Banking regulation: Labour and Tories BOTH got it wrong

Watching Prime Minister’s Questions the other week, the ‘yah-boo’ politics as described by SDP leader David Owen in the 1980s was alive and well. Following the charade on the Twitter hashtag, Gabby Hinsliff summed it up well; “Shortened version #pmqs if you can’t be bothered listening: the banking crisis is the other lot’s fault (says everyone)”. Not only is such tribal politics an immense frustration for the general public, but it is unproductive. Hinsliff’s tweet also raises the question of who was to blame; David Cameron and Ed Miliband’s rhetoric at the dispatch box would probably have you believing whoever the last person to speak was. Mindless tribalism is an important topic for another day (I’ve been called ‘Tory scum’ just for wearing a Lib Dem ID card on the streets of Newcastle at the Spring Conference in 2012), but who was to blame? Both parties.

Intuitively, the Conservatives are on to a winner when the issue of banking regulation surfaces. Priding themselves on economic competence at Labour’s expense, they justifiably deride the Opposition for Gordon Brown’s promise of “no more boom and bust”, along with their feather-light regulation which helped to lead to the 2007 banking crisis. New Labour’s hubris when it came to economic regulation is evident in Gordon Brown’s Mansion House speeches, such as his declaration in 2006 that “we (New Labour) were right to build upon our light touch system”, and in 2007 that the Government was “enhancing a risk-based regulatory approach”. In his first Mansion House speech in 1997, Brown proved his Thatcherite credentials by wishing to “make supply side improvements that are needed” (or Reaganomics if you prefer). By capitalising on this, Cameron can expect a big cheer from his Coalition backbenchers at Prime Minister’s Questions, and get one or two red faces on the Opposition rows. Or does he?

Ed Miliband returns the serve by sneering that Cameron demanded “even less regulation”, and simple quote searching makes this accusation accurate. Cameron will wish to forget these quotes in a hurry, and like Brown he made them eerily close to the financial crisis from 2007-onwards; in 2007 he said “We need to make it more difficult for ministers to regulate, and we need to give the critics of regulation more opportunity to make their case against specific new proposals”. If that wasn’t embarrassing enough, Cameron added “A Conservative Government should relax banking regulation, allowing a new breed of venture/micro-credit institutions...the regulatory burden should be measured and reduced year on year”. The Thatcherite consensus was alive and well.

In short, Labour got it wrong in office, and the Tories got it wrong in Opposition. The problem is, in an age where banker’s bonuses appear to be escalating, and RBS can get away with lending little despite being 82% nationalised, we seem to be left with a depressing option of picking a lesser of two evils. Do we believe the approach to banking of Miliband and Balls, the right-hand men to Gordon Brown in office? Or do we hope that Cameron has ‘changed his mind’ on deregulation and is prepared to hit the banks hard? A lack of timescale on implementing the Vickers Report may allow for cynicism.

However, without intending to invoke Anthony Giddens, there is a third way. Way back in 2003, when the economy appeared to be booming and any talk of crisis was scoffed at, Liberal Democrat Treasury Spokesman Vince Cable asked Gordon Brown “Is not the brutal truth that ... the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level?" Added to this, Cable was widely judged to have edged the 2010 Chancellor’s debates with George Osborne and Alistair Darling. For all the talk that the Lib Dems are continuing a pandering to the banking industry, their 2010 manifesto commitment is, slowly, being realised:

“Break up the banks, to ensure taxpayers are never again expected to underwrite high-risk banking. We would establish a clear separation between low-risk retail banking and high-risk investment banking, and encourage the development of local and regional banks. We will introduce a Banking Levy, so that banks pay for their tax-payer guarantee, until the break-up is complete”.

This manifesto commitment is being realised in two ways. Firstly, the Vickers Report (set up the Coalition) recommends “The ringfence - trailed in the interim report in April - should include domestic retail banking services while global wholesale/investment banking should be outside”. Secondly, a permanent bank levy raising £2.5 billion a year has been made. To prove that the Lib Dems were not recent regulation converts like Labour and the Tories, their 2005 manifesto stated that “We will tackle irresponsible credit expansion in  mortgages and personal loans by curbing misleading advertising and anti-competitive practices by promoters of insurance for mortgages and loans, and of credit cards”. So at least one party was talking tough on banking regulation.

