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public spending cuts - which was about the only thing anyone remembers from this document - the policy quickly became out of date for reasons that were perfectly forseeable at the time.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.