Lib Dems – Page 7 – thinking liberal

Was the coalition’s austerity policy a colossal mistake?

Politics is dominated by historical myths, about which the different political camps disagree. Examining these myths critically is one way that societies can find reconciliation. While “austerity”, the favoured shorthand for government cutbacks, is fast sinking as an issue in British politics, long since overtaken by Brexit, its mythology remains a defining issue. This mythology has right and left versions. I want to look at the mythology of the left.

Few in the Labour Party would disagree with Oxford Economist Simon Wren-Lewis in a recent article that austerity “will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.” We in the Lib Dems are implicated in this criticism, as part of the coalition government of 2010-2015 that implemented austerity. It is exhibit B in the Labour case that the Lib Dems should cease to exist as a political party, and that all “progressives” should simply join their party (exhibit A being the tuition fees fiasco). So what are we to make of it?

Mr Wren-Lewis sets out this narrative very clearly in his article. He is an open Labour supporter, so his comments come with a political slant – but he is a proper economist and the case he makes is a substantial one.

This narrative runs something like this: in 2008-2009 Britain followed the world into a severe recession, brought about by a global banking crisis. This inevitably created a government deficit, of which he says: “We experienced record deficits in 2010 simply because the recession was unusually severe.” The Labour government used fiscal stimulus to moderate the effects of the recession, but the Conservative-Liberal Democrat coalition that came to power in 2010 rejected this approach and focused obsessively (so the story goes) with reducing the deficit, using austerity policies – cutting government spending severely. He claims that this focus on austerity had no economic merit, and is best understood as a political exercise to reduce the size of government, with misery as its by-product.

Mr Wren-Lewis says that the government defended its policy with three arguments: that innovative monetary policy would provide the necessary stimulus; that improved business and consumer confidence would do the trick; and that financial markets would not finance the national debt unless action was taken. He demolishes each of these arguments, and I would not disagree with him, though there is an element of hindsight and the first two ideas came good in the end. As a result, he says, the British recovery was extremely slow, costing the average household £4,000 a year – coincidentally about the same as the Treasury’s estimate of the costs of Brexit.

But Mr Wren-Lewis is being disingenuous. There was a fourth argument for austerity. And that was that most of the deficit in in 2010 was “structural” – in other words had a deeper cause the recession. If I remember correctly, the Office of Budget Responsibility estimated that about 8% or so of the 11% deficit was structural. In other words a lot of the pre-crash tax revenues were gone for good, and would require more than short term demand management to bring them back.There is plenty of scope for disagreement amongst professional economists here – but it does suggest an alternative narrative, to which I personally subscribe.

This narrative posits that the British economy was not in a stable position when recession struck. It had already been pumped up by excess fiscal stimulus; there was too much private sector debt; and there was an unhealthy dependence on international finance and, to a lesser degree, North Sea oil. The evidence for this is not just the precipitate nature of the crash – bigger in Britain than in other developed nations – but the large current account deficit before, during and after the crash, and the high level of Sterling beforehand, and its abrupt fall. It is true that the public deficit did not look outsized by international standards before the crash, but, as my macroeconomics lecturer pointed out at the time, the overall economic context had classic signs unsustainable fiscal stimulus. The crash was more than an ordinary business-cycle downturn, it was Britain’s financial chickens coming home to roost.

So what does that mean? It means that fiscal stimulus as a response to the recession would have only a limited impact, and would not have restored the economy to its previous health, and in particular it would not have solved the government’s deficit problem. Before long the additional demand generated would have led to inflation (in fact unlikely outside economics textbooks) or (much more likely) a worsening current account deficit, i.e. stimulating other countries’ economies rather than ours. That put the British government in a bind. There was a case for stimulating demand through fiscal policy, and yet government expenditure had to be cut back towards something sustainable in the medium term. The government in fact plotted a middle way and, far from obsessively focusing on deficit reduction, moderated the cuts when the recovery proved slower than they expected. The trajectory of deficit reduction was close to that projected by the outgoing Labour government in 2010.

But many distinguished economists were and remain highly critical of the coalition’s austerity policies. Labour supporters can quote any number of famous names. But you need to read what these distinguished people actually said, rather than the mood music they fed into. In fact they hedged their bets. They focused criticism on the lack of public investment, and not across the board austerity. Investment, in theory anyway, is a magic bullet in this context. It generates future productivity growth, so helps to put the economy on a more sustainable future path, while at the same time providing short-term demand. This is a perfectly valid criticism of the coalition record, shared by many Lib Dems who were part of the government. But it does not suggest that the majority of austerity policies were wrong in principle. Taxes and spending were badly out of line and something had to be done to return them to balance. All I can say in the government’s defence is that public investment is much harder to do in practice than in theory – so often the money ends up in wasteful white elephant projects. But it would have relatively easy to allow the building of more council homes, for example.

Where I agree with Mr Wren-Lewis (though he does not explicitly say it) is that the macro-economic policy presented by Labour at the General Election in 2015, under Ed Balls and Ed Miliband, was much more sensible than the one presented for the Conservatives by George Osborne. Mr Osborne proposed a charge towards fiscal surplus that made little economic sense – and one year on it is being buried by his successor. The Labour strategy would have knocked some of the hard edges off austerity, while promoting a higher level of investment. The left is right to call to call it “austerity-lite”, but wrong to suggest that this was a bad thing.

So criticism of austerity is warranted, but this does not amount to what the left wants it to do: to prove that cuts to government spending and benefits were unnecessary, and still less that they can be reversed. Extra spending will require higher taxes. Economists may feel that austerity policies are self-defeating in many instances, such as in some of the Eurozone adjustment programmes. But there is also growing recognition of a deeper weakness in many advanced economies, including Britain’s, signified by the stagnation of productivity. That is limiting tax revenues and what governments can afford to do. That weakness should be the central topic of political debate.

How should Lib Dems embrace economic policy?

The British Liberal Democrats are setting up a policy working group on the “21st Century Economy”. I was among over 200 people to volunteer to take part, but sadly I was not picked. Those that have been picked will face truly daunting quantities of advice and reading material, but nevertheless but doesn’t stop me from offering my thoughts today. This time I won’ focus on the hard content of any new policy, but on its all-important political framing.