The 2007 crisis was also down to global events. It may or may not be clear by now that I’m not an expert in economics, but I do know from history that the causes of the 1929 Wall Street Crash (and subsequent Great Depression) and the 2007 debacle were frighteningly similar; easy credit schemes along with an overheated financial sector. I’m a consistent praiser of the 1933 Glass-Steagall Act in the USA, brought in by FDR’s “New Deal” administration; an Act which separated investment and retail banking. The Act lasted until 1999, where it was repealed by the Gramm-Leach-Bliley Act, sponsored by Republicans but curiously not vetoed by President Clinton; arguably a key instigator of the subprime mortgage crisis. Barack Obama’s administration sought to eradicate this with the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, sometimes dubbed “Glass Steagall II”. 

These elements show that the financial crisis was a culmination of global events and domestic errors. I will put my economic tin hat on here, but with tougher regulation in the UK, it’s likely that the crisis would have still been severe, but nevertheless softened to a degree. The problem is that global events allow for New Labourites and the current Labour Opposition (it’s sometimes hard to tell the difference between the two) to gain a scapegoat, humorously satirised by Rory Bremner declaring (as Gordon Brown) that the economic crisis was “none of our doing, but the result of events elsewhere; in America, in China, and in a small village in Mexico”. 

A vote for the Liberal Democrats economically or otherwise may be considered anathema to those who call them ‘Tory poodles’ who have ‘sold out’. However, answer me this question; who would you rather have as Chancellor? George Osborne, Ed Balls, or Vince Cable?

Can we trust Labour to be fair?

After the appalling decision by the incoming Labour County Council administration in my local area to award themselves a 12% pay increase, I wrote to the 'letters' section of the local Matlock Mercury newspaper to express my anger. My response was published as the main letter in the Friday 21st June edition:

Dear Editor,

I'm writing to express my absolute disgust at the recent decision by the incoming Labour leader of Derbyshire County Council Anne Western to award the incoming cabinet members a £3,000 a year pay increase. As a University student in a heavily politicised environment, I am fully aware of the tough economic decisions that are being made, and in particular the seemingly holier than thou attitude from the Opposition.

Recently at Prime Minister's Questions, Ed Miliband accused David Cameron of presiding over "wages falling for ordinary people...by £1,300 a year". Miliband went on to say that "what people see is day in, day out prices rising and wages falling, whilst the Prime Minister tells them that they're doing well". It is ironic, then, that the incoming Labour administration has chosen to give themselves a 12% pay increase whilst the council needs to save £127 million. These pay reforms would be unacceptable had Anne Western's team been a hard-working fixture as council members who had been elected numerous times; that they have chosen such an illicit deal as newcomers is even more galling. How many other lines of work would allow for newly employed members to award themselves instant pay increases?

As a student on the Centre-Left of the political spectrum, I have over time argued that many economic reforms have been deeply unfair in a time of austerity, yet I am left suitably unimpressed with a Labour Opposition which cannot practise what it preaches. How can the confidence of young people such as myself be strengthened when certain political parties pursue self-serving agendas?

A compelling theme has been that you can't trust the Tories on fairness or Labour on the economy. However, it seems that you can't trust Labour on fairness either.

2015: Coalition Mark II?

2015: Coalition Mark II?

For perhaps the first time (surprisingly), I wish to use a football-based analogy. As a Derby County fan, I am fully aware of the unpredictability of the nPower Championship. The cliché that “anybody can beat anybody” is nevertheless true, and compared to the relatively cast-iron nature of the Premier League, it is often rather foolish to predict what the result will be next Saturday, let alone for the whole season. Similarly, poll leads and expert analysis are little to go on with regard to General Elections; just ask Neil Kinnock, who had regular poll leads over Mrs Thatcher. Nevertheless, it does not stop newspapers on all sides giving regular poll reports and predictions, with new policy initiatives associated with “how to win over voters” come Election Day. As a budding politician, I find it hard not to speculate myself, and as political events shape the debate, I find myself frequently revising my predictions.

In my October 2011 entry, I concluded that a comfortable rather than emphatic Labour victory would be the likely scenario. Furthermore, I noted that David Cameron desperately needed more growth in the economy whilst combating the Tory Right, whilst Miliband needed to establish a coherent strategy, whilst Clegg had to differentiate further from his Coalition partners. Two years on, and it is a mixed bag. Miliband and his ‘One Nation Labour’ brand has been converted to the Lib Dem mansion tax on households worth over £2 million, promising to use the proceeds to reintroduce the 10p rate of tax scrapped by Gordon Brown in 2007. In addition to this, calls for more investment in infrastructure have led newspapers such as The Independent to deduce that Labour plans to outspend the Conservatives in 2015. Clegg vetoed proposed boundary changes (believed to be worth 20 seats to the Tories) after plans to elect the House of Lords were defeated, and has recently blocked proposed changes to childcare after vocal opposition from experts. For Cameron, the situation has worsened. Growth is anaemically slow, and the ‘Tea Party tendency’ of his Party has resulted in yet more headaches over the EU, forcing the offer of a referendum on renegotiated terms in 2017. More frustrating than this, Nigel Farage and UKIP have gone from strength to strength, scoring impressive results in by-elections and polling higher than the Liberal Democrats in many cases.

