Lib Dem economic policy takes a step leftwards

Last Monday the Liberal Democrats passed a policy paper on economic reforms, Good Jobs, Better Businesses, Stronger Communities. This covers economic policy outside fiscal and tax reform, and fits in with the party leadership's wish to address the challenges of what is often called the fourth industrial revolution. Does it measure up to the challenge?

Sometimes it is hard not to agree with fellow Lib Dem blogger David Boyle that liberals don't take economic policy seriously enough. There was little excitement about this motion, or another two which tackled taxation. I only attended two of the three debates myself and spoke in neither. But the party leader Vince Cable takes economics seriously (he was a professional economist after all), and the party does find itself well-provided with official policy, even if most of its members might struggle to know what it is. The party should be doing more to promote internal debate.

The Good Jobs motion, and the paper behind it, demonstrate one of the problems. They are very densely packed with ideas and policies. So much so that they are hard to read and harder to condense into something clear and ringing. There seem to be two problems here. First the scope was probably too large. You could easily produce a worthwhile motion on workplace rights, for example, rather than tucking it away in this much bigger motion. And then there is the desire to establish consensus. This boils down to including something for everybody: I'll let your hobbyhorse through if you'll do the same for mine. How much this dynamic came from the policy working group itself, and how much from outsiders I don't know. It must be admitted that there are some advantages to this approach. The Labour manifesto last year seems to have been produced by a similar process, and it collected together enough hobbyhorses to make it a good tool for roping in disparate groups of special interests. I remember one online commenter disparaging the Lib Dem manifesto because, unlike Labour's, it had no policy on puppy farms. It was an electoral success, notwithstanding major holes in, for example, university finance. Secondly, if your party actually does get into government, it helps to have a bank of small-ish policy ideas ready. This gives ministers something to do, and helps them set their own agenda, rather than being swept along by their departments and issues of the moment. So the policy paper should do valuable work, even if it failed to the party at large on fire.

My main beef is that it pays homage to the idea that the country has a serious productivity problem, and that this is something politicians should worry about. But this is such a consensus view that I guess they had little choice. I don't particularly object to the polices that this gives rise to. Indeed many of its ideas would no doubt dent measured productivity in the short term (more regulation, tougher environmental focus, and so on), so it is probably politically wise to have some policies specifically focused on raising productivity. Labour does something similar.

So what, for me, are the key issues? The first is that too much money in the economy is being either retained by businesses, or distributed to shareholders, or paid to senior employees. Quite apart from the corrosive effect this has on people's sense of fairness, too much of this money is idle, causing a phenomenon called secular stagnation. One of the symptoms is low interest rates and too much private debt. This tendency started in the 1980s and  technological changes aren't making it any easier. In order to address this, broadly two sorts of reform are suggested. First there is attacking monopoly capitalism. This is David Boyle's big theme: he wants to rescue the old liberal concept of free trade as a liberator, after it has been hijacked by neoliberals to mean staying out big business's way. The second is to redress the balance of power between workers and bosses. I think this latter is probably more important - I am less convinced than David that modern monopoly capitalism is quite as harmful as it was in old economy days of oil, phones and steel - though I do think he is onto something over excessive protections for intellectual property. The Lib Dem paper embraces both approaches, though not intellectual property, which requires a policy paper all to itself. It opens the door to supporting unions. Having heard a very sensible presentation by a representative of the union Prospect at the party conference, I am changing my mind about the role of trade unions. One of my formative political beliefs (from the 1970s) was that unions were a baleful influence on the economy. But empowering unions sounds much more likely to redress the palpable power imbalabce than more shared ownership of businesses, a typical Lib Dem suggestion (though not advocated as radically as the left are starting to).

The second issue is that the economy needs to be pushed towards environmental sustainability. Not only does this mean unlocking renewable energy and leaving coal and oil buried in the ground, but it also means producing and consuming less stuff. The sustainable economy will be based on services, not manufacturing. This needs a change of mindset, and the policy paper does give it a big shove in the right direction.

A third issue is getting a more even geographical spread of economic success. It is a pity that economists are not giving this more thought. Certain economic processes seem to benefit from accelerating returns - returns that rise with concentration. The idea of accelerating returns sounds good, but it isn't, because it leads to success being concentrated, and increases inequality (unlike the alternative concept of diminishing returns, the more conventional assumption in economic modelling). This seems to be because of network effects among personal relationships, that work better in geographical proximity. This is not particularly well understood, but needs to be. I am convinced that government structure is part of the story. More devolved political power helps - but exactly how and why is less clear. The policy paper duly pushes for this, both in government and in the purchasing of public agencies. That is helpful. But whether more devolved government will help Boston, Margate or Merthyr Tydfil enough is doubtless open to scepticism. The centralised political culture runs deep in Britain.

And a fourth issue is human fulfilment. We have reached the point in our economic evolution when economists need to consider this explicitly, rather than simply trying to give people more money to spend. This fits in with worker empowerment, but there needs to be more. The paper's advocacy of lifelong education and individual learning accounts is helpful here. But I want to see the greater availability of counselling for people between jobs, or unsatisfied with their jobs, as a part of this. Simply giving people spending power is not enough, and can be dehumanising - one of the reasons that I am suspicious of universal basic income, a very fashionable idea on the left that the Lib Dems are sensibly steering clear of.

So, overall, this policy paper fits well enough with the economic agenda that I support. But standing back it leads me to a striking thought. There is a growing overlap between current liberal thinking and new socialist thinking (which isn't just a throwback to the 1970s as its opponents claim), and a step away from the neoliberal thinking that still dominates the centre-right. Perhaps there will be enough common ground for a future coalition, once Labour sees beyond its internal struggles and overcomes its more extreme tribalism. Alas that day is some way off. But a coalition with Conservatives once the Brexit hoo ha has settled looks even less wise than it was in 2010.

 

Vince Cable sets a bold course for the Liberal Democrats

In one episode of the masterly political comedy Yes Minister, the knowing civil servant advised his naive minster on the art of public presentation. It depends on how radical you are. The more radical that you want to be, the more sober the presentation needed to be, to reassure the wary. A contentless speech, on the other hand, needed to as glitzy as possible. On that basis the British Liberal Democrats' leader Vince Cable's speech yesterday to his party must have been radical indeed. Its presentation was as dull as ditch water, fluffing its one joke (something about erotic spasms). Its content was another matter.