So far as content is concerned, regular readers will have got the hang of it. I blogged about it last year as part of another Lib Dem initiative, recommending Four Themes. These themes are green growth, small is beautiful, humane public services and redistribution of imbalances.

This line of thinking is very compatible with Lib Dem values and should go down well with the membership. But it presents a political problem. It means overturning several beliefs that the British public policy establishment holds dear. These include that higher volumes of consumption of things are essential to economic health (and may even be a measure of it), and that large, centrally controlled systems and organisations are the most efficient. It amounts to a policy revolution. And revolutions make people uncomfortable.

It is essential for future political success for the Lib Dems to have one foot in the political mainstream – so that they are regarded as being basically a sensible party. If they aren’t they will be condemned to the margins of politics like the Greens. It is the same dilemma faced by Labour supporters as they challenge capitalist ways. You do not secure lasting political progress in a democracy from the extremes.

The Lib Dems should therefore present a radical policy agenda in an un-radical way. It must be evolutionary, not revolutionary. The party needs to specify small steps forward, each of which is able to achieve demonstrable improvements, that will over time change the conventional wisdom.

This is why I particularly like the idea of Green Growth. it contains a highly constructive ambiguity. On the one hand it suggests that the party favours economic growth in the conventional sense, which the public has come to associate with better employment conditions and higher pay. But it does not quite say what is actually meant by growth – it could mean general wellbeing and quality of life rather than volume of consumption. Meanwhile the phrase unambiguously points to environmental sustainability. I strongly suggest that the Lib Dems make the phrase central to their proposition, or come up with something that does the job even better.

That’s my first piece of advice. My next advice is that they need to tread very carefully around two hot political topics: free trade and macro-economic management (aka “austerity”). These may well be excluded from the policy group’s formal scope, but the party’s wider narrative cannot avoid tackling them.

Free trade is a totemic issue for the Liberal Democrats. It was the one of the key organising themes of its predecessor: the Liberal Party. That was in a different time and context, of course. The Liberals then saw free trade as a way of breaking the hold of the landowning classes, who sought to protect their business interests (especially agricultural) at the expense of high prices for the masses. But even now, it is clear that freedom of trade, and competition, is a good way of keeping consumer prices down and freedom of choice up. By and large the general framework of world trade is something that Lib Dems will be quite happy with.

But something has changed in the power balance. Free trade helps keeps prices down, but it also seems to be doing the same with wages, until you reach a globally mobile elite of senior managers and other professionals. And worse, the instruments of free trade can allow globally powerful businesses to legally challenge public policy. There are some particularly odious examples from the tobacco industry as they have successfully slowed down, though not defeated, the introduction of plain packaging of cigarettes. Intellectual property is another issue that needs to be examined with a sceptical attitude. It is promoted by many businesses as being akin to any other form of property right and fundamental to civilised existence, but it is often used to stifle freedom and innovation, rather than encourage it. It is a favourite means for the manipulation of profits to low tax regimes by multinationals.

And trade agreements make this a hot topic. Brexit adds to the relevance. There were already cogent arguments that the EU was using its free trade rules to block general public policy (such as restricting state subsidies to the steel industry – though liberals should see two sides to that argument). Brexit does let Britain off the hook for the proposed EU-US trade pact – TTIP – which is causing a lot liberal angst. But the country must decide what sort of trading relationships it wants, and how far to go – including whether to join multilateral pacts such as the nascent one in the Pacific, TPP, which the country could join if it left the EU (or so I read). I have to say that I am agnostic on this question. My faith in free trade pacts has been shaken, but not destroyed. But the issue is becoming a political touchstone, and the Lib Dems would do well to apply some serious thought to this area, rather than recycling old slogans.

The Lib Dems will also find a minefield confronting them on macroeconomic management. The left have decided to make opposition to “austerity” one of its organising principles. I suspect that is because they draw so much strength from public sector employees and people from places such as universities and charities that depend heavily on public largesse in some shape or form. But anti-austerity does not resonate amongst the general public, who generally get the impression (justified or not) that public spending benefits other people. Since the Greens and Labour have drawn away the more trenchant political voices on the left, the Lib Dems have the opportunity to strike a more nuanced tone. Austerity is an elastic idea, so it is quite possible to say that you are against it, but the party should not apply “homeopathic policy” – mouthing anti austerity rhetoric while diluting the substance – as this did not work well for the previous Labour leadership.

My advice is for the Lib Dems is to stay clear as they can from the word “austerity”, and to strongly advocate higher levels of public investment in education (not just schools, incidentally) and green growth. Public services, though, must deliver value for money, and will need continued reform – though not the brainless outsourcing and “payment by results” favoured by the Conservative government.

So there are some hard questions and tricky politics. But as I said last week, the left has to develop a new economic narrative. Given the staleness of the economic discourse on the far left, the Lib Dems have real opportunity to take up thought leadership. There is a real prize to be taken here.

The rise of Labour’s hard left reflects the weakness of the soft left

I am no fan the British Labour Party. I have spent years enduring its arrogance and tribalism; I would not mind terribly if the party did not survive its current crisis. There is a temptation to gloat over its predicament – though this would be a distraction from the important political questions of our time. But it is more important to reflect on wider lessons for the political left.

Labour’s immediate problem is that their leader, Jeremy Corbyn, has no idea how to lead a political party, even if he were inclined to lead it in a sensible direction. To understand the depth of his failure I would point to two articles by former supporters. First from the Guardian journalist Owen Jones is getting a lot of attention right now; but what really shocked me was this from Richard Murphy, who developed Mr Corbyn’s economic manifesto last year, when he was running for the Labour leadership. And yet Mr Corbyn remains very popular in the party’s mass membership, much of which has only recently joined, who seem convinced that he represents a new kind of politics, and that criticism arises from malign forces. And that is enough to keep Mr Corbyn secure in his role.