These factors make the outcome of the 2015 Election even less clear, and therefore even more fascinating. A May 12th ‘poll of polls’ (found here: http://ukpollingreport.co.uk/) has the Labour Party on 39%, the Conservatives on 31% and the Lib Dems on 10%, a solid if unspectacular lead for Labour. Despite this, Miliband has been criticised for not doing better in the face of an unpopular Coalition. Although consistent with my 2011 prediction so far, the double-digit polling of UKIP has yet to be taken into account. Under FPTP, UKIP are unlikely to gain more than 5 MPs (at a generous estimate), yet their siphoning of Tory votes could severely damage Cameron’s hopes of a majority. Labour are likely to gain almost all of the seats where they are second to the Liberal Democrats, but they have yet to prove that they are capable of gaining seats in the South of England. Whilst many are deriding the Lib Dems and predicting their demise, the UKIP presence could conversely help them. The Eastleigh by-election is a case in point; the vote was split between the Tories and UKIP, allowing for the Lib Dems to claim the seat. Furthermore, winning Eastleigh despite a massive drop in popularity and the resignation of a disgraced former member of the Cabinet highlights a ‘never say die’ spirit in the Party (a “sheer bloody resilience; they won’t lie down”, according to one Tory), along with their impressive local organisation. The majority of Lib Dem seats have the Tories in second place; if they can replicate Eastleigh in “40 by-elections”, they could preserve their fortunes whilst denting the Tories’.

I still predict that Labour will be the largest Party, but a hung parliament is not out of the question. Labour are likely to gain 17 seats off the Lib Dems (where Labour are currently second), along with Labour-Conservative marginals such as Amber Valley, where centrists may have given David Cameron the benefit of the doubt in 2010, but are unlikely to do so in 2015. Whilst I hate the idea of tactical voting, it is a necessity under FPTP, and Labour and the Lib Dems may well have to come to a tacit arrangement to ensure that the left-leaning vote doesn’t totally collapse in Lib Dem seats where the Tories are second, otherwise it is the latter Party rather than Labour who will benefit. It will be very difficult for David Cameron to win a majority without bruising his Coalition partners, and he is unlikely to retain seats where Labour are a close second. If the Lib Dems can gain a respectable 30-40 MPs in vicious circumstances, they will have done well.

What if a hung parliament is the outcome? If Labour are indeed the largest Party, the Lib Dems could yet again hold the balance of power. If this is the case, they would be foolish not to contemplate a Coalition with Labour; a ‘sequel pact’ with the Tories would lead to political oblivion and a mass desertion of support (again). It is likely that bridges between Labour and the Lib Dems remain burnt, and I cannot imagine Miliband being an enthusiastic supporter of a Coalition; he and Ed Balls declared their wish to go into Opposition during 2010 talks between the parties. However, on paper a progressive Coalition could be an attractive one. Common ground could easily be found in areas such as Europe and taxation (think mansion tax and taking the lowest paid out of tax), whilst the Lib Dems could curb any illiberal tendencies still prominent within Labour ranks, and in turn a potential Labour pledge to abolish tuition fees may be readily accepted by a Lib Dem Party still haunted by the NUS pledge.

Hypothetically, the prospect of electoral reform re-emerging is a fascinating but unlikely one. Whilst Miliband supported AV, it is unlikely that he would go to the country again with another referendum on the issue so soon after it was roundly rejected, and it would be feeble for the Lib Dems to once again support a fairer but nevertheless disenfranchising system. 2010 showed that the Lib Dems will not necessarily demand “PR or else” in Coalition talks, and a return to this approach would probably result in Miliband rejecting it out of hand and calling a second Election, but can he take that risk? A referendum on PR is a possibility, but the Lib Dems would do better to finally achieve a breakthrough in electoral reform and safeguard their chances by demanding more; perhaps guaranteed AV with a referendum on PR?

Once again, the TV debates could shape the Election, although David Cameron’s team have suggested that he will decline to participate. I have revised my 2015 Election prediction slightly; Labour will be the largest Party, but with a small majority of around 20 plus. The Tories have every reason to be pessimistic about 2015, but a Labour Party hostile to a Coalition with the Lib Dems may have the chance to win an Election after only one term in Opposition for the first time in their history, and have to be prepared to be receptive to the Lib Dems (with Nick Clegg perhaps the price of any Coalition deal). For the Lib Dems, the old adage may yet be preserved: “in the event of a nuclear holocaust, all that will remain of life on earth will be cockroaches, and Lib Dem activists handing out Focus leaflets”.