Most commentators, inside and outside the party, have been unable to see past the superficial. They complained that it was dull, and lacked radical new ideas. They assumed that his appeal to reasonable, moderate voters, put off by the extremism of other parties, meant that his ideas were would be wishy-washy, and duly saw that both in what he said, and in the series of policy resolutions passed by the conference. But I have been listening to leader's speeches for nearly 30 years. I'm tired of the presentational tricks, the crowd-pleasing jokes, the radical-sounding policy ideas that lead nowhere, and the personal stories injected by professional speechwriters to establish "authenticity". What I actually heard was a series of direct answers to the hard political questions that the party faces; he never lost my attention. My first thought, as we got up to applaud it, was that it was the best leaders' speech I had ever heard.

So what are these hard questions? The first was what actually do we say if the party succeeds in its quest to secure a referendum on the Brexit proposal, with an option to stay in the EU. This is something that most advocates of a referendum say little about. Vince recognises that most people that support Brexit have a real grievance, having been left out of whatever economic advance the country has made over the last generation. That needed to be addressed through public investment, and for public resources to reflect population increases more readily. He also recognised that the party needed to push for reform of the European Union itself. This is something most Remainers are silent about.

But this only poses deeper questions about what is wrong with Britain, that go far beyond Brexit. Vince took this on too. Part of his answer was a familiar liberal one: better education services, with a lifelong remit; he mentioned further education colleges in particular as a neglected sector that needed attention. He also supported Education spokesperson Layla Moran's ideas for changes to schools. These are a little too crowd-pleasing for me (replacing Ofsted and reducing primary testing) but are generally going in the right direction. But he also had ideas, indeed firm policies, on the economy, often a Lib Dem weakness. He recognised the biggest problem: that too much money is being hoarded by the well-off. He wants to tackle this by taxing it harder. This is quite brave, since there is likely to be collateral damage amongst a swathe of older people (like me) who have made money from owning homes, and who (unlike me) want to pass on much of this wealth to their children (I don't have any). This is surely part of the answer, but also I think it means being braver on government debt. But he hinted at this too - by loosening government rules on borrowing to invest, locally and nationally. My criticism in my previous post that the Lib Dems are weak on economic policy is being addressed.

He also wants to start thinking about how the impact of increased automation will affect our lives, and how public policy needs to change to reflect it. This will doubtless lead to a focus on empowering workers, as well as re-focusing regulation of digital platforms. Deputy Leader, and likely successor to Vince, Jo Swinson also talked about this.

But, of course, developing a policy platform that is relevant and radical is only part of the problem. The are small signs that the party's fortunes are improving at the expense of Britain's big parties, but far short of what is needed to turn the party into a major political force. The party isn't speaking to the vast majority of the public, and media gives it little attention, almost none of it sympathetic. Amongst those who have some awareness of the party, it is considered to be well-meaning but ineffectual. It is unfashionable to support the party, and many people who might be supporters resort to sneering at it. There needs some kind of seismic shift, both in gathering supporters and, critically, money. Vince has launched a series of ideas for party reform in an attempt to do just that. I did not attend any of the consultations on these reforms, but I understand that attendees were giving them a sympathetic hearing, but were worried about some aspects, notably that the free supporters' scheme might be subject to entryism. Many of the older hands are very sceptical, though. They way in which the leadership is trying to push the reforms through has ruffled quite a few feathers.

But the party doesn't belong to these old hands, who include long time members like me, and more recent ones who joined in the 2000s, who consider themselves to be radical liberals. The party's membership has exploded since 2015. The recent publicity of Vince's reforms have drawn in thousands more. Nearly every other speaker claimed that it was their first time speaking at conference. By and large these were persuaded by the leadership line. A strong move by the old lags to derail a motion on immigration, recommending substantial reforms to Britain's current system, but falling far short of making the country truly open, was easily defeated. The complainers were passionate, angry and numerous, but oddly unspecific. Against this most people were persuaded that the policy was a step in the right direction.

But the opportunity is palpable. The Conservatives are skewered by Brexit, as well tied to an outdated economic orthodoxy. Labour is riven by internecine struggles that are relegating many of its ablest people to the sidelines. Too many of its supporters indulge in tribal abuse as an alternative to building broad support for a radical policy programme. Its leader is failing to convince much of the public. A bit like the Lib Dems, he is seen as well-intentioned but ineffectual.

And meanwhile Brexit is hurtling towards us. Personally I still think that the Prime Minister Theresa May will succeed in getting a compromise deal with the EU through, allowing an exit from the union in March next year. The Lib Dems owe it to their supporters to try their damnedest to stop her. But its leader is looking at what the party has to do beyond that. That encourages me.

Is Vince Cable’s plan for the Lib Dems a gamble too far?

Last Friday the leader of the British Liberal Democrats, Vince Cable, launched his plan for remaking his party into a broader liberal movement. Having been away, my reaction to this event has been slow. But before we launch into the party conference next weekend, here are my first thoughts.

Vince's main idea is to create a supporters' scheme which costs nothing to join. To give people extra incentive to sign up to this (and be bombarded with requests for help and donations, etc.) he suggests that these registered supporters have a vote to help choose party leaders - and a suggestion that non-MPs may be allowed to stand for the leadership. He also wants to make it easier for new members to become candidates for parliament - currently they must have a full year of membership. Vince said that the party needed to open itself up to become a movement for political moderation.

First reactions in my Facebook feed were very negative. If there's one thing that annoys the more vocal people in this community it is referring to Lib Dems as "moderates", or worse, aiming at the political centre. The party has being going through difficult times after its support collapsed in 2010 when it joined the Conservatives in coalition government. What has kept those of us who remain going, and motivated those who have joined since, is passion for its liberal and internationalist values, not moderation, and not being Mr In-Between. But political leaders know that they must do more than merely represent their supporters; they must broaden their movement's appeal to people who do not currently support it actively. There are many people out there who are appalled by the idealistic extremism that is infecting both Labour and the Conservatives. Doubtless the use of the word "moderate" was based on at least some market research, though the party cannot afford much.

