Tuesday, 17 July 2012

Considerers and Borrowers equally tiny and insignificant

Southport's MP has been making some important observations over the weekend in an article in the Observer.  Not least amongst them is the exploding of the Westminster Village myth that there were a group of voters who would step up and fill the void left by those electors deserting us because of the coalition.

The deputy PM, .........' has had to recognise that being in government has not by itself won a whole new range of voters who it was said previously "considered" the party but doubted its capacity to make tough decisions and declined to vote for it. These hoped-for new Lib Dem voters ,"the Considerers", have proved as elusive and shy as "the Borrowers" in Mary Norton's children's classic – very tiny and almost invisible.'

He has also asked some key questions:

So need this spell doom for the coalition as Cameroons, Orange Bookers and Blairites, who collectively occupied the same crowded, cultural and political space, are forced to hearken to the primal instincts of their respective parties? Need the Lib Dems, as Tim Farron urged us two years ago, get an exit strategy in place? Are we seeing the scaling back of ambition or the end of hubris, depending on your take?

The truth is that we all knew whoever won the last election would have been forced into some pretty unpalatable policies -which is why Alister Darling was warning that the cuts would have been worse that Thatcher if Labour had been in power. In truth the Darling package is broadly the same as the Coalitions, in fact some analysts think that it would have been more severe. All this is irrelevant because Labour are in opposition and being opportunist. The key battle ground is what happens next. The markets have decided that the government has a credible deficit reduction policy and now is the time to move to phase two; taking advantage of that platform to get the economy moving. In that context, rail infrasture spending, housebuilding and banking reform are essential elements.

Clearly this week there will be an announcement that the government are going to offer some for of loan guarantee for social housing. Housing Association have considerable land banks with planning permission granted than could be developed if the finance was available. Vince Cable's recent advocacy of this approach alongside the published research of Professor Nick Crafts adds credibility to this move.

Banking reform was in the coalition agreement and there is no secret at Lib Dems wanted to go further than Osborne wished or Labour ever proposed. I think the chance now exists to revisit these proposals. First we can push for a complete split between investment and retail banking, secondly we can do more to split up the retail banks by creating regional banks and not by just adding another PLC bank to the existing mix, but by reviving the mutually owned sector. We need different sorts of bank. The Building Society Act 1986 paved the wide for the destruction of the mutual sector and Labour did nothing to stop it, in fact under their watch some of the biggest de-mutualisations took place. As Prof Crafts explains it was the Building Societies that in significant measure funded the move out of recession but so enamoured were New Labour with markets etc they did not lift a finger.

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