The UKIP Myth

“The new third party” is a frequent chorus about UKIP, a party that are apparently creating “political shockwaves” in by-elections such as Eastleigh, where they often gain more media coverage than the winners. There’s no doubt that their success boils down to their single-issue protest vote regarding Europe, yet leader Nigel Farage insists that they are “no longer a single-issue party”. It is for this very reason that they deserve far more scrutiny than the media are currently giving them. Beneath their anti-Europe platform is a far more sinister and radical outlook. 

First of all, let’s look at their manifesto. They have called for a £11,500 tax-free threshold; so far so good, and higher than the current Lib Dem-inspired £10,000 limit. That’s where the good news ends. Once the £11,500 threshold kicks in, UKIP plans would have a flat rate tax of 31%; whichever way you spin it, nurses, teaching assistants and every one of the “squeezed middle” would pay the same rate of tax as millionaires and bankers. With disparities in earnings large enough as it is, the UKIP tax plan is not only economically questionable but morally depraved; with fairness often lacking in society, how can it be right for someone earning just above the minimum wage to pay the same rate of tax as someone earning hundreds of thousands of pounds a year? Various benefits, such as Jobseekers, Incapacity Benefit and Student Maintenance Grants would be rolled into one, with no account for costings whatsoever. 

The loose and flexible term of “reducing bureaucracy and red tape” is a euphemism in the manifesto for repealing the 1998 Human Rights Act, along with abolishing employers’ national insurance contributions. The ‘Tea Party’ tendency of the right wing of the Conservative Party is present in the whole of UKIP’s ranks; they wish to spend an extra 40% on defence annually at a time when budgets are being squeezed. A common (and somewhat fair) theme is that the Conservative Party are “out of touch”, and going “too far, too fast”, yet Nigel Farage derides the Government for not cutting fast enough. This is politically poisonous, and Farage knows this; in a recent Question Time appearance, he admitted that “it looks like they are cutting too fast”, contrary to his true views, with the lack of media scrutiny benefitting his U-turn. The manifesto also promises to “denationalise Universities”, a contradiction to their desire for people to attend University “regardless of the ability to pay”; what would stop a privatised University having a free market in charging tuition fees without state intervention? UKIP would also introduce a “school voucher” scheme, hardly basing education on the equality of opportunity. 

The contradictions do not stop there. “UKIP accepts that the world’s climate changes”, yet they promise to “increase nuclear power generation to provide up to 50% of our electricity needs” and “oppose wind farms”. They wish to require UK schools to “teach Britain’s contribution to the world”, yet wish to create “an English Parliament”. Rather arbitrary figures are bandied around in the manifesto with regard to how much they believe leaving the EU will save, without specific details on how or why. Their school education policy is also a cause for concern; they wish to reintroduce grammar schools, a subject dear (secretly and not so secretly) to many Tory hearts. Whilst in some ways grammar schools could be a vehicle for social mobility, those that failed the 11-plus were left with a hugely unfair stigma, and an arguably lower quality of education. The UKIP manifesto rules out a return to the 11-plus, but they do not specify at what age selection would kick in. I admit bias here, but comprehensive schooling offers educational opportunities regardless of backgrounds, and has no doubt made thousands of students flourish, yet is unfairly derided as lacking in quality. The argument that comprehensives “drag down” people grouped with differing academic abilities does not hold; certain subjects are placed in sets in terms of grades. 

On a broader theme, Nigel Farage and UKIP hold the rather bizarre Daily Telegraph-inspired social commentary that the three major parties hold a social-democratic consensus. UKIP may well consider themselves the true heirs to Thatcherism, but the Iron Lady herself chose New Labour as her “single biggest achievement” when asked. The Peter Hitchens-esque view that the reason David Cameron and the Conservatives are performing so poorly and are so unpopular is because they are not enacting “true conservative values” (i.e they are not right wing enough) is a very unstable one; if this is true then why did people vote en masse for the so-called “radically left wing” New Labour Party? It is my view that New Labour was essentially a Thatcher-(l)ite Party, therefore enabling them to attract Tory voters, yet they were just centrist enough with policies such as the minimum wage and the windfall tax that they could gain moderate and floating voters. Had John Major, William Hague and Michael Howard adopted much of UKIP’s “true conservative “manifesto in their election campaigns, New Labour would have won even more convincingly. John Rentoul holds that much of Britain is made up of “social democrats and moderate conservatives”, and it is a compelling view; such an electoral makeup would not hand a radically right wing party election victory. 