Apart from suspicion of the word "moderate", members are wary of involving large numbers of newcomers with little experience or stake in the party. The Labour Party were the first down this route, when they opened up their leadership contest in 2015 to the public for just a £3 fee. In one sense this was enormously successful: hundreds of thousands were drawn in, and many became full-fledged members. The party how has about 600,000 members when the next three in size (the Conservatives, the Scottish Nationalists and the Lib Dems) have not much more than 100,000 each. But this influx of members helped a manifestly unsuitable candidate (Jeremy Corbyn) become elected to the leadership, and has been exploited to drive the party to left. I need to be careful here. Mr Corbyn has been badly underestimated by mainstream politicians and media, and the lurch to the left has involved some welcome fresh thinking. It may not turn out as bad as many outsiders, including me, are predicting. But what is unquestionable is that the process has been very uncomfortable for many of the people who had devoted their lives to the party before the influx changed things. And that's what many Lib Dems fear will happen to their party if these changes actually succeed in drawing lots of new new people in. It's all very well saying that these new supporters should share the party's current values, but how do you ensure that this is the case?

What gives weight to this is the thought that the party might be able to draw in defectors from other parties, including MPs and big-hitters. Unhelpfully, former Labour Prime Minister Tony Blair piped up on Friday too, expressing his fears over the turn that politics in Britain has taken. People won't be slow to make the connection that "moderates" and "centre ground" include people like him. And to many of us, it is people like him who got the country into this mess in the first place, by pushing a series of ideas (often referred to as "neoliberalism") that have created a whole class of left-behind people that are stoking up the anger.

But the party's position is quite desperate, if it wants to live up to its ambitions to make it to the political big time (i.e. achieve power), rather than being an ideological fringe, like the Green Party. It is stuck at between 5-10% in national opinion polls (though at the upper end of the range at the moment) and has too few MPs (at 12) to have serious political clout. Andrew Rawnsley sums this up very well. And yet, as Mr Rawnsley also points out, the opportunity is palpable. The ideological fringes in both the major parties are making the running. And there are examples of successful mass movements led from the centre (he points to Barack Obama, Emmanuel Macron and Justin Trudeau in Canada, whose party has been advising Mr Cable). If the Lib Dems can't do this all by themselves, it is hard to see it working without them. The party has nearly as many members as the Conservatives, and the organisational nous and cooperative culture that a brand new party would lack (one reason that the party has seen off Britain's most successful new party of recent times: Ukip).

There are moments in life when you have to be courageous, and take big risks in order to get what you want. This is one such moment for the Lib Dems. All the risks pointed out by the plan's critics have a basis in fact - but they can all be managed. The plan is not nearly enough by itself, but the point is to capitalise on opportunities as they arise. As such I am giving my support to it, though I have reservations about some of the plan. The secret weapon of liberalism is that it can be ideological and moderate at the same time, because it celebrates inclusion. Inclusion is what political moderation is all about.

To me, though, there remains a hole at the heart of this exercise, which will also afflict any new parties created out of fragments of Labour and the Conservatives. We know what they stand against, but what's the plan? How do they propose to help the left-behind, and start to heal the rifts that are all too apparent in our not-so United Kingdom? At the heart of this has to be a new approach to economics. At the moment Labour understands this better than the Lib Dems, but they are ruining their good ideas by proposing to over-centralise power and supporting the deep conservatism of trade unions. But at least they realise that the cosy consensus that dominates the centre of British political establishment has to be challenged. And that is radical rather than moderate. Once liberals start to champion an agenda for radical economic reform, everything is possible.

Lib Dem English Council: why didn’t the turkeys vote for Christmas?

Warning: this post is about the internal workings of the British Liberal Democrats. To anybody not a party member this will be of no interest, unless you want to draw some general ideas on how, or how not, to manage a political party.

Yesterday the Liberal Democrat English Council (EC) rejected a motion to implement a new constitution for the Liberal Democrats English Party, which, among other things, would have abolished the EC. I am a member of the EC and voted against the proposed new constitution. This deserves some explanation..

What is the EC? It is a group of representatives from across the party in England. Each regional party is entitled to a number of representatives based on the size of its membership. These are supposedly elected by the members of the regions, but in fact there a generally fewer volunteers than places, so it is mostly self-selected. The gathering amounts to fewer than 100 people (about 70 on this occasion), meeting twice a year in London (by the choice of its members a few years ago) for a 5 hour session. Its job is to take reports from, and put questions to, the officers of the English party, and to approve the administrative rules by which the party runs itself. It does not deal with matters of public policy because there is no English Parliament. Another party body, the overarching Federal Party, through various directly elected committees, a twice annual conference and an executive arm of paid employees, handles English policy issues.

Why have an English Party at all? The party has Scottish and Welsh "State" parties, following a long tradition in the party and its Liberal forerunner of supporting devolution to these nations (and before that to Ireland, a much more divisive issue in its time). When that devolution happened, with Scottish and Welsh parliaments, autonomous organisations in the two nations made even more sense - these entities could take on serious policy issues too.  But that left an England-shaped hole in the party's set-up, just as it does in the British constitution. The party, when it put together its constitution in the late 1980s, filled it with two levels of organisation: regional parties and the English party. The regional boundaries largely followed the arbitrary administrative concoctions the UK government used, which also became constituencies in the European Parliament. These convene twice-yearly conferences and elect executive committees. There is little policy work to do; only in London is there any kind of regional devolution to bodies that follow these regional boundaries. New "city regions" are emerging, but not in the sort of tidy way that can be used to carve up the country as a whole. The regions are of equivalent population size to Wales and Scotland (with London region being bigger, though more compact, than Scotland).

So why not give these English regions to the status of State Parties? Firstly because the Scottish and Welsh parties take great offence to the idea that English regions might have a similar status to their nations. Also because the administrative infrastructure required to keep regions on top of their responsibilities would be quite high. The Lib Dems cannot afford much in the way of professional administration staff, while the regulatory burden, from the Electoral Commission and data protection in particular, gets ever greater. And so we have the English State Party, which does things like set rules for candidate selection and disciplinary processes, and represents the English organisation in Federal Committees alongside the Scottish and Welsh parties.

And so how to ensure appropriate scrutiny of English Party officers, and represent English regions and local parties in big decisions? The regions and the Federal Party were already holding conferences twice a year, and besides such conferences often do a poor job in that sort of technical function. What is needed is something more like a local government scrutiny committee. The EC was the solution hit upon.

This leaves the party with an administrative structure that few members understand. The English party structure (and the English regions) are useless as a vehicle for promoting a serious political career, and so are left to backroom types with skills in administration but not salesmanship and explaining themselves. Every so often these structures come under criticism for being opaque and unaccountable. Following the calamity of the 2015 General Election, it was decided to review the whole thing, following an extensive consultation exercise with members. This job fell on the usual worthy suspects who did their best.

