Wednesday, April 11, 2012

Time to reset the coalition

My recent trip to the UK reminded me just how difficult the economic situation remains for a large number of people. The simultaneous increase in taxes and cuts in services is coming at a time when it is clear that many, if not most, pension schemes need dramatic increases in savings in order to provide a financially secure retirement.

Those on the left argue that this policy of austerity is counter-productive and that- if anything- government expenditure should be increased through the downturn. Yet the reality is that the global investment markets will not provide capital to fund this spending splurge: austerity is not optional, it is compulsory.

And the worst is yet to come, the impact of the spending reductions will take time to come through the system, and although emergency action is saving many pension - including public sector pension schemes- from total bankruptcy the huge number of interest-only mortgages that have been created during the crisis provides a long term threat to people's retirement security, and potential short term problems to the housing market, if mortgage interest rates continue to rise.

So, the despite the slight improvement in general economic sentiment, the British economy is going to continue in a long and painfully slow restructuring which will maintain the pressure on average incomes for the foreseeable future.

This rather gloomy economic environment has a political impact.

Firstly, politics as a whole has become the focus of general public anger and contempt. It is not just the coalition that seems bogged down in trivia like the pasty tax, but as the success of the odious George Galloway shows all too well, the left is included in the general opprobrium towards politicians.

The most vituperation, however, is still reserved for the Liberal Democrats. Some of this is not really their fault- the decision to form a coalition with the Conservatives was not a matter of choice but of necessity, given the inconclusive result and the impossibility of forming a government with Labour alone. However there is also no doubt that the mistakes that the party has made have cost it dearly. The most important mistake of all was our own failure to understand that policy making for the sake of simply popularity, rather than principle- which is where the origin of the tuition fees debacle lies- would have even more severe consequences when its abandonment was almost the first decision that the Liberal Democrats made.

The fact is that the Liberal Democrats have been outmanoeuvred at several critical junctures: not just on tuition fees, but on electoral reform too. The Party was put in a position where it was the sole proponent of an electoral system- AV - which it did not even support. The defeat in the referendum was a disaster that has likely delayed electoral and possibly even constitutional reform by years, even decades. As Nick Clegg gets himself into more difficulty over the House of Lords reform and the proposed snoopers charter, many Liberals have been asking what is actually so Liberal about the Liberal Democrats?

It is a critical position- yet as the prospect of Labour defeat in the City of Glasgow and the London mayoral elections looms, and as nearly 20% say they will not vote for any of the big three parties, it is clear that the Liberal Democrats are only receiving a more extreme version of the same punishment being visited upon all the Westminster parties.

So, what is to be done?

From the point of view of the Liberal Democrats, we should remind ourselves that we are in it for the long game. The short media and even electoral cycles should not distract us from the core long term Liberal agenda: radical and comprehensive reform of our constitutional and political system. Paradoxically, despite the fall in support for the Liberal Democrats, our ideas are now seen as more relevant and important than ever. Yet the great failure of our leadership has been the failure to identify these radical reforms as a core part of the Liberal political brand. Still, too few identify what the Liberal Democrats core agenda is, and have tended to project their own wishes for protest onto the party- no wonder so many of our voters now feel betrayed.

Political reform. Civil Liberties. Radical tax reform.

These should be the core values that we project - and if we did so, then David Cameron could not try to railroad through his illiberal proposals for Internet controls which conflict with a central part of this core agenda. The party should burnish its Libertarian credentials- making common cause with those on the Tory radical right who share these values to a surprising degree. It also, helpfully, differentiates the radicalism of the Liberal Democrats from the tender-hearted but wrong headed policies put forward by Edward Miliband.

The coming local elections may well mark something of a nadir for Liberal Democrat electoral fortunes. Painful losses can be expected. Yet the party as a result may receive back some of the excellent activists it lost to local government- who can revitalise both policy formation and campaigning. Even the most bitter defeats may have some silver linings- if we learn the right lessons.

The next year will require the party to hold its nerve- but insist that the leadership rediscovers a focus based on principled Liberal positions. The next party conference should become a platform to reorganise, retrench and recover. I -for one- intend to be there and to make a contribution to the process of the reformation of the party in order to reflect the rapidly changing realities that the continuing economic crisis is likely to force upon the whole of the United Kingdom. 

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