There’s little doubt that the UKIP manifesto is a right wing agenda, yet such an ambitious behemoth which provides a platform for Conservatives who dare to think the unthinkable with regard to policies still dares not to attack the symbol of state power and spending; it promises to protect the “principle of an NHS free at the point of use”. Much criticism was aimed at the Conservatives for their diligent pursuit of electing police commissioners (and I’m inclined to agree with that criticism), yet UKIP chime with a similar theme; they wish to “make the police democratically accountable by introducing directly-elected County Police Boards who can appoint and dismiss Chief Constables”. Nigel Farage’s frequent attack on “the political class” is a popular but hollow theme; he was recently photographed having lunch with Rupert Murdoch, and since 2008 Farage has had more appearances on “Question Time” than any politician other than Vince Cable. Nigel Farage may well be in Europe to ‘attack Europe’, but as an MEP he is nevertheless still a politician, and still the recipient of taxpayer expenses, all £2 million of them in 2009 alone if media reports are to be believed. 

UKIP’s relative success in the European Elections and in recent by-elections cannot be denied, and it would be no great surprise if they come first in next year’s European Elections. But they are not winning. UKIP cannot be the “true third party” if they are not winning; the Liberal Democrats developed a famous habit for by-election victories back in the days of numbering around 20 MPs, such as when they overturned a 16,000 Tory majority with a winning majority of 4,500 in the 1990 Eastbourne by-election, or the overcoming of a 13,243 Labour majority at Leicester South in 2004, not to mention their victory in Eastleigh against many odds. UKIP are not winning because, contrary to their beliefs, they represent a small right-wing minority. It’s a strong bet that they will gain MPs at the 2015 Election, but under the unfair First Past the Post system they will only gain around 2-5 MPs. Their policies are a concern for who they attract; the English Defence League (EDL) has recently endorsed them, and UKIP MEPs sit with far-right homophobes such as the far-right United Poland party. UKIP Deputy Leader Paul Nuttall has already stated his enthusiasm for reinstating the death penalty. UKIP MEP Roger Helmer once compared gay marriage to incest and polygamy, whilst one UKIP candidate in 2010 suggested that “there is a strong connection between male homosexuality and paedophilia." UKIP may well distance themselves from such views, but the fact that their manifesto attracts such people must ring alarm bells. 

If people vote for UKIP for all of the above reasons, then fair enough. However, it is highly unlikely that this is true. Many people are Eurosceptic at the moment, and with the major parties offering ambiguous themes on Europe, UKIP are the only party to offer a firm stance on the matter. They also attract support as an inevitable protest vote, even though Nigel Farage is very much a part of the “political class” which he seeks to attack. Their other policies are a safe ideological haven for disaffected Tories, but they are a vote turn-off for the general public, yet they are not scrutinised. I found it hard to agree with much of the UKIP manifesto except for their pledge to introduce a Glass-Steagall equivalent for banking regulation, but I doubt bankers would mind being regulated in Britain if they are paying the same rate of tax as a dustbin collector under UKIP proposals. UKIP pose a big enough threat to the Conservatives, forcing David Cameron to hold a referendum on the EU, but they do not hold enough popular appeal to radically change the outlook of Britain; what would UKIP’s purpose be if the ‘yes to EU’ camp won the referendum? 

I’ve already alluded to the negatives of leaving the EU in my blog, but there are people on the Left who would wish to leave the EU. UKIP is more sinister than that; they have an underlying tone of prejudice which appeals to a small minority of people in Britain, and an economic policy of selfishness and unfairness. Furthermore, they do not offer anything concrete on cutting the deficit; there are no specific accounts made of spending and cutting plans, just vague pledges. In contrast, (yes, another bias here) the Liberal Democrat manifesto has a number glossary at the back which highlights the cost of every tax and spending plan in full. UKIP are the party that is really out of touch, but with the generous media hype and unscrutinised coverage that they receive, most people don’t yet know it.

Thatcher: The Conviction Politician

First off, rest in peace Margaret Thatcher. That the death of an elderly lady should be immediately thrust into a political context seems wrong. I maintain that any death is sad; it has been especially humbling to see Mrs Thatcher’s physical and mental decline over the last years, so much so that she could no longer take up her seat in the House of Lords. This blog piece isn’t going to praise Mrs Thatcher; such a move would be contradictory and would go against my political values. Neither will it demonise her.