What was the aim of the review? Beyond being an expression of angst, this was never very clear. We had the usual sweet nothings about having something simpler and clearer which would allow activists to spend more time on campaigning. The proposal was to abolish the EC and its executive and replace them with committees composed mainly of regional officers, and an annual or twice-annual annual conference open to all members lasting about an hour, held in close proximity to the Federal Conference. This amounted to a gutting of the English Party and its powers being taken over by the Federal Party and the regions.

How did this look to EC members like me? It looked as if its sole purpose was to abolish the EC as an end in itself rather than to achieve any wider goal. It was very hard to see how the regions would be empowered as a result, and easy to see how the officers of the Federal Party would be. The ability of the committees and the new conference to act as scrutineers looked laughable compared to the admittedly flawed EC. So lots of people spoke against the proposal; people from further-flung regional parties (in the north and west) sounded particularly aggrieved - even those who had been part of the consultation process. The new constitution's supporters offered no serious arguments in support of it, beyond it being a bit embarrassing if the thing was voted down. The motion needed a two-thirds majority, and it failed even to get a majority. No effort had been made in advance to sell the new constitution, or wheel in respected names to support it, or indeed to provide any supporting speakers beyond the proposer and seconder. It was a study in political ineptitude.

In that it was pretty typical of the Lib Dem English party. Nobody important in the party takes it seriously, and so it is left to hard-working but worthy types, with limited political skill. This is surely an inevitability. I personally think that the current constitution is the least bad of the options in the circumstances, and that a proper case had not been made for the new one. With constitutions it is best to be conservative, and weight towards the status quo. If that leaves the structure messy and opaque, we might reflect that in politics only dictatorships are clear and tidy.

Which does not mean that things can't be improved. The disciplinary processes in particular need some careful thought. The working of the party as a whole could do with rethinking. But I don't think the intermediate structures are a major part of the problem. It is dealing with the weaknesses of many struggling local parties in an unforgiving regulatory environment; and it is trying to improve the accountability of the Federal Party, while still giving it some room for manoeuvre. The former problem is the more urgent. The Federal structures have been overhauled recently, and it is too early to write them off.

Meanwhile learn this. If you want the turkeys to vote for Christmas, you had best give them a good reason.

Life in the tunnel. Being a Liberal Democrat

Featured on Liberal Democrat Voice

I just want to ask: when will the party face up to the fact that whatever it is doing isn’t working even in the slightest?

This was from Lib Dem blogger Nick Tyrone before the recent local elections, after a London opinion poll showed weak figures for the Liberal Democrats. The party's appeal to Remain voters had pretty much failed, he thought, with the party lagging even the Conservatives in this group, never mind Labour.

Then came last week's local election results. If you are going to take a cold, hard look at them in the round, they were nothing to shout about. They were perfectly consistent with that poll. In equivalent vote share they even marked a slight fall from the rather dismal 2017. And yet. Look at the London results (as a Londoner, I have an excuse for being London-centred - though my story works just as well outside it). The two most spectacular results for any party on the night were the Lib Dem gain of 25 seats from in Richmond, and 21 seats in Kingston, mostly at the expense of a Tory party that collapsed to a rump in both boroughs. And at last the party started to win seats from Labour, gaining seven in Haringey, for example. And the party had its Wandsworth moment too, fending off a sustained and confident campaign by Conservatives in the one borough it controlled in Sutton. Minds aren't swayed by dry statistics but by stories - stories that show what is possible. In London, and across the country, the Lib Dems had plenty of good stories to encourage them. That made them a much better set of results than the party has had for a long time, even in 2017 when the equivalent poll share was higher.

Not that you would have guessed this from the media coverage. Even in its later coverage (when the Kingston result was known, giving resonance to the Richmond story) the BBC chose to highlight the relative failure of Labour in Wandsworth to the spectacular écrasement of the Conservatives in two neighbouring boroughs, which went unmentioned. Why were the non-events in Wandsworth and Westminster more important? Because, apparently, they are a "flagship" boroughs. Actually I think the Wandsworth result is an important story, but this prioritisation is an interesting window into the current journalist mindset, even at the politically balanced BBC. This may not be bias; it may just be a bid to cover up the humiliation of the editorial team of not getting the story right in advance, and sending its big guns to the wrong places. News is made on expectations, not real events.

Which, I think, is the issue at the heart of Nick Tyrone's critique. Whatever the party does, nobody in the media, mainstream or otherwise, is listening. The only stories that are of interest are the sorts of stories that Ukip still manages to pick up: ones that point to the parties final, humiliating death spiral. I don't think it is fair to blame that on the party's leadership or messaging.

Life as a Liberal Democrat supporter is like being in a long, dark tunnel. Things are miserable; nobody can see you; and too often any small flickers of light vanish, rather than grow into that light at the end. But last week's small chink of light just could be what we hope it is.

The point is this: the problem isn't the message, it is getting people to listen to it in the first place. It is nearly hopeless achieving this through the media. It is just possible that a moment of genius or massive good luck suddenly does the job. But waiting for such a moment does not amount to a strategy. The other way to get noticed is to go out and talk to people directly - through door-to-door canvassing and attractive literature pushed through letterboxes, and with videos promoted through paid-for advertising. This is inevitably very localised, and it tends to happen in the run-up to elections, when people have a good reason to take notice. The good news is that when the party was able to do this, it, by and large, raised its share of the vote. And sometime spectacularly - in Remain-voting Richmond and South Cambs, in Leave-voting Kingston-upon-Hull, and in the somewhere-in-between Kingston-upon-Thames. That suggests that Nick Tyrone is wrong. What the party is doing is working at least a bit more than the slightest.

And the hope is that if the party keeps going, the general public, and the media that follows it, will start to notice. Even now, the BBC must start to question its policy of giving the party so little coverage compared to Ukip, which has now virtually ceased to exist.

But why soldier on in the cold, dark place, where hope is but fleeting? Because we believe in our liberal message. That humanity is more important than the nations and religions that divide it. That all humankind benefits when we listen to different points of view with respect. And that we should look at facts and evidence rather than let our prejudices run riot. No other party is doing that as much as the Liberal Democrats in British politics. It is worth pushing on through the tunnel.

