What the Liberal Democrats should do next

Why yesterday's electoral disaster is not the end.

The left is generally more interested in protest than power. And so, even though in terms of practical policy the Liberal Democrats are ensuring that the coalition government is far less brutal than it otherwise would be, many on the left are gleeful at the party's electoral rout yesterday.

This is rather strange in terms of practical politics. It is almost as if the left wants the Conservatives to have more influence in the coalition, so as to punish Clegg and his party for daring to try to make a coalition work. The left seems to want the Conservatives to marginalise the Liberal Democrats in government. The left may well dislike the Tories; but they really do hate the ministerial Liberal Democrats, just as a religious fanatic hates the apostate more than the infidel.

This ferocity must bewilder and unsettle the average Liberal Democrat activist. They are more used to benefiting from the dislike voters have for the main two parties, rather than being disliked themselves. However, it may be that yesterday's electoral disaster, and the underlying antipathy which many now have for the party, has a silver lining.

If the Liberal Democrats are to be a serious party in respect of central government, there are two things to be done. First, they need to be more realistic and consistent in what they campaign for: manifestos and pledges now need to practical and attainable. The luxury of striking populist poses is for politicians in opposition, not those who actually have to implement policy. One hopes the Liberal Democrat MPs who made the pledge not to raise tuition fees and then voted to do so have learned this lesson.

Second, the party has to be distinct. As this blog has said previously, the blurring of lines between Tories and Liberal Democrats makes one want to adapt the ending of Animal Farm:

"The voters outside looked from Tory to Clegg, and from Clegg to Tory, and from Tory to Clegg again; but already it was impossible to say which was which."

The Liberal Democrats in the coalition need to emphasise differences with the Conservatives. Clegg should ration his appearances alongside Cameron. One realises it is perhaps not practical politics for the Liberal Democrats to go into opposition and offer their support on a vote-by-vote basis (though there is no constitutional or legal reason why they cannot); but it is crucial that the party develops a ministerial reputation separate from that of the Conservatives.

Both the Conservative and Labour Parties have come back from setbacks similar to that suffered by the Liberal Democrats yesterday. The loss of so many local councils will of course have an adverse and lingering effect on the party's activist base.

But it is not the end. Instead, it is a signal to the party that it has to take exercising and retaining ministerial power seriously; to think and act and campaign as a left-of-centre party of power, making a substantive and positive difference to actual policy. And then the self-indulgence of opposition for its own sake can be left to the Labour party.

 

David Allen Green is legal correspondent for the New Statesman

David Allen Green is legal correspondent of the New Statesman and author of the Jack of Kent blog.

His legal journalism has included popularising the Simon Singh libel case and discrediting the Julian Assange myths about his extradition case.  His uncovering of the Nightjack email hack by the Times was described as "masterly analysis" by Lord Justice Leveson.

David is also a solicitor and was successful in the "Twitterjoketrial" appeal at the High Court.

(Nothing on this blog constitutes legal advice.)

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.