As a convenient shorthand I will call Mr Corbyn and his supporters the “hard left”, though it is in fact a more complex fusion of old and new leftist trends than this name suggests. The word “hard” suggests its uncompromising attitude towards the political and business establishment, and its rejection of the conventional methods of politics. It compares with two other loose groupings. First are centrists, who held sway in the late 1990s and 2000s under former leader Tony Blair. These combined an embrace of global capitalism with a broad role for government intervention, albeit using quasi-market structures much of the time, and with a contempt for intermediate levels of democratic intervention below national government. The centrists made a successful pitch for formerly Conservative voters, giving the party power from 1997 to 2010. And yet the left of the party felt betrayed by its compromises, and especially by the Mr Blair’s support for the Iraq war in 2003.

In between the centrists (otherwise referred to as Blairites) and the hard left stands what outsiders call the “soft left”. I’m not sure if they would be happy to use that term themselves, they might prefer “liberal left”, but it seems to me highly appropriate. The soft left want to have the best of both worlds: drawing on the anger felt by the public sector workers that are the core of the hard left, while still wanting to achieve and wield political power through conventional political processes. The soft left became the dominant Labour faction under the leadership of Ed Miliband, after Labour lost power in 2010 until last year’s general election. It still forms most of Labour’s parliamentary party, and it is trying to oust Mr Corbyn as leader.

The success of the hard left reflects the weakness of the centrists and the soft left. The centrists are now a busted flush. The financial crash of 2008 exposed the hollowness of their achievement; the economy was not robust enough to support the level of public expenditure they favoured. Meanwhile their economic policies seemed to favour an affluent minority. While they might use government agencies to redistribute much of the wealth, what was required was decent jobs in poorer parts of the country. The Conservatives took over much of their governing ethos.

The soft left are no better, and that goes to the heart of Labour’s problems. They have no more idea about what to do than anybody else; the hard left doesn’t have much idea either, but is able to focus its energies on being against things instead. They nevertheless focus hard on what they have to do and say in order to win back political power. Under Mr Miliband this took the form of endless re-launches as they tested out one half-baked idea after another. By 2015 they ended up with an election manifesto that was generally centrist. Its core fiscal policy is in the process of being adopted by Theresa May’s new Conservative government, along with many other policies and priorities. But in order to coopt the anger of the hard left they had to dress it up as something more radical. This is what, in another context, the Economist calls “homeopathic politics”: the adoption of radical policies in minute quantities in the hope that it will create a positive aura by association. The Economist framed this idea to describe the way the American right tries to tap into the anger of the working classes at globalisation. Its warning was that it always backfires, as it will never satisfy the people that it Is trying to appeal too. In due course it led to the capture of the Republican nomination by Donald Trump. Something similar has happened to the soft left.

The soft left have compounded their problems by changing the leadership election rules so that not only is the mass membership in control, but they are boosted by temporary members (though they are trying to backtrack on this now). Two muddled ideas seem to be behind this. The first was that broadening the franchise for the leadership battle would make the selectorate more representative of the country at large; a quick glance at US primary elections should have shaken them out of that. Second was that the soft left could ride the tide of left wing anger at “austerity” and “neoliberalism”, the abstract ideas that the hard left choose to obsess about. But they have been outgunned by the hard left.

Meanwhile soft left MPs have shown little backbone. Their chosen challenger to Mr Corbyn, Owen Smith, was almost unheard of outside Labour circles, and even he required another MP, Angela Eagle, to break cover and make the initial challenge. The best qualified MPs to be leader are keeping a low profile.

The political misjudgements and the lack of backbone are signs of a wider weakness – a failure to develop distinctive political ideas of their own with which to excite the country at large. Owen Jones’s article, linked to above, takes the form of a series of questions to which he feels Mr Corbyn’s supporters have no convincing answer. But the soft left would struggle with exactly these questions.

This vacuum of ideas on the left is not unique to Britain. It is why populists of left and right are doing so well in so many developed countries. It is why the left is in full retreat in Latin America too. Beyond the populists it is leaving the political space dominated by the centre-right, such as Britain’s Conservatives and Germany’s Christian Democrats. Developing new, liberal ideas on economics and democracy is now of the utmost urgency on the left. I wish more people were engaged in that exercise.

And it is the best hope for my party: the Liberal Democrats. It has flirted with both centrism and the soft left; neither will work now. But it is as close as anybody to the new ideas that will be needed to take our society forward. It should make development of these ideas its top priority.

But what are these new ideas? A topic for another day!

The Liberal Democrats: a rebirth not a fightback

Britain’s political system is in turmoil, and each political party faces distinct problems. For now the Conservatives seem to be weathering the crisis best; the referendum result was the right one for them, in party management terms at least. Labour’s crisis is looking terminal, “the reek of death” as this excellent article by Nick Cohen has it, describing the particular lunacy of the political far left. But what of the party that has already suffered death: the Liberal Democrats?

Death might sound a bit strong. It continues to bob along at 8% or so in the opinion polls, win the odd local election, and its membership is resurgent. But the party has regained little of the political traction it lost during its coalition with the Conservatives from 2010 to 2015. And so much of the human capital and community connections it built up in its growth years in the 1990s and early 2000s has gone. Locally I can’t get over the fact that the Lambeth party has lost all its councillors – I remember so well the process by which the party took de facto control of the council in 2002, a process that will now have to restart almost from scratch. The party is now almost completely ignored by the mainstream media. In David Cameron’s valedictory Prime Minster’s Questions last week the Speaker saw fit not to call any of the party’s MPs, in spite of the important role the party played in his premiership. Only Lib Dem activists noticed.

And yet new life is stirring. Last year, after the calamitous General Election, party membership surged, and the Autumn conference was one its best attended, though ignored by lobbyists and media. But that is as nothing compared to what has happened in the last month – after the referendum. Membership has surged again (my local party has grown by about 60% – this may be the strongest it has ever been), but it is very different from last year. In 2015 the members were sorry for the party; they were interested in it, but few were up for a fight. In 2016 they are boiling. Membership events are better attended than ever; new and recent members want to get involved. The party is benefiting from a general increase in political engagement, which is benefiting most other parties too.

What is happening? Last year the party celebrated the membership surge under the hashtag #libdemfightback. This made me cringe. The old party is dead. A new party is being born. Not enough of the party’s remaining old hands recognise the difference between a fightback and a rebirth. With the latter you are dealing with a new party.