The Budget shows that the Tories are in a political cul-de-sac

I will break my self-imposed silence because yesterday's British Budget is one of those great set-piece occasions which can be used as a moment of reflection. Predictably, most in the news media squander this in a silly game of speculation about the short-term prospects of political leaders. But the Budget poses more profound questions.

The government faces two profound economic problems, which it must either learn to live with or expend political capital to solve. These are low productivity and housing. There are other big problems, of course: Brexit, austerity, regional disparities and income inequalities, for example. But Brexit is more about means than ends; austerity is symptom of the productivity problem; and the other problems are not so high on political agenda right now, though they are important to both housing and productivity. Broadly speaking, the government is being forced to embrace the productivity problem, and is doing its best to confront aspects of the housing problem, without being able to do enough.

Let's look at productivity first. This is about production and income per hour worked. Since unemployment is now low, and immigration is looking less attractive, increasing productivity is the key to raising incomes, and, above that in my view, to raising taxes. Weak tax revenues lie behind austerity - the cutting of public spending to levels which are now unsustainably low. The government is forced each year to spend extra money to fix some crisis or other brought about by austerity. This time it was Universal Credit and the NHS. Next year it will be police and prisons, after that it will be schools and student loans. And so it goes on - this is no way to build for the future. The government could try to raise taxes, but this is so politically unpopular that not even the Labour Party is talking about it - they persist in thinking that there is easy money to be raised from big business, rich people and confronting tax evasion. So growth it must be, and productivity must rise. But productivity is stuck in a rut. The big news for this Budget is that at long last the Office for Budget Responsibility has given up hoping that there will be a bounce back, and so reduced its forecasts of income growth, which are used to set tax and borrowing assumptions. The Chancellor, Philip Hammond, talked about fixing this, as all politicians do, but in practice has done very little about it. Labour, for all their huffing and puffing, are no better. Both parties propose a number of sensible small things, like increasing public investment and education, but nothing that gets to the heart of the issue.

So the political class have chosen to embrace slow productivity, by their actions if not their words. They are right, though they need to think through the consequences. My take on the productivity puzzle is different from pretty much everybody else I have read. I think that the primary cause is what economists call the Baumol Effect. The problem is not the failure of British businesses to embrace improvements, but the limited demand for goods and services that are susceptible to advances in productivity, such as manufacturing. There are things that can be done to raise such demand, but these mainly have to do with increasing incomes for those on low incomes - people with high incomes consume less as a proportion of income, and spend more on low-productivity items that confer status. Also if demand for exports could be raised, and imports diminished, that would help - international trade is mainly about high productivity goods. But nobody really has much idea how to deal with these problems beyond tinkering at the edges with minimum wage adjustments and such.

So what of housing? What, exactly, is this about? It is about high costs to both buy housing and to rent it. This is a very complex problem with deep roots. Most analysis is superficial, but this article in the FT by Jonathan Eley is a good one. Among a number of interesting points he makes is that the low number of new housing units being built in recent decades compared to earlier ones is a bit misleading. In those earlier decades a lot of housing was being destroyed: slums and temporary housing for victims of bombing in the war. It is not necessarily true to suggest that the problem is that too few houses are being built. In fact there are deep structural problems with the housing market. One is that private borrowing has been made too easy; another is that changes to housing benefit has subsidised demand for private rental accommodation. The result of this and a number of other things has forced up the price of land relative to the housing  built on it, and made trading in land central to economics of private sector developers.

The upshot of this is that it is hard to see any solution to the housing problem without a substantial intervention by the state to directly commission house building, and social housing in particular. Another issue is building on greenbelt land outside cities, which is now forcing suburbs to turn business premises into housing, and turning suburbs into an unhealthy housing monoculture. Caution on greenbelt building is warranted, of course, as suburban sprawl, as demonstrated in so many countries in the world, is not desirable either. Mr Hammond did practically nothing on either of these critical issues. He did try to tackle the housing problem, but mainly through the private sector and private markets which are structurally incapable of making things better for the growing proportion of the population weighed down by excessive housing costs.

That is entirely unsurprising. Solving the crisis, especially in an environment of low economic growth, means that current levels of house prices and rents have to fall. That is a direct attack on the sense of wellbeing of the Conservatives' core constituency: older and better off voters. And if that isn't enough, property developers and others with a vested interest in the current system are showering the Conservatives with money. A politically weak government is no shape to take this on.

And that, I think, is the most important political fact in modern Britain. Housing costs are not an intractable problem that we must learn to live with, like productivity. One day it will solve itself in an immense period of pain as land prices, and much of the financial system, collapses. The sooner it is tackled the less the pain will be. Labour may be useless on productivity, but they are much stronger on housing. They have a much better prospect of doing something useful. That does not mean they will win the next election - the forces of darkness on the right should not be underestimated. But it does mean that Labour is looking to be the lesser of two evils.

For my party, the Lib Dems, this is important. It means its stance of equidistance between Labour and the Tories needs to be modified. The turning point, in hindsight, should have been that moment in coalition with the Tories when the then Chancellor George Osborne said that he could not support the building of more council houses because that meant more Labour voters. The coalition should have been ended then and there. Just as in the 1990s when the Lib Dems leaned towards Labour, the party needs to accomplish the same feat now. It is much harder because Labour has abandoned the centre ground. But that is where the country is at.

Have the Lib Dems reached a Battle of the Marne moment?

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Following the fortunes of Britain's Liberal Democrats is a niche interest these days. So much so that this Lib Dem blog spends most of time commenting on other things. But the party conference in Bournemouth has just ended, and I was there. Something needs to be said.

The party's fall from mainstream politics has been dramatic. It peaked when the party was in coalition, with four cabinet ministers, in 2010 to 2015. At that time the party was scarcely out of the news. This year the party's autumn conference rates hardly a mention. In yesterday's London Standard, on the day of the the leader's closing speech, the party got no coverage in the news pages. Absolutely nothing. This is not especially surprising. The party has but 12 MPs, a a tiny scattering of council leaderships, and single-figure poll ratings. In much of the country it can't even scrape together enough votes to retain its deposit. Still, its position is much stronger than other minor parties that have hit hard times: Ukip and the Greens.

