Liberal Vision

Review of conference by Mark Littlewood

Well said Mark Littlewood of the IEA  (founder of Liberal Vision)… written for LDV….   

“What a strange few months it’s been for the Liberal Democrats. In Bournemouth a year ago, few LibDems would have truly believed that this was to be their last annual conference in opposition.

My sense of the mood in Liverpool this year was that it matched the political and economic times we live in. Serious, but somewhat apprehensive. There seemed a lot of quiet satisfaction – although never smugness – that there were Liberal Democrats in government, but a nervousness about what the “end game” might be.

A few things truly surprised me. Support for the principle of entering Coalition with the Conservatives was close to unanimous. A straw poll at the IEA’s fringe meeting showed about 95% felt that Nick Clegg had made the right decision in those tense few days after the General Election. The national media were, of course, on the look out for any sign of coalition-fatigue, but seemed initially disappointed – and then rather impressed – about the absence of much strategic dissent.

But looking through the tea leaves of Liverpool, there are some longer term issues which the party will have to address. The first is the status – or lack of it – of the policy-making machinery. The passage of a motion critical of free schools may have caused just a few jitters in the leader’s entourage, but pretty much everybody else shrugged their shoulders. Not only was the government going to completely ignore the decision of conference, but LibDem MPs would do so too. And rightly so. What then is the real point of Liberal Democrat party policy? Sure, conference reps can point at a piece of paper and insist “that is our official policy”, but so what?

Secondly, Nick Clegg has a fight on his hands to try and reframe a Liberal Democrat approach to “fairness”. I wish him well in doing so, but he will need to try harder than he did in Liverpool. Many Liberal Democrats – or at least the most vocal ones – still take a “bar chart” approach to fairness. A policy which has the effect of improving the immediate financial position of the relatively poor at the expense of the relatively affluent is deemed “fair”. Little or no attention is given to dynamic effects. Nick Clegg – and the Coalition as a whole – are surely right to argue that the challenge for government is not simply to shift someone’s income from £9,000 to £10,000 per annum through redistributive mechanisms, but to provide such people with the opportunities and incentives to rapidly ascend the income ladder. Liberal Democrat activists, however, have yet to fully buy in to this approach.

Finally, no one seems to have fully addressed the question of how the Liberal Democrats can maintain a separate and distinct political identity as junior Coalition partners. Or whether it’s even possible to do so. Vince Cable may have stretched Cabinet collective responsibility to the limits with his rather off-piste and ill-judged broadside against capitalist “spivs”, but that hardly amounts to a distinct identity – let alone a liberal one. This is going to be the real challenge – and the largest area of disagreement – at Liberal Democrat conferences in years to come”..

Who’s bigger than the NHS?

Remember that old chestnut that “The only organisations bigger than the NHS are the Chinese People’s Liberation Armyand the Indian Railways”?

Well, according to the NHS, there’s a new sherrif in town, courtesy of Wal-Mart, the first private sector employer to break into the top three largest employers in the world.

Congratulations to Wal Mart for creating nearly 2m jobs!

On diversity we should copy Cameron

My eye was drawn to this linked piece on Lib Dem Voice by activist Davina Kirwan. It’s a fabulously angry piece of writing about one thwarted attempt to improve the ethnic diversity of Liberal Democrat representation by requiring a BME candidate on by-election shortlists and where an MP resigns. A pretty mild quota proposal compared to all-black shortlists, but still fairly objectionable to opponents of quotas, either on principle or as a matter of a practicality in respect of what happens if no one applies.

Her irritation appears underlined by the presumption this party gets it has a diversity problem, 10% of the UK is BME, and 0% of our MEPs, MPs, MSPs, and AMs, but stubbornly refuses to do more about it. Are we “the new Conservatives” she asks?

Her problem in this instance surely is the Liberal Democrats are not Cameroonie enough. Both parties have or had a similar diversity problem going into the last election. Not just under-representation, but due to historic voting and support, much smaller pools of talents to draw from than Labour.

The Liberal Democrat solutions to this were premised around various mentoring and support schemes for talent, the Conservatives had an explicit A-list. One approach knocked politely on the door of the constituency associations and said ‘would you mind awfully looking at this lovely candidate’, the other kicked the door in and (in a voice that in my head sounds like Andy Coulson’s character in the last Thick of It) said ‘right racists, ditch the local limpet and put this genius on the estates instead and we’ll be running the country by Christmas’.

Not successfully in every circumstance, Shaun Bailey famously failed in Hammersmith, but in overall a lot better than nothing. A point Simon Woolley of Operation Black Vote also makes:

“They also realised that to make the breakthrough strong leadership would have to convince the party that change needed to happen, and where necessary they would use positive-action measures such as the A list, or persuading Tory grandees to mentor brilliant candidates. Their efforts made history.”

It probably also helped that a greater number Conservative MPs were laid low by expenses scandal exposure than Liberal Democrats, providing opportunities for parachute candidates, but there were several Liberal Democrat MPs who also had change of career plans around that time. The broader Conservative base also means more opportunities, candidates prefer to stand near where they live, and there are very few Liberal Democrat opportunities either with or near areas of high diversity. But the really motivated candidates travel.

The A-list also sent a signal Liberal Democrat alternatives have not. It something you can aim for that’s a lot more attractive and tangible than some training courses and an approving word from a sponsor.