I want to say something about what I suspect about the reborn party. This is unashamedly based on my local experience in this part of cosmopolitan London, plus reading the odd blog and social media comment. I may be proved wrong – this year’s party conference in Brighton will be an important test. But here goes anyway.

First the new party is cosmopolitan, well educated, and, as a generality, distinctly younger than the old one. Many in the old party, including me, find the new members to be kindred spirits. But much of the old party was built through local campaigning, and drew in a distinctly less cosmopolitan crowd. Many female activists reported casual sexism that would be anathema to the new membership. The new party may find it harder to rebuild in its old rural strongholds than many suppose, but it should be less dominated by white male representatives.

Second, the new party is not very tribal by British political standards. The need for political alliances to achieve wider political ends is often mentioned. The wider political scene, and especially the promotion of cosmopolitan values, is more important than the party’s own fortunes. Old hands need to be conscious of this, though the party leader, Tim Farron, has clearly picked this up.

Third, the new party is distinctly more centrist than the old one. After the coalition with the Conservatives ended in 2015, many old hands thought they could put those years behind them, and recover the party’s old standing as part of the “radical” left, which peaked in 2005. The new members will give them a shock. They may cringe at the tuition fees debacle, but they do not regard the coalition government, and its austerity policies, as a betrayal. They are largely private sector in employment and outlook. The more left-wing types have joined Labour. Members of the old party who think the former leader Nick Clegg should be erased from the party’s history will not find a receptive audience.

So, those are the main elements of the new party that is taking shape. What about its political opportunity? So far there is little evidence of traction with the public at large; but with the Conservatives embracing Brexit and Labour showing suicidal tendencies, that could easily change. At this point I just want to posit one negative and two positives.

The negative is shared with the emerging Labour Party, which is undergoing its own rebirth, except that in their case the old party hasn’t died yet. The social base of its membership is narrow. It will be a huge challenge to broaden the party’s appeal to less cosmopolitan groups – and yet that is what the party must do to succeed. At least the Lib Dems, unlike Labour, who are victims an overblown sense of political entitlement, can have few illusions about the scale of the challenge.

The first positive is that the referendum has proved to a cataclysmic political event, that has helped erase memories of what went before it, or at least changed their perspective. This gives the Lib Dems the chance to move on from its recent traumas more speedily that otherwise.

The second positive is that the referendum result has changed the political dynamic in the party’s favour, just as the country embarks on a course that it thinks is profoundly wrong. Previously being against the EU was a central organising theme of anti-establishment politics. All sorts of ills could be blamed on EU membership, and it was very hard to refute these claims. Now that dynamic is reversing. The country’s ills can plausibly be blamed on Brexit, and life in the EU can slowly be built into a sort of promised land. Being pro-EU and pro-immigration will become anti-establishment. That is a much easier dynamic for an up and coming political party to play with, whatever the justice of it.

The media will continue to treat the Lib Dems as if their party was dead. The survival of the reborn party is certainly not assured. But something interesting is happening.

Remain supporters won’t get over Brexit but we must move on

“I feel that part of my identity has been taken away,” said one of our members in a local Liberal Democrat meeting last week. The local party, in a cosmopolitan part of London that voted 75% Remain, has grown its membership by 50% since the referendum result. I have never known members to be more motivated. Shock is turning to anger, though not yet to coherent action.

It turns out that party members are not alone, at least here in London. Psychotherapist Susie Orbach describes in the Guardian how her patients (mostly Remainers) will talk of little other than Brexit. Many had not been politically engaged, and hadn’t thought they were particularly worked up about the issue, but now find themselves in profound psychological shock. Interestingly this does not present itself as anger at the majority of Brexit voters, understood as being as those left behind by globalisation. I found that at our members’ meeting too.

This depth of feeling is surprising. I have been told many times that Britons had not accepted European-ness as part of their identity. Unlike those from other countries, they viewed the EU as a transaction which they weighed up in cold pragmatic terms. This has never been true of me personally, but I supposed that I was in a tiny minority. Us British-Europeans are still in a minority – but not as tiny as previously thought. For me feeling European was something to do with the stultifying claustrophobia of Englishness, and a strong feeling of not being American. For others, perhaps many years of foreign travel, and of European work colleagues and neighbours, have crept up on them without their realising it. Their horizons have just been narrowed. Freedom of movement, at the heart of Leave voters’ concerns, is closely linked to Remain supporters’ sense of who they are.

So there’s a gulf of understanding between us and that part of the political and economic elite that supports Brexit. This was evident from Sunday morning’s Point of View on Radio 4, by philosopher John Gray. He told Remainers to get over it and move on. To him the EU is a failing international project that Britain is well out of, and that Britain would be the first country to exit of many. He differed from many commentators in not seeing the British as exceptional from other Europeans, but he still saw the EU as essentially transactional – a power play by a shadowy group of politicians and bureaucrats. He was quite perceptive in many ways, though I think he made some factual errors. It is not right to call the EU strongly protectionist against countries outside it, except in agricultural products, where it has plenty of company, such as the USA and most emerging markets. The European expansion was not an exercise by the European elite to grow and deepen the EU, but something of a plot by Eurosceptics to make deepening impossible. The imposition of austerity policies on many European countries is not those same elites desperately trying to keep the union together – but a number of better off countries in the Union putting boundaries on its powers to deploy their taxpayers’ funds. These errors reveal a lack of understanding, though they do not directly undermine his conclusion.

But what Mr Gray has missed is how bound up the EU has become in people’s sense of identity. This happens in the same way as identity has become bound up with the nation-state. Why on Earth should the English feel a sense of belonging to the British state after all? We just do, and it grew over a 1,000 years; in 1066 the English state was controlled by alien Normans. On the way Englishness and Britishness have become entangled. Many English Brexit voters, incidentally, seem only loosely tied to the idea of Britishness, never mind European-ness. Identification with the EU varies from country to country, and is genuinely weaker in England (and Wales and Cornwall and Unionist Ulster) than in most other European countries. I sense it is also weak in Austria, for example, but strong in Germany and France. Identification should not be confused with satisfaction. The English are dissatisfied with the British state, but they don’t want to leave it so set their own governments in Yorkshire, Somerset or wherever. The sense of identity of so many of its citizens gives the EU a much better chance of surviving than Mr Gray thinks. He is far from the first of Britain’s intellectual elite to underestimate the EU’s capacity for progress and survival. I remember being assured by most of the Britons I met in the 1990s that European monetary union was utterly impossible. In the mid 1950s British thought the idea on the union laughable.