Why is that? The party's infrastructure is much diminished, but it still dwarfs that of the other minor parties. It has even seen a membership surge, meaning that the conference was well-attended and lively, even if all the lobbyists and sponsors were absent. The party has been here before and progressed - notably when I attended my first conference in 1990, when it polled at a similar level to the Greens, the continuing SDP and the continuing Liberals. Furthermore its team of MPs has more government experience than Labour's entire front bench. And its ideological space, internationalist liberalism, is unchallenged in Britain's political system. And yet it is very hard to deny the pessimistic conventional wisdom, nicely summed up in this Economist Bagehot column.

But the party's leaders remain determinedly optimistic. Could this be a Battle of the Marne moment? This was the early turning point in the First World War, after the Germans had driven the French and British armies into headlong retreat, and the fall of Paris beckoned. The French general Ferdinand Foch was promoted to lead the fightback, and famously said: "My centre is yielding. My right is retreating. Situation excellent. I am attacking." The tide was turned, and France saved. The wider point here is that retreat can bring opportunity. Your opponents become overstretched and exhausted; meanwhile your own communication lines are tighter, and you become more cohesive. There are at least some elements of this for the Lib Dems.

The party's main opponents, the Conservative and Labour parties, do show signs of overstretch. The former are stuck with a mediocre leader because they can find nobody better; they are saddled with implementing Brexit, and with being on the wrong side of demographic trends. The easiest votes for Lib Dems to win these days are disillusioned Conservatives. Labour are in many ways in much better shape but remain a fragile coalition with incompatible views; I will write more of them after their conference next week. And the Lib Dems' main competitor on the political fringe, the Greens, look in even worse shape. They made a serious strategic error to occupy more conventionally left-wing social justice territory, and have been crushed by Labour's revival, after briefly threatening to eclipse the Lib Dems in the coalition years.

Also the party itself is more cohesive. It is not constantly undermined by the pleas that this or that policy line will upset this or that local community in a Cornish Lib Dem seat. Those conservative rural voters have now gone elsewhere. As have inner city voters. The party is now more tightly focused in Britain's suburbs, allowing it to sharpen its appeal and take greater risks.

And the party has its General Foch too, under its new leader, Vince Cable. As even the Economist admits, he is easily the more intelligent that the main party leaders. That intelligence was on display in Bournemouth. There was practically no question thrown at him to which he did not have an intelligent answer. Unlike his predecessor, Tim Farron, he is no tub-thumper; you would not call his speeches rousing. But he is facing up to some of the most difficult issues that confront the party. The biggest of these is the party's stance on funding higher education. Up to 2010, the party did well amongst students by promising to abolish tuition fees, including a dramatic pledge by almost all MPs not to vote for any increase. The party promptly ditched this in coalition, and Labour has exploited this ruthlessly ever since. Vince's fingerprints were very much on the volte-face, unlike Tim. At the time he argued that the new policy was a graduate tax by another name, but to no avail. This demographic of younger voters will be vital to the party, and it fits well with its liberal-international outlook. It will hardly be easy to turn the corner and win them back, but at least Vince is tackling it head on.

Vince's speech yesterday was quite remarkable in another way. We see a lot of dumbing-down in modern politics. This was evident in the deliberate obfuscations and lies in the campaign to leave the European Union (not really made better by claims that the Remain side were hardly better...), and above all by the triumph of Donald Trump in the United States. And yet Vince Cable persists in treating his audiences as if they are intelligent human beings. Surely the politics of misleading sound-bites, fake news stories and hyping victimhood must play itself out? Vince is betting that it will.

Still, the challenges for the Lib Dems remain huge. They need to rebuilt the party's base in local government - but with a new membership who so far are showing little interest in such patient and painstaking politics. The party's internal organisation remains weak, and it is not clear that the new leadership know how to address this. And, of course, the other political parties' commanding position is based on the ruthless logic of Britain's first past the post voting system.

I can offer sceptical observers no hard evidence that the Lib Dems can change their fortunes. But I do know that I will continue to work for it.

The Lib Dems must look beyond Brexit towards 21st Century liberalism

Last week I wrote about the strategic cul-de-sac that Britain's Conservatives find themselves in. I will write of Labour, whose strategic grasp is well ahead of all the other parties, later. But we are coming up to the Lib Dem annual conference. What of them?

Alas the Lib Dems seem no better at political strategy than anybody else. They (I could also write we, as I am a party activist) had some real momentum at the start of 2017, with the strange quiescence of Jeremy Cobyn's Labour party. But the general election in June changed all that. The party organised itself around a clear message on the main issue of the day - Britain and the European Union - but to very little effect. While the party held up reasonably well against the Tories, it folded wherever it came under any pressure from Labour. Where I live, in Battersea, the Lib Dem message could have been tailor made to succeed, and yet it was Labour that reaped the reward of locals' anger at the Tory Brexit strategy - they took the seat with a lightweight campaign and an unknown candidate. I did not receive a single piece of Labour literature.

But was the party's weakness merely tactical? People who suggest this say that Labour made irreconcilable promises to different groups of voters and will be found out. And the party's advocacy of a second referendum on Europe was simply an idea ahead of its time. As Brexit rage rises (and pretty much anything that goes wrong can be blamed on Brexit), the public will look again at the party's consistent line on the matter.

For a different perspective read former leader Paddy Ashdown. This is a pair of articles (I link directly to the second) moaning about the lack of direction in the party. Paddy is not particularly coherent (he doesn't pretend to be), but I do think he is on to something. Here is the penultimate paragraph:

I have concluded that all this is so, not because we have really lost our intellectual curiosity, but because of the dead hand of Brexit. I admit second place to no-one when it comes to fighting for the best Brexit we can, and preferably no Brexit at all. I am proud of our Party’s clear position on this defining issue. But is our obsession with Brexit in danger of distracting us from what kind of country we want Britain to be, whether in the EU or out of it? For me the heart of liberalism is our crusade for the empowered citizen, not the powerful state. This is a radical disruptive and insurgent idea. But where is it? When did you last – at Conference or outside it – hear us arguing that case, debating new ideas to make it happen or proselytising it before the court of public opinion?

Liberal Democrats are united by an open view of people and cultures, and a suspicion of nationalism and strong state power. These values point to sympathy with the European Union, if you view it as a restraint on state power rather than an extension of it. But the EU is a pragmatic solution to the problem of European states needing to cooperate more closely. It is not an ideology - or a new nationalism. While I do feel a certain pride in European identity, it developed long before the UK joined the union, and it is not a nationalistic pride, that seeks to diminish Americans, Russians or Chinese. Campaigning over EU membership is a tactic and not a strategy - and this is something that Labour, whether by accident or design, have grasped more clearly than either the Conservatives or the Lib Dems.