I have been truly disgusted at the predictable responses from various people, inevitably from the Left. How anyone can gleefully rejoice in someone’s death is beyond me, and no doubt the family and friends of the deceased are not taken into account when vitriol is spouted. This episode has suddenly made people ‘political experts’, many (not all) who were neither born in the Thatcher period nor affected by her reforms. It is likely that many of the offenders would not support the death penalty on principle (I don’t support it either); how ironic then that they should relish someone’s death. I won’t give a platform by naming vicious quotes here, but such views are not only sick and shameful; they are immature, and offer absolutely nothing to the political debate. 

I gave a critique of Thatcherism in a much earlier blog post, but I will try and surmise my views here. She dismantled the post-war consensus, a fraying method which nevertheless brought prosperity to the country and increased social mobility to an unprecedented level. Various industries were privatised, inflation was given priority over unemployment and business and trade were heavily concentrated in the capital. Her neo-liberal free market agenda led to a heavily individualist and uncaring doctrine, and she contradictorily wanted to ‘roll back the state’ whilst at the same time heavily centralising power in Westminster. The poll tax will forever remain her nadir, and she bequeathed a Eurosceptic legacy which has been unhealthy for the country and poisonous for the Conservative Party. I heard someone recently say that she was one of the luckiest leaders, and I believe them. Had Labour Prime Minister Jim Callaghan not dithered in calling an election earlier, it is widely assumed that he would have defeated Thatcher. Furthermore, with the abject failure of Ted Heath’s U-turns and Callaghan’s “winter of discontent”, Thatcher could feasibly offer her radical alternative against both her predecessor and the Labour Party with the cry that “it’s not working”. Harold Wilson’s failure to legislate trade union reform in 1969 with “In Place of Strife” further gave strength to Thatcher’s cause. Her share of the vote remained relatively stagnant over her premiership; more people voted against her, but the opposition vote was split almost 50-50 between the unelectable and radical Labour Party of the 1980s and the SDP-Liberal Alliance. The Falklands attack in 1981 brought her a timely electoral boost when the Conservatives had been lagging at third in the polls. Events aided her, massively. 

Thatcherism remains to this day, a further criticism of mine and a contributor to growing inequality in our society today. For Daily Telegraph and UKIP observers who curiously viewed the New Labour administration as a “radically left-wing” Government, Thatcher named New Labour as her single biggest achievement, with her student Tony Blair saying “we needed the reforms of the Thatcher period...an undoubtedly great Prime Minister”. Yet the fact that Thatcherism remains has shown that “no alternative” has emerged, and will be argued as a pro in Conservative circles. Credit where credit is due, however. The top rate of tax was far too high at 80%, something that she corrected (but at a 40% rate too low for a social democrat’s liking), and trade unions had exerted far too much influence over “who governs Britain”; in 1980 trade unions had 40% of the vote for electing Labour Party leaders, whilst party members and MPs had only 30% each. Enabling people to buy their own council houses was also a good move. 

Whatever people think of Thatcher, and politically I think of her negatively, she was a conviction politician. She stuck to what she believed in, and pursued it with great diligence; “the lady’s not for turning”. She shines over her U-turning predecessor Ted Heath, along with his modern incarnation David Cameron. How often have we seen people in politics dither, and change the course they believe in for the sake of political capital? The examples are far too numerous, but I will name one perhaps tenuous link; Mitt Romney appeared to be liberal as Governor of Massachusetts, yet veered sharply right in the Republican primaries in order to be elected, before cautiously flirting with the centre-ground in the Presidential race. Thatcher would not have countenanced such flip-flopping; what you saw was what you got. 

Thatcher’s death should be solemnly mourned, as anyone’s should. I will continue to criticise her record when asked, and will give credit where credit is due. I will never, however, engage in the basest of humanity and politics, where people believe it is ok to mock the passing of someone who you disagree with.

Eastleigh: The parrot has squawked

“The Lib Dems are finished” is the recurrent battle cry from the likes of Ed Miliband. He may well have wished to hark back to Mrs Thatcher’s “this parrot is dead” Monty Python-inspired verdict on the third party. Events in Eastleigh suggest otherwise. Against considerable odds, Mike Thornton received 13,342 votes and duly held the Liberal Democrat-Conservative marginal. The parrot has squawked, and the junior Coalition partners are to be treated seriously once again.