So, much as the Brexit leaders tell us Remainers to get over it, we won’t; there is a complete gulf of comprehension. Much like opponents of EU membership could not get over the last referendum, in 1975. As a nation we are utterly divided.

But us Europeans will have to move on, even if we cannot accept the result in our souls. The referendum result could be reversed – but only after a prolonged period of disillusionment and failure to get a satisfactory new way of being – and even then it would be hard. Our project to return to the European family could take another 40 years. It will happen as people’s outlook becomes more cosmopolitan; as the current 20-somethings move into their retirement; and as the bedrock of anti-European identity literally dies out. The central demand will be to restore the freedom to move, work and settle.

Meanwhile we must take on other political projects, to help create a less divided Britain and a less divided Europe. That means taking the Brexit slogan of “Take Control” seriously. The Brexit leaders have no intention of implementing this idea beyond the Westminster political establishment, and perhaps in boardrooms. We must look at the communities who voted to leave, and ask ourselves how to make the people living there less powerless. We may regard the Brexit leaders as traitors, but the bulk of people that voted for them are our sisters and brothers.

The politics of Brexit: how should the parties respond?

I had thought things were going Remain’s way, after my near certainty of last week that Leave had won. A day helping get out the Remain vote in Wandsworth and Lambeth borders (mainly alongside Conservatives) helped cement that feeling. The vote for Remain there was 75% and over. But the backlash from the rest of England (aided and abetted by Welsh voters) was too great, and we ended up with a decisive vote for Leave. I’m still in the very early stages of grief for the country I love. British politics has suffered an earthquake. I want to offer some first thoughts about how the different parties should respond.

The Conservatives first. As my experiences here in Wandsworth shows, they are bitterly divided. But they will now have to rally behind the result and be the unequivocal party of Brexit. David Cameron was clearly right to resign, albeit at a leisurely pace. It is very revealing about those that supported Leave that so many of them thought he should stay. It bespeaks denial about the gravity of what they have done. But Mr Cameron would have been a prisoner and puppet as Prime Minister and party leader; that is not what the situation demands. Personally I think Boris Johnson should take over; his leadership may well have been decisive for Leave; he should be made to answer for its consequences. He may not have enough support amongst Tory MPs, though. But he does have momentum.

There is a clear opportunity for the Tories tok benefit from the bitter divisions in England and Wales. George Osborne’s wish for the party to build bridges with voters outside London now looks altogether more credible. Quite what this means in policy terms is less than clear. But they will need a clear focus on limiting immigration to begin winning the trust of Brexit voters.

That they have a chance to do so arises from the problems of the political left. Labour’s leadership backed the wrong horse in this race, mainly through honourable and honest belief. But their core support now comes from educated public sector workers and minority ethnic groups. The gap between this core and their previously loyal working class voters outside London has turned into a gulf. This has become a strategic problem.

I believe that the best thing for them is to stick to their beliefs keep up the attack on the advocates of Brexit. They will need to play lip service to respecting the will of the British people, but what they really need is for the Conservatives to fall apart under the stresses of trying to follow Brexit through. A period of institutional chaos is about to unfold; they need to be the party of buyer’s remorse and even “told you so”. This should be combined with a bold move to the political centre, perhaps scooping up disillusioned Conservatives.

But they have a leadership problem. Jeremy Corbyn has been criticised for being a lacklustre advocate of Remain, because of his half-hearted support for the idea. I have a feeling that the problem is much deeper. I don’t think he is cut out for hard political campaigning of any kind. On the radio this morning he sounded like a damp rag; he offered no ideas about what the country should do next. The Conservatives will have to be in bad shape indeed if they can’t beat him in a general election. And it is not just leadership. I would take an amazing act of political skill to persuade Labour members back to the centre ground. But not impossible.

Ukip have been dealt an interesting hand. They have done much to bring this situation about, and will doubtless gain Kudos. They must continue their pivot towards disaffected white working class voters, and peel them away from Labour. But it will be a hard road under Britain’s electoral system. Their power base in the European Parliament is about to be closed down. That this will hurt so badly will be amongst the many ironies of the vote.

And my party, the Liberal Democrats? The party continues its flirtation with irrelevance, and Brexit for these enthusiastic supporters of the EU makes it worse. But it has much stronger party infrastructure than Ukip; it has more MPs, more councillors and more Lords. They should benefit from the manifest troubles of the Labour and Conservative parties, but it is hard to see exactly how. They do not offer an inviting prospect for disillusioned centrist Labour and Tory MPs. I don’t see that they have much choice but to slowly rebuild on core liberal values, and make a strong appeal to younger voters. A lot will have to change to make this credible; not least it needs an influx of women and ethnic minorities into its leadership positions. I will write more on what the party should try and do another time.

And the Greens? They, too need to compete hard for that younger vote, where they have an edge over the Lib Dems. They have a very interesting strategic choice though. Do they continue with their leftwing, pro public sector lurch, away from their environmentalist roots? Jeremy Corbyn seems to have shot that fox, and offered a home for these voters in the Labour Party. But if Labour start a serious march to the centre, this gap might open up again. But if Labour continues to be a prisoner of its new members this route towards relevance will be blocked.

And the SNP? They have been presented an opportunity for independence and another referendum. But Brexit poses challenges for Scotland. A Scotland inside the EU and an England outside poses some major headaches. Many of these are about to be rehearsed on the island of Ireland. It may be hard for the SNP to create an attractive prospectus.

And what is the best thing for the country? I see the vote as a cry of pain from the politically excluded. This has a very ugly face, and I fear the rise racism and xenophobia. But all politicians should heed that voice. We must develop a new economic model that brings the excluded back in. That is the only way to bring liberalism back into fashion. If the Brexit vote hastens the development of such a new model, it will have been a good thing. All of the parties, apart from Ukip perhaps, show some signs of understanding this but are bereft of clear answers. But I fear that instead too many politicians will draw the conclusion that they should pander to dark side.

British politics is in stalemate

The British elections last Thursday were probably the most significant electoral test this parliament, with the Scottish and Welsh parliaments, the London Mayor, and many English councils up for grabs. Everybody had the chance to vote for something. The outcome was underwhelming. Where does that leave the political scene?

The analogy is overblown, but I am reminded of the war that ravaged Europe 100 years ago. In 1916 huge efforts by the major combatants yielded little return on the ground. While the military men looked for breakthrough tactics, these yielded limited results, and in the end it was a matter of stamina and fundamentals.

The results pose uncomfortable questions for all the political parties that took part, major and minor. Most of the attention has focused on Labour. They suffered a further catastrophe in Scotland, falling behind the Conservatives to third place. In England they mainly held their ground, with an impressive victory in London’s Mayoral election. Supporters of Labour leader Jeremy Corbyn hail this as vindication – but that only shows how low their expectations have sunk. There is no hint here of how the party can regain power in Westminster. The myth of a hidden bank of left wing voters waiting to be energised by Mr Corbyn has been shown to be just that. But neither is there a disaster enough to fuel Mr Corbyn’s opponents; the Scots meltdown predates his tenure and so had already been written off. The best guess is that the far left will continue to hollow the party out from within, but that the party’s outward status remains largely unchanged. Come the next general election the question is whether the party will implode or simply repeat its dismal performance last time. On this year’s evidence it will be the latter.

For the Conservatives the position looks considerably better. They drifted only gently backwards in English councils; their performance in London was reversion to type, after unexpected success under their Mayor Boris Johnson; and they achieved a remarkable breakthrough in Scotland. But to keep governing beyond 2020 they will need to deliver a killer blow to Labour, while containing any Lib Dem comeback. Can they do that when they are riven by divisions over Europe, will replace their leader with one who has much less public respect, and while their government programme keeps being derailed by backbench discontent? Meanwhile their tactics in London, where they tried to toxify Labour’s Sadiq Khan by associating him with Mr Corbyn and Muslim extremists, failed, and may have damaged the party’s brand.

The SNP maintained their grip on Scottish politics but lost their overall majority. They have completed an astonishing pivot to the left, allowing the Tories a bit more breathing space, and leaving Scots to wonder what the point of Labour is. It is hard to see how anybody is going to deliver a knockout blow, but more Scots will surely start to tire of them. The only way seems to be down.

Ukip cemented their status as a major UK party, with breakthroughs in the Welsh Parliament and London Assembly, and consolidation of their role as Labour’s main opposition in parts of the north of England. But they are a party of oddballs, and it is hard to see how they can maintain their coherence. As a party of local government in England, they won only 15% of the seats of the supposedly down and out Lib Dems; this is a weak grassroots base.

The Greens moved forwards in Scotland, and held their own in London, where they are established as the third party by popular vote. But in English council seats for every gained they lost a seat somewhere else, to end up with even fewer seats than Ukip. Their switch to the left, while downplaying their environmentalism, looks to have been a strategic error, with the wind taken out of their sails by the revival of the Labour left.

And my own Lib Dems? There were quite a few successes; they gained more English council seats than any other party, and are approaching half the Conservative total. They comfortably retain their position as the third party of local government. There were striking constituency wins in Scotland and one in Wales. But all the Lib Dem successes boiled down to pockets of local strength, where they are deeply embedded into civic society. They have shown their ability to claw back ground from the Tories in particular, and even the SNP. But talk of a revival of fortunes belongs in the same category of optimism as the Labour left’s. The party was reduced to a single seat in both the Welsh parliament and London Assembly, and fell behind the Greens in Scotland. They struggle to reach 5% in proportionally elected contests, an irony for a party that is so in favour of this type of election. The party has not established clear political ground for itself and remains confused as to whether its coalition years were its finest hour or a terrible mistake. The party fights irrelevance in most of the land.

Plaid Cymru continued to move sideways. The politics of Wales remains quite different from that in Scotland, and the party seems quite unable to replicate the SNP’s success.

And nobody else made an impact. The Women’s Equality party was launched last year in a big media splash, and tried its luck in London, but got nowhere. The nativist Britain First is another new party, which has a big presence on social media, and it put in a performance that beat other competitors in its space (such as the British National Party), but still only managed a derisory result. For all the claimed discontent of the public with established politicians, there is not even a faint sign of an insurgency that could take off.

So British politics is in deadlock. The Conservatives have a narrow majority in the UK parliament but lack the discipline to govern decisively. There is no evidence as yet that they are going to break out of this. But neither is there any sign of a party or coalition of parties that can knock them off their perch.

There is a broad lesson here about British politics that is not given enough weight by most commentators. Political success requires a strong grassroots infrastructure and solid organisation, built up over many years, as well as being able to chime with some part of the zeitgeist. Labour and the Conservatives have achieved this more or less across Britain, now that the former are rebuilding themselves in Scotland. Fear of losing this vital political infrastructure stops either party from breaking apart, in spite of huge political divisions. The SNP has this in Scotland and is consolidating. That the Lib Dems are in the fight at all after failing so spectacularly to hit the zeitgeist is testament to their pockets of grassroots strength and penetration of institutions like the House of Lords; they have something to work with. Ukip and the Greens have attempted to build their own infrastructure but are finding it desperately hard going. Nobody else stands a chance. There will be no unconventional uprising like Italy’s Five Star movement. It is also very hard for a nativist insurgency, such as that of Donald Trump in the US, or the Front National in France, to get traction – though Ukip has tried.

And so we are locked in stalemate. The biggest threat to this dynamic is if one or other of the major parties breaks up under the strain. The second possibility is that the Tories get their act together sufficiently to deliver a knock-out punch to a Labour Party that does not look interested in government. As yet there is no sign of either.

Tim Farron sets about changing the Lib Dems

Tim Farron is proving a decisive leader of the Liberal Democrats. The party is in a poor way. It languishes at about 6-8% in the opinion polls, and its doings are almost entirely ignored by mainstream media. Whether he is able to save the party remains to be seen; but he is certainly making his mark.