So what is the point of the Lib Dems strategically? Are the party's values best promoted by a separate political party, or by factions within larger political groupings, i.e. the Conservatives, Labour or the SNP in Scotland? Few liberals can see a future in the Conservatives these days. One Lib Dem I knew who moved to them a couple of years ago has dropped out, unable to take the strain. I don't know the SNP well enough to comment on them - they have tempered their nationalistic defining theme with inclusiveness. The real problem for Lib Dems is Labour - because that is where most political active liberals are now going, especially the younger ones.

The critical issue here is the question of state power. The point that unites almost all successful Labour politicians, from Tony Blair to Jeremy Corbyn, is that they view a centralised state, under democratic control, as the solution to most problems. This is one of the critical debates of our time. And liberals are not pulling their weight.

One the one side we have advocates of a strong state. The most important of these worldwide is the Chinese Communist Party - and they are picking up a substantial following throughout the world. Democracy is viewed with suspicion at best. On the other you have nationalists, who seek to create culturally homogeneous nations where individuals suffer minimal state interference - and the state's main role is to keep the rest of the world at bay. Established political parties in the developed world, such as Britain's Labour and the Lib Dems, belong to neither camp, but they are struggling to put forward a coherent alternative.

Paddy Ashdown does point towards the sort of places where liberals should be looking to develop a compelling vision for the 21st Century - centring on information and technology.  While I struggle to make sense of his "four dangerous ideas", they are all attempts to push the debate on in this direction.

And there is an opportunity for the Lib Dems here. While Labour is picking up some of the 21st Century agenda (not least in the way it organises itself, especially its party-within-a-party Momentum), much of it either has a statist mindset, like the Chinese Communists, or harks back to the 20th Century and its swathe of secure jobs in manufacturing and administration.  I have not heard much from Labour on critical issues of privacy, ownership of data and ways that state power might be restrained.

If the Lib Dems can win the race to develop ideas for a 21st Century state that is truly liberal and democratic, then the party will have a clear purpose. But if all it does is bang on about Europe, it will, eventually, vanish.

Can Vince Cable broaden the Lib Dems appeal?

Last week Vince Cable was elected unopposed as leader of the Liberal Democrats, following Tim Farron's resignation. This is not a situation many Lib Dems expected to be in a month or so ago.  I don't think I would have voted for him if the selection had been contested.  Yet I dare to hope.

Let's start with my reservations. The first is his age at 74. This is the least serious. Age has different effects on all of us, and Vince has clearly been looking after himself, physically and mentally. He will have bitter memories of 2007, when he was advised not to run for the leadership vacated by Ming Campbell, who was only slightly older. Ming was widely bullied for being too old - I remember some vicious cartoons. And yet the reasons for his failure were clearly something else - age was just a convenient proxy, reflecting the prejudices of the time.  By picking the relatively youthful Nick Clegg, it is far from clear that the party was better off. Meanwhile there have been a number of successful older politicians - including Jeremy Corbyn and Donald Trump. Age does mean that Vince's tenure is likely to be less than a decade. But that may not be a bad thing.

My next reservation is more serious. It is that Vince is not known for grassroots campaigning. His constituency organisation in his Twickenham seat was notoriously weak between elections - and that ultimately lost him his seat in 2015. In the jargon, Vince is a man of the air war, not the ground war. That is a worry because the Lib Dems weakness in ground organisation is one of the bigger issues that the party has to face. Tim Farron, by contrast, was much stronger on the ground activity. But am I worrying too much? Vince's constituency campaign this year was one of the better organised - and the result was spectacular. Tim came within a hair's breadth of losing his seat, which had been the "safest" in the country (there's no such thing as a safe Lib Dem seat). For all Tim's enthusiasm for grassroots campaigning, he did not strike me as a gifted organiser. We may be no worse off.

And finally there is policy. I have advocated fresh thinking on economic policy for the party, in particular to unlock under-used potential in poorer areas. I am also deeply suspicious of monetary policy as a method of managing aggregate demand. Vince is much more of a traditional economist - he seems more interested in using neoliberal ideas more effectively than looking for the next revolution in economic thinkin. Again, I am probably making too much of this. He has a lot of common sense, and does not strike me as a man that pushes policies that aren't working because he thinks they work in theory. And innovation needs to be small-scale at first if it is to win public confidence.

Against my reservations, though, I am finding quite a lot to like. He is very impressive when being interviewed on the radio. He answers the questions being asked, and confidently, displaying a great deal of expertise and honesty. He has enormous credibility, built up over many years - not least his five years as a senior cabinet minister. He can overdo the honesty and get himself into trouble - but this is a net benefit. Former London Mayors Ken Livingstone and Boris Johnson have learnt to pull this trick - being a bit too honest - off very successfully (though Mr Johnson's shine has now worn off), as has the Labour leader Jeremy Corbyn. When it works it is a priceless gift. Vince has much more impact on the media scene than did Tim Farron. He makes headlines effortlessly - and not by making gaffes.

And Vince's evident experience and expertise puts him ahead of almost every other front bench politician in the country - especially since Labour have been forced to promote inexperienced MPs into front line roles. This makes the Lib Dems look like a player in the grown-up game of politics, which hasn't been the case since the party's catastrophic defeat at the 2015 general election. Especially since there is now a back up team of experienced politicians in Norman Lamb, Ed Davey and Jo Swinson. This is important, because if the major parties do start to break up under the pressure of divisions over Brexit, the Lib Dems are starting to look like a credible alternative for refugees - or at least a vital alliance partner for any new grouping.

So that is why I dare to hope. But meanwhile the party is very weak. Many of the sixty or so parliamentary seats where the party used to be in close contention now look gone for good. It is not clear how the party is to replace them with new ones. The party might have some success in tapping angry Conservatives, but it is remains pretty hopeless against Labour in the pitch for younger voters. I am seeing quite a lot of manufactured kerfuffle about how Labour is supposedly breaking promises on student debt. Any Lib Dem who thinks that the party is going to make traction with that line of attack should think again. It's best hope against Labour remains its firm position against Brexit - but as yet Labour remains coated with Teflon on the topic.

