Exclusive: Tim Farron interview: "I really like Ed Miliband, I don't want to diss him"

The Liberal Democrat president lavishes praise on the Labour leader and says "I don’t want join in with the Tories who compare him to Kinnock."

Liberal Democrat president Tim Farron said of Ed Miliband: "I don’t want join in with the Tories who compare him to Kinnock."
Illustration: Nick Hayes

Nick Clegg and his allies have long regarded Tim Farron, the Liberal Democrats’ popular and ambitious president, with suspicion and they have even more reason to do so after my interview with him in tomorrow’s New Statesman.

Days before the Lib Dem conference opens in Glasgow, Farron lavishes praises on Ed Miliband in a clear signal that he has his eyes on a Labour-Lib Dem coalition after 2015. While critical of Miliband’s conduct over Syria (“He changed his mind half a dozen times in 48 hours”), he qualified his remarks by telling me:

I really like Ed Miliband, so I don’t want to diss him. I don’t want join in with the Tories who compare him to Kinnock.

He went on to praise Miliband as a model progressive:

First of all, he’s a polite and nice person. I think he is somebody who is genuinely of the Robin Cook wing of the Labour Party, from their perspective what you’d call the 'soft left'. Somebody who is not a Luddite on environmental issues, somebody who’s open minded about modernising our democracy, somebody who’s instinctively a bit more pluralistic than most Labour leaders and a bit more internationalist as well.

I waited for a "but", only for Farron to say:

And they’re other things too. For all that I think he could have done a lot more on the AV campaign, he did at least have the backbone to come out and back it.

He mischievously added:

He wouldn’t share a platform with Nick [Clegg], so he ended up with me, poor thing. I like the guy.

As Farron knows, should Miliband refuse to form a coalition with Clegg in 2015, he could well end up with him again. In a way that the Deputy PM never could, the Lib Dems president regards Miliband as an ideological co-spirit. While Clegg seeks to remake the party as an economically liberal outfit, instinctively closer to the Tories than Labour, Farron holds out the alternative of an unambiguously centre-left party, at one with Miliband on issues such as the 50p tax and tuition fees.

Farron’s comments set him at odds with Clegg allies such as Home Office minister Jeremy Browne (interviewed by Rafael this week), who described Labour as "intellectually lazy, running on empty" and suffering "from a leadership void". Rather than making eyes at Miliband, he praised David Cameron for identifying "the big issue of our time” in the form of “the global race".

On Michael Gove: "completely wrong" on school standards

By contrast, when Farron does mention a Conservative minister (Michael Gove) it is to bury, rather than praise him. He told me that the Education Secretary was "completely wrong if he thought that the way to deal with the age-old problem of the fact that Britain doesn’t always compete as well when it comes to educational outcomes as our European neighbours is to just berate the teaching profession, the chances are that it’s British political culture and class culture that are the reason why we’re behind other European countries and always have been."

50p tax rate: "we should have that in our manifesto"

Elsewhere, in another point of agreement with Miliband, Farron calls for the Lib Dems to pledge to restore the 50p tax rate. While David Laws has warned against tax policies that raise little revenue and are "just symbols", a view shared by Clegg, Farron turned this logic on its head.

"My personal view is that we should have that in our manifesto and while it raises an amount of money, it’s also a really important statement that we are all in it together."

Tuition Fees: "I’d like to see fees abolished"

In the case of tuition fees, he similarly argued that the party should not settle for the status quo. “I would personally like to see fees abolished and replaced with a graduate contribution system purely based on ability to pay.” The manifesto, he said, should call for “movement towards a more progressive system.”

While avoiding mentioning Clegg by name, he told me:

There’s a danger that some people in the party might think we should concede and maybe write bits of our manifesto on the basis of what we think other parties would accept, rather than the basis of what we want to achieve.

The fear among activists is that the party will produce a bland, centrist manifesto seemingly crafted with a second Conservative-Lib Dem coalition in mind. It was a concern echoed by Farron. "The most important thing from our perspective, and I’m a member of the manifesto group, is that we ensure that our manifesto is 100 per cent Liberal Democrat. You don’t pre-concede on things. So if we think the Tories wouldn’t accept putting the top rate of tax back up to 50p, but we want to, then we stick it in there and we negotiate from that point."

Syria: I would have voted against military action

Farron abstained on the government motion on Syria but told me that he would have opposed military action had there been a second vote.

"I made it very clear that if it was a call to intervene militarily, I would have voted against. If the vote had been won, and we’d been back here voting on action this week, I’d have been in the no lobby."

On Clegg’s attitude to left-wing voters: "you don’t write people off"

As party president and the standard bearer of the Lib Dem left, Farron has made it his mission to win back the millions of progressive-minded voters who have deserted the party since the last election. But while he would never describe any voter as lost, Clegg often appears to regard his party’s former supporters with something close to contempt. He remarked last year: "Frankly, there are a group of people who don't like any government in power and are always going to shout betrayal. We have lost them and they are not going to come back by 2015. Our job is not to look mournfully in the rear view mirror and hope that somehow we will claw them back. Some of them basically seem to regard Liberal Democrats in coalition as a mortal sin."