This struck me forcibly as I attended the party’s Spring conference in York last weekend. The most dramatic development there was the adoption of a motion on ensuring greater diversity amongst the party’s elected representatives. This has always lagged behind the party’s rhetoric. Dominance by white middle class males remains largely undisturbed after decades; even the Conservatives manage better. Some of the stories put about by female activists show the party in quite a shocking light, with discriminatory questions and petty harassment widespread (though I have to say that I haven’t seen it in cosmopolitan London – but maybe it isn’t the sort of thing I register). The only proven way of breaking this is positive discrimination, with the use of quotas or exclusive selection contests. This has been proposed many times in the party’s history, always to be knocked back by the conference as illiberal.

Tim meant to change that this time. He supported a motion that imposes all-women shortlists for replacing any MP that stands down, and at least one other more winnable seat in each region of the country. Local parties are mandated to apply all-women or all-disabled lists more widely. Positive discrimination for ethnic minorities is a lot harder legally, but the party is meant to push matters as far as it can. Having thrown his weight behind the idea, and, importantly, spent considerable effort in persuading key people in advance, he secured the change by an overwhelming majority, notwithstanding many eloquent speeches against.

That is quite an achievement. It is not beyond the bounds of possibility that if the party has a moderately successful general election next time (say raising its tally of seats from the current eight to twenty or so), it could become 50% female in one sweep. Tim has already shown he means business by having more than 50% female and 10% BAME in his shadow cabinet, if it can be conferred such a grand title. Whether you approve of it or not, this is decisive leadership.

On policy too there is an evident change, led from the top. He is following a “core vote” strategy by picking issues that are likely to motivate core supporters, rather than the general public. The leadership supported motions against fracking and in favour of legalising cannabis at the conference. In his closing speech Tim supported the accommodation of refugees, backed the junior doctors in their dispute with the government, and opposed laws designed to make life easier for the security services to gather personal information. This is all crowd-pleasing stuff for liberals that a party with ambitions to govern would struggle with.

A third element of Tim’s strategy is more strategic. He is promoting community politics – which means the party’s activists cultivating contacts with their local communities and facilitating solutions to local problems. Related to this he is trying to promote policies that support small, locally based businesses. The party at large likes this in theory, but often lacks the understanding or appetite to put these ideas into practice. It pushes political activists way out their comfort zone and forces them to deal with real peoples’ problems, rather simply sounding off amongst the like-minded – which is, of course, why it is such a powerful idea if it can get going.

As with all strong leadership, this is taking risks. The diversity ideas have put quite a few people’s backs up, and may hasten the departure of many older hands who run local organisations. As one such I always feel weak after being lectured by assorted conference speakers about how local parties need to be made to do this, that and the other – and I support them. That is no bad thing in itself, but will enough younger and more willing people come to take our places? The collapse of much of the party’s local organisation will no doubt be hastened. With the paid part of the organisation also in free fall, and with the regional layer dependent on a small number of usual suspects, this is going to be hard going. The party will need to develop online networks and non-geographical interest groups to compensate for the hollowing out of much of its organisation. The push on diversity is hardly the cause of this hollowing out, and one day it will even be part of the solution, but it will make things worse in the short run.

The liberal populism is also risky. Some of the ideas are probably ahead of their time, like more liberal drugs laws perhaps. The world will catch up and the party will get kudos. But others will look plain nuts to most people. It’s lovely to help refugees, but won’t it just encourage more to take to boats and get drowned? Or just divert developing world entrepreneurship towards people-smuggling? It tends to reinforce the public’s fear about liberals – nice but too soft to be given real power. I think a lot of the party’s ideas on privacy may be backward rather than forward-looking, too. All this risks leading the party up the same old blind alley which it took in Charles Kennedy’s (much less vigorous) leadership – which means that if it enters government it will be accused of betraying its principles. Tim ran into bumpy waters himself when he decided to support the government over bombing in Syria. He risks more of that sort of thing. A broader fear is that “core vote” in fact equates to “middle-class”, and the party cuts itself off from working class support.

Community politics should counter these problems. It is a very good way of involving and empowering working class people, as well as showing that the party can deal with, tough, practical problems. It is Tim’s strongest suit, after the idea has been systematically neglected by his three predecessors. The danger is that he finds himself unable to deliver on it, as activists prefer sounding off in blogs and social media to helping to create a thriving environment for local businesses.

But the party must take risks. I admire the way Tim is trying to take the party by the scruff of its neck. He is working out much better than I feared. The unpredictable world of British politics may yet throw the party the lifeline it needs to make a comeback. The progressive destruction of the Labour Party makes that look a distinct possibility. And if it does, the party will be a different thing to the one that embarked on coalition government in 2010.

The speech I would have given at #ldconf

I wasn’t called to speak to speak at the economics debate. Only one speaker was picked to oppose the motion. That reflected d the balance of cards submitted, apparently. This is what I was planning to say:

What on on Earth am I doing? Vince Cable is one of my heroes! He is one of the few economically literate people in British politics. How can I oppose a motion that he has proposed so eloquently? And a motion with so many worthy sentiments in it. It’s like voting against motherhood.

Well maybe that’s the problem. The party at this point in the political cycle needs a serious motion on economics to do one of two things.

First it could set out a clear but simple vision that shows what the party stands for and who we are. It could pick up themes such as green growth or local enterprise.

Or it spell out specific policies. Things that can be put in a manifesto, or, Heaven forbid, a coalition agreement.

But the motion has no clear organising theme. Vince’s speech helpfully offered us four. But not the motion we are being asked to adopt. As originally published it had 10 complaints about current government policy, and no less than 15 themes for Lib Dem policy. From my Conference Daily I see that it has grown. It truly is no hobby horse left behind! Where on earth is the clarity and vision in that?

Amendment one does try to build a green theme, which improves the motion, and I support it. But it cannot save it.

And neither does it help create detailed policy. Each of those 15 proposals needs a debate of its own.

This motion is neither fish for fowl.

Conference, you could take the easy option. You can vote it through, and let it be instantly forgotten. For that is the only fate that can await it. But is that what you really want for the first motion under One Member One Vote? No. You can be brave. Throw it out and send a signal that this conference means business.