Nick Clegg called for “muscular liberalism” after the crushing AV referendum defeat in 2011, a strategy designed for differentiation from the Conservatives, and the emphasis of Lib Dem achievements in Government. Whilst few can disagree with the popularity of raising the income tax threshold (although Ed Miliband has stubbornly refused to endorse it), polling has regularly shown single-digit voting intentions for the beleaguered party. Numerous by-elections have dampened morale, with results slipping down to as low as eighth in some constituencies. This result therefore should not be underestimated; significant contextual features should have indicated a bruising defeat. The Liberal Democrats’ long term unpopularity is obvious and almost monotonously repeated: Coalition, tuition fees, ‘selling out’, ‘Cleggzilla’. These features alone should have been enough theoretically to prevent Mike Thornton from reclaiming Eastleigh. Nevertheless, Chris Huhne resigned in shame (I did a blog piece on his decline in February), a fact played on well by Conservative candidate Maria Hutchings running on a “candidate you can trust” slogan. Furthermore, issues over the serious but considerably overblown Lord Rennard sexual harassment charges were well marked by the media, and put a stain on the party’s reputation. Despite this, I make reference to Iain Dowie and Soccer AM’s dictionary entry of “bouncebackability”, and it could not have been more crucial.

The warning signs are still there. The Lib Dems suffered a 19.3% swing to Diane James and UKIP, and with 32.06% of the vote it was a tight race. It is David Cameron who will be feeling the heat, however. Despite promising and in-out referendum on the EU, the Tories were beaten into third place by UKIP, leading to Nigel Farage perhaps mischievously noting that “had the Tories not split our vote, we would have won”. Contrary to my long term prediction, UKIP support is still going strong, although perhaps for different reasons now. UKIP are still (relatively) prospering as a protest vote, but it is unclear whether people are now voting for them in spite of their policies, and not because of them. Farage said that people were now voting for UKIP instead of “three social democrat parties who are indistinguishable from each other”, perhaps hinting at a bigger focus on UKIP’s thin domestic plank rather than their anti-EU message. I would hope people aren’t voting UKIP because they are sympathetic towards a regressive flat rate of tax, or the reintroduction of grammar schools and deeper spending cuts into the economy, but if Farage’s latest comment strikes a chord, then maybe they are. 

UKIP MEP Marta Andreasen recently defected to the Tories, and accused Farage of being “anti-women” and “a stalinist”, with Farage’s riposte that “the woman is impossible”, further adding that the Tories “are welcome to her”, perhaps underlining the true nature of the party. Whatever the UKIP message, Clegg is now given breathing space; challenges to his leadership will subside for now. Cameron, on the other hand, is stuck. Does he move further to the right in order to outflank UKIP, or does he continue his weak ‘detoxifcation’ treatment? Either way, his chances of winning a majority in 2015 are slim. 

The (understandable) theme that is likely to emanate from the Lib Dems is the desire to preserve as many seats as possible, rather than optimistically aim for new ones in 2015. This is not defeatist; the party have at times been clinging on for their lives. With the majority of Lib Dem seats having the Tories as their principal challenger, Eastleigh is therefore a crucial demonstration of their ability to fight their Coalition partners. There are a supposed 10-20 target seats for the Conservatives which are held by the Lib Dems; crucial to the Tories if they want a majority. Whilst the Lib Dems are frequently mocked, Eastleigh displayed the rugged organisational skills which have served them so well over the years. Perversely, a strong UKIP presence may well aid the Lib Dems by siphoning the Tory vote, as it did in Eastleigh. It is ironic that the Tories brutally rallied in Machiavellian fashion against the voting system that could well have won them the battle here; the Alternative Vote. Whilst UKIP are a threat, they have yet to master what the Lib Dems did as the original protest party of the Paddy Ashdown to Charles Kennedy era; winning by-elections. They regularly overturned huge majorities, ironically with the help of chief strategist Chris Rennard. 

This result stresses once more the need for Cameron and Miliband to take seriously the threat of the Lib Dems to chances of a majority for either party. Miliband’s ‘One-Nation’ message did not make any inroads into this southern seat; not a major problem in the unwinnable seat of Eastleigh, but a key concern if the Lib Dems replicate this success in other southern areas. Cameron’s defenders will note that incumbent Governments rarely win by-elections, and whilst this is true it merely highlights further the achievements of the Lib Dems here; as the junior members and often shields of an unpopular Coalition, they nevertheless prevailed. Labour will be gleeful at another bombshell for Cameron, Nigel Farage and UKIP will hail it as a success against the ‘doomed Tories’ and the political class, the siren voices of the Tory Right will ever increase their shrill tones, but the real winners here are Nick Clegg and the Liberal Democrats.

On the right track, but a long way to go

Ed Miliband and the Labour Party have rightly been criticised over the last two years or so for lacking policy detail. They’ve opposed pretty much every single cut brought forward by the Government, yet have not outlined any cuts that they would make. In the last couple of days, Miliband has moved to slightly eradicate these accusations by asserting that a Labour Government would bring back the 10p tax rate (abolished by Gordon Brown in 2007) on earnings above the personal allowance, funded by a mansion tax on households worth over £2 million. These progressive measures are an important step forward, but they are far from a seal of approval of their ‘One Nation’ message.

