Adam Smith, Gladstone and J.S. Mill, but also Keynes and Lloyd George…The liberal ambition should be for long-term total public spending to be restrained at below the trend rate of growth of the economy…”

Paul Marshall (co-editor of The Orange Book) writes:

“Within the government, it is no coincidence that, in addition to championing the Pupil Premium, Nick Clegg is seen as one of the strongest supporters of Iain Duncan Smith’s welfare reform programme. The two are linked.

“The next frontier in structural school reform revolves around the role and potential of profit-making schools…”

Notes to editors

To arrange an interview about the publication please contact Stephanie Lis, Director of Communications: 020 7799 8909, [email protected]

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties