Friday, 31 December 2010

Osborne's spending cuts are seriously hurting the Lib Dems

Not long ago the Lib Dems triumphed in their successful campaign for fair treatment for the Gurkas. Then at the last general election we witnessed "Cleggmania" - which lasted briefly but was sufficient to bring in many new members to the party.
It all went wrong on May 6th. The general election result saw a net loss of seats for the Lib Dems, and then of course coalition with the Tories. A coalition with Labour was not an option once Labour decided to exclude the SNP. The Lib Dems need some good news stories, but with the possible exception of winning the AV referendum, it is hard to see where any will come from.
Some claim that this Coalition was a triumph, despite a dramatic drop in the opinion polls. After all, government is about making difficult decisions, you cannot continue to be all things to all people. In any case they argue, the Liberal Democrats are now delivering on many of their manifesto commitments.
However the problem was not so much what was in the manifesto, it was what was not included. Premature and radical cuts at a time of fragile growth threaten to throw the economy into reverse. Radical reforms of the NHS that have never before been debated with the Lib Dems and have not been tested by pilot projects may go horribly wrong. Radical changes to higher education finance - not just student fees but the marketisation of course funding will also have unpredictable results. The cuts in local government are devastating and the impact will not only be regressive, but runs counter to what the Lib Dems stand for in local government. The policy in supporting academies and free schools is against the policy of the Liberal Democrats and this was reconfirmed at the last conference by a 10 - 1 majority.
Of course in a Coalition you will not always get your way, but these are big hits. The concern is that Nick Clegg is not fighting our corner. This is important not only in relation to Lib Dem members and activists, but also to voters.
On the issue of Equality Nick Clegg has played down our commitment to reduce poverty and focussed instead on social mobility. His advisor Richard Reeves dismisses the research in The Spirit Level which shows that only countries with low levels of poverty also have high level of social mobility.
On localism Nick Clegg tells us that the Big Society also equals liberalism. It does not. The Big Society is a welcome advance by the Tory party compared to the centralising days on the 1980s, but the suspicion of local government is still there and without democratically elected bodies with the ability to raise funds locally, this is not good enough. Indeed policies like Free Schools and Academies are likely to benefit the middle classes more and work against any gains the pupil premium may bring to social mobility.
So the question is this; is the current state of affairs sustainable?
We hope the vote on AV will be won, but if not Nick Clegg could go in 2011.
If he remains he still has the reputation issue to resolve. His agenda setting speeches on Equality have not yet won him any popularity and it is hard to see how he can improve things for the Liberal Democrats. Many new party members are scheduled to renew from next March, and if they don't we could start to see a weakening of the party, combined with big losses in the forthcoming local elections.
Even if we win the AV referendum it remains the case that Nick Clegg has to find a way of recovering his reputation. The party cannot go into the next general election at less than 15%. Labour is facing up to a dreadful general election in 2010, but the problems for the Lib Dems look substantially worse than that.

Sunday, 23 May 2010

Has Vince Cable been sidelined? Will there be a double dip recession?

There is no doubt that Vince Cable has a very important job to do. He needs to propose how to split up the banks, make sure they are not too big to fail, that they are properly regulated and the retail and casino functions are split up. People's savings should not be put at risk by irresponsible banking behaviour of the kind we have seen recently. Ideally he should resist Tory urgings that the banks should be privatised straight away. Yes they should be privatised eventually when economic conditions are favourable, but not on the behest of his ideological counterparts in the Tory party. It is said that he is frustrated that he does not have the power to do what he wants and that George Osborne wields some power in all this. This is alarming if true. However even if it is true, Vince should fight his corner and go public if the Tories are being obstructive. He will surely have public opinion on his side. He may have more power than it appears on paper.
But why would the Tories do such a thing anyway? Well the Tories are the party of hedge fund managers and the money markets. Not only that, city institutions will lobby hard and they have the financial clout to do so. Making these changes will be very hard, and the Tories are not our natural allies in wanting to do this.
So there is a battle to be fought on the banking front, but we should not overlook the broader economic picture. This is a government that will make cuts right away. That in itself is a problem, as Vince Cable argued only a couple of weeks ago not to do this; "Slashing spending now could push the economy back into recession and inflict further structural damage on the UK that will make it harder to sustain our credit rating. He (George Osborne) ... fails to appreciate what the markets are looking for is a credible plan to reduce the deficit, not a willingness to slash regardless of economic conditions. In the current climate it is essential that decisions about the speed and timing of tackling the deficit are based on the state of the economy, not political dogma". See Vince Cable will be busy with his own priorities and will not get much of say in all this now.
I have asked about this on-line and got various responses. Some Lib Dems never believed what Vince Cable said at the time and thought he was just playing politics. These are often the same people who thought a the same a couple of years ago when Vince Cable was criticising the government over the high levels of debt. Look how wrong there were!
Others argue that £6billion is not very much, although I doubt it will seem that way once implemented. Some have pointed out that it depends on where the cuts are being made, and this is a more important point. Clearly cutting on national Id cards will not result in big job losses (albeit no comfort for those who do lose their jobs). Maybe it is possible to make cuts without detracting from the economic stimulus? Up to a point this is true, but can we cover all £6billion this way? Probably not. The official party response is that somewhat miraculously we do now have the growth we need to make this cuts less painful. If true this is an astonishing turn of events, coinciding very conveniently with the date of the general election. The latest growth figures do look better, but surely it is too early to say now that the time is now right? particularly given the prospects of contagion from the parlous state of the Greek economy?
The problem once again is Tory ideology. They will advocate we should cut regardless of economic conditions, as Vince Cable warned. Dangerous times.

Saturday, 15 May 2010

"Cleggmania" succeeded first of all in galvanising the electorate. But by the time they got to the polling booth their attention had switched to defeating the party they were afraid of most. Under our voting system, that meant they reverted back to "Labservative".
In addition the leadership debates brought up the issue of immigration. Whenever Cameron spoke on this, his vote went up.
And so on election day the Tories got the most votes.
A progressive coalition looked mathematically possible. But Labour tribalist MPs made that impossible.
This left 2 options; go it alone, or align with the Tories.
Go it alone was not really an option. Only the Tory party can afford to fight another election this year.
But aligning with the Tories has risks too. For many on the left, including many Lib Dems, there is the symbolism. The MPs we least want to see running the country; Osborne, Hague and Fox now have their hands on the levers of power. It becomes much harder for the Lib Dems to win votes in Labour areas from now on.
Then there is the question of what the government will now do. 2 weeks ago, the Liberal Democrats claimed that they would not support radical cuts in public spending right away, as this would induce a double dip recession. Now they are doing just that. How can this be in the national interest? There may be a good answer to this question, but I have not come across it yet.
On the other hand there is a lot that is positive about this proposed coalition. Good to see Chris Huhne tackling the issue of global warming for example. Good to see the pupil premium being implemented (although it remains to be seen if the investment will be there to make it work). Good to see civil liberties being supported. The question is whether the benefits on policy outweigh the risks from a possible recession?
The electorate gave the Lib Dems a poor hand for their negotiating position in the coalition talks. They have made the best of a bad hand, but there remains a high risk that our unforgiving voting system; whether FPTP or AV, will come down hard on them next time.
Under our voting system, you do not get many choices in politics. Left Liberals should stay in the Lib Dems and make the best of the situation as they can. It is not clear there is any other choice for the time being.

Thursday, 6 May 2010

Change the system, vote Lib Dem

I have not had the time to write about this election. However I did find the time on Facebook to suggest why not to vote Labour;
"A catastrophic war in Iraq, the never ending war in Afghanistan, failure to stand up to Israel when they invaded Gaza, collusion with torture with the Bush regime, "light touch" regulation of the City, believing that market forces were self-correcting with disastrous economic consequences, failure to reform the finance of political parties - which ... See morenow gives the Tories a massive advantage for decades to come, failure to change the electoral system after they said they would, wasted lots of money on national ID cards and their commitment to replace Trident, locking up petty criminals for short term prisons which are in effect academies of crime with a reoffending rate of 90%, a widening gap between the rich and poor, making the UK the worst in Europe, the consequences of which you can read in The Spirit Level, the Decent Homes initiative that has saddled unsuspecting leaseholders on salaries of £15K with bills from £10K to £70K, failure to introduce the traffic lights system of food health after lobbying from ex-Labour ministers, the UK massively behind Denmark in alternative energy sources, support for a new runway at Heathrow despite commitments to global warming targets ..."

In short, Labour dances to the tune of Rupert Murdoch.
Before "New Labour", the politics of the left was in many ways more liberal than it is today. There is still a hinterland on the left that supports the Liberal agenda, and although many of them would prefer to vote Labour, this time they are either voting Lib Dem or are voting tactically to keep out the Tories.
It was over 50 years ago when Liberal leader Jo Grimond talked about Liberals "realligning the left". Today we must rescue the left, but only the liberal part of it. Otherwise the onslaught from Murdoch will soon begin.

Friday, 1 January 2010

2010 - A difficult year in prospect for the Lib Dems

When Charles Kennedy stood down as leader of the Liberal Democrats in 2006, many saw this as a great opportunity to shift the party into a more "economically liberal" position. The agenda was to be to advocate a smaller state and tax cuts. Whilst proclaiming that they saw the labels of left or right as irrelevant when defining where they stood politically, they were also keen to point out that the party should not be identified as being left of Labour as it had been in previous general elections.
Early proposals for the party to drop it's support for the Local Income Tax and to support a "Flat Tax" did not make it to party conference. The "Flat Tax" proposal was quickly dropped when the German Christian Democrats who also supported this policy almost snatched defeat from the jaws of victory in the German general election.
Even so, economic liberals were victorious in the leadership election when Ming Campbell supported their cause. When his leadership fell flat, economic liberals won again when Nick Clegg replaced him, albeit by a much smaller margin than anyone predicted.
All this seemed very radical, and in terms of how previous Lib Dem positions had been in favour of increasing taxes to fund greater public spending it was. However when the nirvana of the economic liberals was finally reached; the "Make it Happen" policy document which proposed tax cuts funded by public spending cuts - which was about the only thing anyone remembers from this document - the policy quickly became out of date for reasons that were perfectly forseeable at the time.
Even if the global economic downturn had not taken place, the charge by Danny Finkelstein of "punk" tax cuts seemed a valid one. The Liberal Democrats had not identified a more efficient way to run public services that would acheive the same or better with less funding. The proposal was simply to spend less. The rhetoric was to spend less on waste, as though the current government had set aside a budget specifically for waste that simply needed to be cut. In truth every government wants to acheive more with less when it comes to public spending. The idea that the Liberal Democrats had found a way of doing so that no one else had spotted was hard to believe. Nor did they back it up with any substance. If they had of done, both Labour and the Tories would have copied the policies. Ideologically there was nothing stopping them.
In any case the Make it Happen policy document with the tax and public spending cuts was proposed at conference despite the fact we were on the verge of a global economic recession. And it was passed by a massive 2 -1 majority. Personally I thought the party had gone insane.
Even more absurd was that many delegates who supported the policy went on to oppose the attempt by the party leadership to drop the committment to scrapped student tuition fees. How on earth did they think they could find the savings in public spending whilst keeping this policy? Equally the party leadership at the time wanted to find the funds to replace Trident, again a policy that did not make sense.
In the end sense prevailed. The Make it Happen tax proposals were shelved. A commitment to replacing Trident "like for like" was dropped. The commitment to scrap student tuition fees has been watered down.
All sections of the party favour the rebalancing of the tax system so that the poor pay less and the rich pay more. Even so, the prospects for any future government are ones of increasing taxes overall and reducing public spending - the worst of both worlds. Maintaining our highly valued committments on early learning and family benefits, and tax cuts for those on low incomes will be hard to maintain, no matter how much we want them.
It is worth reminding ourselves that "economic liberalism" was widely understood as the anglo-US model of capitalism that for years delivered on economic growth, but then collapsed. The growth was financed by debt. It was a bubble that was bound to burst. "Light touch" regulation was previously considered a good thing, keeping the state out of the running of business. Now we know that much of that business was "socially useless" to quote Adair Turner. Only heavy touch regulation can control it. If that was true of banking, then where else in the Anglo-US model of capitalism does this apply?
Of course "Liberal" is a good word. So "Economic Liberal" ought also be good. But it all depends on what you mean by the word Liberal. Freedom for financial institutions to ruthlessly persue short term profit regardless of the long term consequences does not seem very Liberal to me. Either we should redefine "Economic Liberalism" to mean something else or we should drop the term.
Where this has left the Liberal Democrats going into 2010 is a lack of distinctive policies. No doubt our policies are better, but it would be an interesting exercise to ask the electorate what policies the Lib Dems have that might persuade them to vote for us.
It could have been different. We could have opposed replacing Trident in a much more forthright manner than we are currently doing. At present it is not an issue that is on the agenda. In which case even more of a reason to do that and take the credit for doing so. If the Tories say they believe the same things we do, throw that back at them. Tell them we will not do a deal with them unless they commit not to replace Trident.
So why should we vote Lib Dem in 2010?
Well one person who did not follow the Economic Liberal script, despite previously doing so, was Vince Cable. His intervention that we should nationalise Northern Rock even before Labour realised that was the best policy demonstrated from the outset that this was the politician who should be running the economy at this time of crises. He is also right to support the economic stimulus and not slash and burn in public spending the moment you win office. If the Lib Dems hold the balance of power, we have to insist that he becomes the next chancellor.
The commitments on Green Taxes and the Pupil Premium, although copied have not been bettered by the other parties. And unlike the Tory party, there is no sign that the Lib Dems will change their mind over global warming. The commitments on supporting the EU and the rights for immigrants and asylum seekers may not be popular, and may weigh against the Lib Dems in a coalition, but someone needs to stand up on these matters. The commitment not to replace Trident "like for like" may be half hearted, but it is better than what is offered by the other political parties.
The commitment to support proportional representation is a fundamental one upon which the party should not budge. The Alternative Vote that Gordan Brown favours is NOT propotional representation, and in some cases is even less proportional.
Finally we need a better foreign policy. Whether the Liberal Democrats deliver on this would appear to depend on how influential Paddy Ashdown is. From my previous blogs I have to say that I do not think his influence has resulted in a good policy in Afghanistan. However there is still scope for the party to give a leaad on foreign policy, and Nick Clegg is to be commended for his interventions on the Arab-Israeli conflict.
The difficulty for the party in 2010 is that the party has not been distinctive enough to be a first choice party. Often we are second - not many people really object to the Lib Dems in the same way as they do the other parties - we are rarely hated by the electorate. But to get that first preference, the only one that counts under our voting system, well it looks as though we will have to depend on the popularity of Vince Cable to get that.
So for the elections on 2010, its a case of fingers crossed.