Recently I read an article in the Guardian by Deborah Orr that lambasted the party as a waste of time. What is striking is that this liberal, well-informed journalist only ever thought the party stood for electoral reform - and so the party's failure on that in coalition leads her to claim that it "lost all it stood for". That shows how much work the party has to do. Most people think that the party stands for very little - they associate it with a single policy, like electoral reform, or, before 2010, free university tuition. When the party fails to deliver on this policy, it is reduced to emptiness in their eyes and it has start all over again. Meanwhile the Conservatives and Labour can chop and change policies at will, because they are seen to stand for something much broader. At the moment the big policy for the Lib Dems is opposing Brexit, with legalising marijuana as a second string. This is far too narrow.

So the Lib Dems need to be seen as standing for a broader range of ideas, and not tied to a single headline policy. There may be an opportunity for this. Most left-inclined liberals still think Labour stands for them - but Mr Corbyn and his allies want to take their party somewhere different. And many Conservative supporters think that their party stands for pragmatic liberal economics - but Brexit ideologues in cabinet don't seem to care what happens next as long as it is Brexit. If anybody can convince these people to look, or to look again, at the Lib Dems, it is Vince Cable.

Modern liberals have a religion problem

Shortly after the General Election Tim Farron resigned as leader of the Liberal Democrats. He said that it was impossible to maintain his Christian faith and be party leader. He was echoing a complaint from many practising Christians that they feel excluded from the party and in wider liberal circles. Muslims feel exclusion too, though often from different people. Is this true? And if it is, does it matter?

Opposition to discrimination is one of the defining principles of liberals. This started with religion, and in particular, in England, discrimination against Catholics and various non-conformist sects, such as the Quakers. It then moved on to issues of sex, race and sexual orientation. Now the problem seems to be between secularists and those practising religions with a universal claim to truth, such as Christianity and Islam.

At the heart of this is a genuine problem. Many adherents of these faiths claim that their faith requires discrimination against sex and sexual orientation, and opposition to such modern practices as abortion. These are important battlegrounds for liberals. Christians who believe that the state should discriminate in these fields clearly can't be liberals. But how far should liberals lay claim to private beliefs? It is quite common for people to say that they don't believe in abortion personally, but that they do believe that the state should permit it - that it should be a matter of personal conscience.

It is over such issues that Tim Farron tripped up. He was seen to prevaricate. Famously he tried to evade a question about whether gay sex was a sin, with the statement that "we are all sinners". I have some sympathy with him over that one. I have a church upbringing, and though I am no theologian, I know enough to tell that what Christians mean by sin is quite a complicated thing. The point is not to avoid being a sinner, but to forgive sins. I could add that many Christians feel that hetorosexual sex is a sin - or at least taking pleasure in it is - although this has softened in recent times. Tim was trying to say that it was the wrong question. Much later he clarified to say that he didn't think gay sex was a sin, but the damage had been done. To many "sin" meant "wrong" and that he therefore could not be trusted to uphold liberal values. The party's opponents made useful weather of this (unofficially, of course). It did real harm to the party.

That makes me very uncomfortable. It seems to exclude a large number of religious people from the movement. It draws the line in the wrong place. Liberalism is becoming equated with aggressive secularism. The response of many people (such as the Guardian's Polly Toynbee) is evasion. Religion was not the reason that Tim resigned, they say, but political ineptitude. Well there are plenty of reasons for saying that Tim was not up to the job (including his evasive response to that interview question - and his rambling email when he resigned), but this type of reaction reminds me a lot of the ways that people try to escape accusations of race or sex discrimination by pointing to other reasons for their views.  It's the "I'm not racist but..." position.

Tim is hardly the first person to claim that liberals discriminated against him for his religious faith. It strikes me that secularists have no idea when they are being discriminatory. Again there are parallels with race and sex discrimination. Workplaces that accept women as equal provided they behave in exactly the same boorish way as the men are discriminating against women. I found advancing sex equality when I was working in the City of Londonwas really hard work in many roles, especially senior ones, as many men had no idea what the problem was. They did not see that a whole range of behaviours and assumptions were discriminatory. The Lib Dems themselves are wrestling with why so few women advance to elected office, and why so few people from ethnic minorities join it. I think there is a similar problem with religious faith amongst liberals, but it is worse because it is unacknowledged.

This is exacerbated by a certain intellectual arrogance amongst aggressive atheists, who form an important minority amongst liberals - people like Richard Dawkins who are apt to talk of prayer as "talking to your imaginary friend". This stems from a rather old-fashioned logical-positivist outlook. They say that you should only believe things if there is sufficient evidence for them. But you have to have a nul hypothesis - you have to have a working assumption that you hold to until something with more evidence comes up. The battles of religion can be seen as asking what shape that nul hypothesis should take, and how much it should be based on handed down wisdom and shared understandings. To more thoughtful religious people, the classic aggressive-atheist viewpoint is an incomplete, like trying to drive a car through the rear-view mirror, and it is often device to evade discussion of important spiritual and moral issues. The point here is not to have debate on the virtues of religion, but suggest that many atheists suffer from arrogance and could do with a bit more intellectual humility.

Which would a good place to start when working out how to treat religious people in politics. So I want to make a number of points:

  1. Political movements should be about changing public life, and not private beliefs. There is much that liberals want to change, and to protect, in public life. It hurts that political cause if you exclude potential allies because of differences in private faith. This is happening with people of religious faith, and liberals need to be more tolerant.
  2. Being a liberal may still be quite challenging for many in particular religious traditions, especially those that set store by traditional teaching and interpretations of texts. Liberals need to give such people more space - without compromising on liberal public values. I don't think they did with Tim Farron, or others like the former Lib Dem MP Sarah Teather.
  3. Liberals also need to be careful about promoting their own religious interpretations in the political sphere. This is a particular issue for Christianity. People like me who were brought up in the faith have strong views about some religious traditions. Pushing these views should not be part of political discourse - though, of course, that doesn't mean that those views should not be aired. I might think that there is no serious theological objection to women priests - but I need to be careful about where and how I air that view, especially since I am no longer a practising Christian.

It strikes me that there are two things going on here. The first is that we should be more conscious of our religious or anti-religious biases, which could lead to discrimination in public life The second is that is important to bring people into the liberal political movement even where their religious faith creates tension.

So we should be worried that Tim Farron's religious faith proved such an obstacle to being part of the liberal movement. And we shouldn't pretend that it wasn't.