Talent spotting to create an A-list is an inexact science, but it is not random. Simon Hughes is rather good at it, particularly amongst communities where we’re weak. But keeping the talent motivated when the route to success remains either get very lucky, or a two decades of leafleting, financial ruin, and being treated as ‘the black candidate’ rather than on your own merits as a politician has proven more difficult. And however in-exact, it would be surely be better to have an A-list that got it right 50% of the time?

It is also worth noting that there is an implicit A-list in operation anyhow. Talented outsiders do tend to beat local grafters in selections, MPs to some extent pick their successors. Nick Clegg a good example of both. It is reasonable to believe in those informal arrangements, that like picks like, and that is an implicit barrier to BME candidates. That can be offset by making the A-list explicit.

Both A-list and quota candidates can suffer being seen as there because of the system not their merit, but the former is considerably better in that regard. A quota candidate is someone who got through approval and ticked the ‘bascially sound, probably not a nutter’ boxes. An A-list candidate has recognised talent and potential.

The main issue that rankles liberals with the A-list is the implicit assumption that everyone else is on the B-list. But the truth or otherwise of that becomes rapidly apparent during selection. The A-list opens the door, it doesn’t push you through it. Some Conservative A-listers found the label a disadvantage. The sense of a candidate imposed from the centre can inspire opposition amongst localists. But if that matters to you, you don’t have to put yourself forward for the list.

I can’t see any principled objection to the A-list as a club for talent and the signals that sends, any-more than the myriad of other memberships and signals candidates use to show something desirable.

If the party did go down that route, it wouldn’t now call it an A-list, the party allergy to doing things that look a bit Tory has increased in Coalition.  It does though look from the 2010 election result like the system works, and it should at least be considered. All successful parties steal their opponents’ best ideas.

Vince Spart rides again

What to say about about Vince’s speech that hasn’t already been said after forensic text analysis and critiques by right and left.

On this occasion I rather agree with Labour blogger Hopi Sen’s ‘Sad donkey runs free’ analogy. In substance Vince has said nothing new, his attacks on the banking profession as ‘spivs’ are pure populism, and his chances of persuading his coalition partners to change anything on the basis of such an analysis are slight.

After the activist cheer has died away in a week, the main impact of the speech will be to permanently lower his reputation amongst business leaders, a novel communications strategy for the Business Secretary.

Behind the rhetoric, competition and bonsues in banking are difficult regulatory issues. For example are the footballer salary figures involved in some trader bonuses evidence of weak competition? Or a reflection that an individual whose decisions turns £1bn into £1.01bn over a year for their clients is entitled to expect some share of the £10,000,000 profit that represents as their fee? That a very small number of people can make a lot of money is not unique to banking, or typical for most parts of banking which involve more mundane activities like managing accounts and loans.

Bank profits on loans are also problematic as evidence of market failure.  A major driver of the credit bubble was the misselling of risky loans as safe, but that manifested itself in not charging enough to cover the risk. Since the bubble burst charges have risen. At what point is this evidence of weak competition? How do banks reconcile this with endless demands from politicians to make risky loans to small business and those on low incomes at interest rates that do not reflect the risk premium? 

What element to reserve ratios play in this? To raise the capital reserves of a bank deemed at risk to the new levels required by the draft Basel 3 agreement  requires profitable transactions. Are these profits acceptable to Vince? Are they unacceptable when the reserve ratio is achieved?

Market concentration can be evidence of oligopoly and anti-competitive practices; but not always; contestability at home and global competition can keep large companies honest.  One of the largest advocates of domestic concentration during the crisis was the previous UK government, encouraging  for example Lloyds to buy HBOS. Not great evidence for the wisdom of the state in adverting and correcting market failure through political leadership.

Another Vince idea, separation of retail and investment banking facilities as a necessary basis for future stability would be more credible if the headline failure of the UK crisis wasn’t Northern Rock, a retail bank.

Outside competition issues how do the Treasury reconcile the attacks on bank profits with the need for the tax revenues from those profits to cover a government debt… in part based on over-optimistic spending commitments premised on bank profits?

Rhetoric about balancing the economy is the current political answer, but to do this either requires other sectors to grow relatively faster than banking, or shrinking the sector. The latter is not a wise growth or jobs strategy. The former… tends to require loans from banks.

Vince has something of a challenge in delivering on his rhetoric.

FN luvs NC

Catching up on a few things I missed over the last couple of days of conference. Here is an interesting article from Frazer Nelson (Spectator) that I urge you to have a look at. In his piece (yesterday) he wrote…

….” If Nick Clegg was a weak-willed, crowd-pleasing charlatan the the front page of yesterday’s Independent would not have read “Clegg: there is no future for the Lib Dems as a left party”.

Turning up to a Lib Dem conference and saying there’s no point in being a party of lefty protesters is like William Shatner telling delegates at a Star Trek convention to “get a life”. He wants them to be a mature party of reform – many of them prefer to throw stones. His stance at conference is certainly courageous.

And it fits a theme. For weeks now, Clegg has been surprising those (myself included) who did not take him seriously, by emerging as one of the boldest and most articulate advocates of reform. He is now advancing arguments about the need for tough-love welfare changes, taking on the teaching unions and shrinking the state”…

read full article here.