The Labour Party still face criticism for their role in the financial crisis of 2007 onwards, especially from Coalition members on the back foot during ensuing economic gloom. “Cleaning up the mess left behind by the last Labour Government” is a recurring theme that is fair but nevertheless hollow, and it wasn’t the only economic variable of the crisis. Miliband and Ed Balls have been frank, this time, in saying that the 10p tax rate abolition was a mistake. The Conservatives will no doubt counter this by saying that Balls and Miliband were Gordon Brown’s backroom team at the time of the 2007 decision, and this could come back to hurt them in 2015. Nevertheless, it is a sensible move to own up to the mistake; if the country is to trust Labour with the economy again, they will not want a Labour Party completely unrepentant of its mistakes in the 2005-2010 premiership. The poorest taxpayers were the victims in 2007 whilst Brown desperately tried to chase a headline grabbing cut in the basic rate from 22p to 20p, so restoring the 10p rate would be a progressive measure. It also places the Tories in an uneasy position ahead of the March budget; they do not want another “omnishambles” moment.

The mansion tax move is also welcome, but it is not original. It has been a Liberal Democrat policy for many years, and it is only the veto of the Conservatives in Coalition that has prevented its enactment. A few years ago, the Lib Dems initially went further and called for a tax on homes worth over £1 million, but backed down under pressure. It is hoped that the tax will raise £2 billion, far below the optimistic £7 billion estimates, but nevertheless a sign of fairness in austere times. Some legitimate concerns are raised over such a tax, and means testing would be a terrible move, but can blocking the tax be justified when people across the country on low and middle incomes are struggling with Council tax? The levy on houses over £2 million would be 0.1%; hardly crippling. The tactical advantages of the mansion tax are clear; after cutting the top rate of tax from 50% to 45%, are the Tories prepared to be portrayed as the “party of the rich” again? As The Independent alluded to, Miliband could also set the cat amongst the pigeons by forcing a commons vote on the issue, a test of Nick Clegg’s leadership. If such a vote were to occur, Clegg would be sensible to go for the jugular and vote for it, therefore proving not only that a partnership with Labour is possible in 2015, but also that the Lib Dems still have a distinct identity in Government, and are prepared to battle on the side of fairness.

Although the reintroduction of the 10p rate would be welcome, frustratingly the Labour Party has still not come out in support of the flagship Lib Dem (and now Government policy) of raising the income tax threshold to £10,000. I’ve spoken before in this blog of my desire for everyone on the minimum wage to be lifted out of income tax (a threshold of £12,500), and addressed Nick Clegg on the issue; introducing a 10p rate on earnings above £10,000 would be a step in this direction. From a threshold of around £5,100 to £8,100 already in less than three years, a noble cause previously denounced in 2010 as unaffordable by David Cameron is being met, yet the tribal instincts of Labour remain in refusing to support it. If Miliband were also to come out and praise this move, it would strengthen links again between Labour and the Lib Dems, and potentially reinforce an alignment of the Centre-Left. It would also help Miliband in defying the claim that he leads an opportunistic opposition policy that merely votes against every Government measure. Labour would also do well to support the £10 billion pupil premium (another Lib Dem flagship policy; yes they are making a difference!), which is designed to provide extra funding for the poorest primary school students.

Labour still have time to build up more policy initiatives, and it is sensible to release them bit by bit, rather than in one full-blown white paper. However, scratching beneath the surface, the Labour message is still relatively hollow; in short, they oppose every Government cut, yet will not promise to reverse any of them in 2015. This tacit attempt at economic competence is anything but inspirational, and, if maintained, hardly presents the electorate with much of an alternative to the Tory-driven unfair elements of the current Coalition. If the ‘One Nation’ message is to catch on, Miliband needs to pursue policies that offer positive alternatives to the current Government, whilst maintaining that cuts need to be made, but not with the current thrust or composition. Calling unequivocally for a restoration of the 50p tax rate to be in the 2015 manifesto would not only emphasise a fairness agenda, but it would further place unease on David Cameron; it is not easy to defend a tax cut that will benefit people earning over £150,000, and better to propose the measure now rather than before the 2015 election where it can be portrayed as another 1992-esque “tax bombshell”.

I welcome Miliband’s latest policy initiative, but he must distinctly go further in the next two years, offering both a coherent and different economic vision, not one that is essentially “we don’t like what you’re doing, but we’ll continue to do it”.  Pushing for the progressive cause is vital in austerity Britain, and it is a noble cause. Miliband is on the right track, but there is much more to do, starting with an olive branch to the Liberal Democrats.