Neither fish nor fowl, why I will oppose the economics motion at #ldconf

This weekend the Liberal Democrats meet for their Spring Conference. To most observers of the political scene, this is an irrelevance. But with the growing gap between Labour members and the general voting public, and the Conservative Party riven by splits on Europe, who knows what opportunities might arrise for the party? I still care about it, anyway.

The party is rebuilding itself after the five year car crash of coalition government ended last year with it being reduced to near irrelevance in the House of Commons. And that followed five years of rather gentler decline after its peak year of 2005. The party conferences are an opportunity for members and leaders to decide what the revitalised party stands for.

One complaint after last year’s meltdown was that the party was weak on economic policy, and so let others set the agenda. No doubt that motivated the submission of a motion on the economy as the first item of policy business on Saturday with just an hour’s debate. Alas the motion plumbs the depths of awfulness.

I can’t find a neat link to it, so I will reproduce it here in full below, so you can judge for yourself. But with its 10 whinges about the current situation, and 15 proposals, I’m not sure I would recommend a close read. It is mostly unobjectionable. It has some worthy ideas, and some airy aspirations. Item 11 od the 15 reads: “Addressing inequality through a renewed commitment across Government and society to analyse and address Beveridge’s Five Giants in modern society.”

In some contexts a list of 15 rather disconnected policy ideas is not a bad idea for a policy motion – for example if the party was planning to negotiate a coalition programme from a position of strength. This is hardly the context now, and even then it fails. Just what would you do with a commitment to tackle the Five Giants in a coalition negotiation? Instead all such a long list of vague ideas serves is to offend people whose own hobby horses are left out of the 15, or are underrepresented, or given too low a prominence.

What the party actually needs from a debate on economics at this stage in the political cycle either of two things.

The first thing it could do is set out a very limited number of general themes, around which to hang more detailed policies. These need to display a bit of vision, and show what the party is all about. I suggested a few last year: green growth, small is beautiful (or greater diversity and innovation, if you will), problem-solving public services and addressing inequalities and imbalances. It would not be hard to do better than that, and any debate would say something about the party’s values and campaigning priorities. I can find no such clear general themes in the motion. Worse, I am rather shocked to see so few references to environmental sustainability in a party that used to pride itself on environmental consciousness – that alone is reason enough to vote the motion down.

The second thing it could do is develop a particular economic idea or solution to a specific economic problem. There are plenty of places where this needs to be done: investing for green growth; tackling the housing crisis; free but fair trade; taxing businesses. Or the role of fiscal policy in economic management, though the chances of getting a rational debate on that area in a left of centre political party are slim. This is actually where the heavy lifting needs to be done, and where the Lib Dems can make a substantive contribution to the wider political debate on economics. The real world of democratic politics is evolutionary; revolutions fail. What is needed is a series of practical changes, each of which will works on its own merits, and which collectively will amount to radical change. The motion does point to some specifics, but each of its 15 proposals needs to be picked apart in a debate of its own. Instead we have a series of vague and useless commitments.

And as a result the motion is a complete waste of time. Much hope seems to be being placed on amendments. But unless these are allowed to replace the motion with an entirely new one, which would be an abuse of process, I can’t see how it can either be turned into a general vision or a specific economic proposal. It is neither fish nor fowl. The best thing to do with it is to throw it out and start again.

Conference re-asserts the Liberal Democrats’ continuing commitment to sound public finances, social justice, an open economy in an open society, and the principle of free markets whenever possible with intervention where necessary by an enabling state.

Conference notes:

a) The Liberal Democrats’ effective record in Government in stabilising the public finances and major contributions in the fields of apprenticeships, banking regulation, the British Business Bank, the Green Investment Bank and the promotion of innovation through the Catapult network.

b) The fragile nature of economic recovery following the 2008 crash, evidenced by interest rates which are historically low and continued Eurozone uncertainty.

c) The growth of house prices carrying the threat of a price bubble and subsequent crash.

d) The Chancellor’s unhelpful and arbitrary re-definition of the deficit, doubling the total by including capital spending, in his attempt to justify Tory spending cuts.

e) The medium-term risk to the UK economy posed by increasing and unsustainable private and household debt.

f) The threats to the UK economic prospects posed by Conservative approaches to UK membership of the European Union and immigration.

g) The International Monetary Fund’s advice to reduce debt through growth not cuts.

h) The UK economy’s over-dependence on London and the South-East.

i) The UK’s bad record in allowing the growth of an increasing number of young people with low levels of education, training and aspiration.

j) Growing inequalities in wealth and income, coupled with unfair and regressive action against the poorest people in the country, now exacerbated by the assault on welfare spending.

Conference calls for effective measures to support and grow the UK economy, including by many established Liberal Democrat policies:

1. Increased investment, both directly by Government financed by public borrowing, and stimulated by Government, particularly in affordable housing including social housing and infrastructure to support balanced growth throughout the UK.

2. Support for planning reform, institutional lending to small builders and action by local authorities for planned development, including assembling land for auction.

3. Further measures to improve and regulate banking services by promoting efficient lending, particularly to small and medium-sized enterprises, encouragement of challenger banks and increased personal accountability.

4. Strengthening takeover legislation to protect the country’s science base.

5. Reversing cuts in the development of green energy and promoting investment in green business initiatives.

6. Further development of the Government’s industrial strategy, promoting co-operation and supply chain development in key sectors for the long-term.

7. Re-balancing the economy towards manufacturing industry and regions, based on the coherent and substantial devolution of political and financial power.

8. Further reform of corporate governance to encourage ‘long-termism’ and to discipline executive pay, including an employee role in determining executive pay.

9. Renewed emphasis on vocational education and training, particularly through effective apprenticeships and especially higher-degree level and engineering and construction apprenticeships.

10. Coherent efforts across Government Departments to address the needs of young people who are excluded from the labour market and participation in wider society.

11. Addressing inequality through a renewed commitment across Government and society to analyse and address Beveridge’s Five Giants in modern society.

12. Investigating sustainable ways of funding universal services, including a cross-party, cross-society settlement on funding health and social care.

13. A new commitment to taxing unearned wealth, including Land Value Taxation.

14. Measures to dampen the growth of asset bubbles in opposition to Conservative approaches which tend to increase that growth.

15. Support for more diverse ownership models including worker ownership, social enterprise, mutuality and co-operation.