The Lib Dems' identity crisis just got a lot more critical

Coalition was meant to be a journey to political maturity and professionalism. But it's amateur hour yet again.

Let’s start, as justice demands we must, with the assumption that Chris Rennard, the Liberal Democrat peer and former party chief executive, is not guilty of allegations of sexual harassment levelled against him. They are not proven and he denies them. Still, since we know that Nick Clegg’s office was informed of complaints of that nature back in 2008, there can only be two possible reasons why the matter was not thoroughly investigated.

The first is that no-one really took the allegations seriously. The second is that the allegations were deemed grave and credible but the importance of Rennard to the Lib Dem political operation and the fear of besmirching his and the party’s good name made thorough investigation feel politically too risky. Both interpretations imply contempt for people who say they have been sexually harassed. Either way the party leadership comes out of the whole business looking negligent and disorderly.

That impression has been amplified by Clegg’s handling of the affair – specifically, his tantalising statement on Sunday, dragging Danny Alexander into an opaque narrative of "non-specific" allegations and vaguely sought reassurances. The Lib Dem leader admitted to having known something all along but couldn’t say exactly what it was. It is hard to imagine a response more finely calibrated to send the press pack into a feeding frenzy.

Most of the British press doesn’t need much incitement to sink claw and fang into the Lib Dems. The timing of the scandal – breaking in the middle of a crucial by-election campaign – has lead to some reasonable suppositions of ulterior anti-Clegg agendas at work. The Eastleigh campaign certainly adds electoral piquancy to the story but the Lib Dems can hardly complain about that. Wishing it had not come out now implies that there might have been some better time for it to come out, which is really a way of wishing it had never come out at all and that instinct is what makes the whole thing scandalous in the first place.

This is bad for Clegg. But how bad exactly? Most of the people in Westminster I’ve spoken too in the last couple of days think the Lib Dems will still hold Eastleigh. It is almost impossible to tell whether any of the Rennard-related news cuts through on the Hampshire front line. If it does, I’d imagine a likely consequence will be mildly affiliated Lib Dem voters staying at home on polling day. Since the party’s strategy on the ground relies on a ferocious Get-Out-The-Vote operation, a surge in abstentions would be problematic.

But I suspect the Lib Dems' pain in this saga will go further and deeper than seeing their by-election campaign blown off course. A central problem for the party since joining coalition government has been clarity of identity. They surrendered the vague pieties of perpetual opposition in the hope of graduating into the status of grown-up party of government.

Clegg’s office has a clear enough sense of where they think he and the party can stand on the political spectrum. They are supposed to be more compassionate than the dinosaur Tories and more fiscally rigorous than profligate Labour. Opinion polls don’t yield much evidence that the Lib Dems are actually perceived that way but the aspiration is plausible enough. There is, in theory, a gap in the political market – a Blair-shaped hole – for third-way candidates who combine economic rigour with a social conscience.

But to fill that gap the Lib Dems must above all look like a serious political outfit. The pitch is non-ideological and pragmatic. They are supposed to be the go-to guys for coalition when the voters don’t fancy handing unalloyed power to either of the bigger parties. They are offering themselves as the moderate technocrats who aren’t afraid of compromise and keep Westminster grounded and centred. You aren’t necessarily expected to like the Lib Dems anymore, but, according to Clegg’s strategy, you are supposed to think it worthwhile having them around in government.

The defining feature of this offer is professionalism and it is the absence of that very quality that stands out from the mess they are in over Lord Rennard. The charges themselves (unproven and denied, it must be said), the original handling of complaints five years ago and the sprawling case study in crisis mismanagement over the past week all conjure up the impression of an organisation staffed with chancers and over-promoted amateurs.

It is already pretty hard to overstate the problems with the Lib Dem brand. Not enough people know what they stand for. (Do they even know anymore?) Clegg himself is still seen as a slippery character, a betrayer of promises and a trader of principle for the baubles of office. The electoral life raft that strategists were crafting was fashioned from claims to be delivering stable, effective government. Lib Dem plans for 2015 are based on the hope that eventually some voters will come to look at their record in office and judge them to have been decent and useful. Yet here they are in a colourful parade of shabby and useless.

Nick Clegg renewing his coalition vows earlier this year. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.