When I asked Farron whether he agreed, he bluntly replied: "the people who are most likely to vote for you next time are the people who voted for you last time...You don’t write people off, they’re there to be persuaded to come back, or rather stay with us."

Housing: we should build "vast numbers" of council houses

While the coalition's Help To Buy scheme is inflating housing demand, Farron will use his speech to the Liberal Democrat conference on Saturday to address the fundamental problem of supply.

He told me that the party should commit to building "vast numbers" of council houses, a minimum of "half a million", and that local authorities should also be allowed to develop "a new strand of income".

Farron explained: "that means not just building council houses but building more expensive houses as a way of developing income streams. Local authorities do incredibly good work in supporting people but not if they’ve got no money, they’ve got a reduced council tax base and reduced funding from central government. Being a councillor is a miserable experience these days as you’re having to cut, cut, cut just to stand still. Well, here’s a way of providing a genuine source of income, with councillors as developers, as investors in their own communities."

Tim Farron is speaking at a New Statesman fringe event ‘Endgames: the Lib Dems in the final phase of coalition’ in partnership with the Institute of Government on Monday 16th September at 6pm at the Liberal Democrat conference in Glasgow. He is also doing an 'in conversation' event in partnership with Santander on Tuesday 17th September at 6:15pm. 

George Eaton is political editor of the New Statesman.

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Artemis Monthly Distribution Fund: opportunities in volatile markets...

The Artemis Monthly Distribution Fund is a straightforward portfolio that combines bonds and global equities with the aim to deliver a regular income. It is run by James Foster and Jacob de Tusch-Lec. James also manages the Artemis Strategic Bond Fund whilst Jacob also manages the Artemis Global Income Fund. Whilst past performance is not a guide to the future, the Monthly Distribution Fund has returned 76.7%* since launch in 2012. Its current yield is 3.9%. It is also the top performing fund in its sector.*

Political uncertainty and the actions of central banks continue to create market volatility. In this article, James Foster talks about the opportunities this has provided and which areas of the market he considers most attractive.


The approach of the European Central Bank (ECB) has been both broad and radical. The increase to its quantitative easing (QE) programme has helped to push the yields on an even wider range of government bonds into negative territory. The cheap financing it offered to banks was less expected. To date, however, it has done little to ease fears that European banks are in trouble. The performance of bank shares across Europe (including the UK) has been abominable. Returns from their bonds, however, have been more mixed.

Bonds issued by banks and insurers are an important part of the portfolio. We increased our positions here in February but reduced them subsequently, particularly after the UK’s referendum on the EU in June. Our insurance positions have increased in importance. New Europe-wide solvency rules were introduced at the beginning of the year. They make comparisons easier and give us more comfort about the creditworthiness of these companies.

As part of its QE programme, the ECB announced that it would start buying corporate bonds with the aim of reducing borrowing costs for investment-grade companies. After months of preparation, the purchases began in June. The mere prospect of the ECB buying corporate bonds proved as significant as the reality. The implications, however, could be even more profound than they initially appear. Bonds of any investment-grade issuer with a European subsidiary are eligible.

Moreover, the ECB has changed the entire investment background for bonds. Companies are more likely to do their utmost to retain their investment-grade ratings. The financial benefits are so great that they will cut their dividends, issue equity and sell assets to reduce their borrowings. We have already seen RWE in Germany and Centrica in the UK undertaking precisely these policies.

High-yield companies, meanwhile, will do their utmost to obtain investment-grade ratings and could also lower their dividends or raise equity to do so. This creates a very supportive backdrop to the fund’s bonds in the BBB to BB range, which comprise around 28% of the portfolio.

The backdrop for higher-yielding bonds – those with a credit rating of BB and below – has also been volatile. Sentiment in the first quarter of 2016 was weak and deteriorated as the risk of recession in Europe increased. These types of bonds react very poorly to any threat of rising default rates. With sentiment weak in February and March, they struggled. However, the generosity of the ECB and stronger economic growth readings helped to improve sentiment. Default rates are higher than they were, but only in the energy sector and areas related to it.

We felt the doom was overdone and used the opportunity to increase our energy related bonds. Admittedly, our focus was on better quality companies such as Total, the French oil company. But we also increased positions in electricity producers such as EDF, RWE and Centrica. In a related move, we further increased the fund’s exposure to commodity companies. All of these moves proved beneficial.

One important area for the fund is the hybrid market. These bonds are perpetual but come with call options, dates at which the issuer has the option to repay at par. They have technical quirks so they do not become a default instrument. In other words, if they don’t pay a coupon it rolls over to the following year without triggering a default. In practice, if the situation is that dire, we have made a serious mistake in buying them. These hybrids have been good investments for us. Their technical idiosyncrasies mean some investors remain wary of these bonds. We believe this concern is misplaced. For as long as the underlying company is generating solid cashflows then its bonds will perform and, most importantly, provide a healthy income, which is our priority.


In equities, our response to the volatility – and to the political and economic uncertainties facing the markets– has been measured. We have been appraising our holdings and the wider market as rationally as possible. And in some cases, the sell off prompted by the Brexit vote appeared to be more about sentiment than fundamentals. We will not run away from assets that are too cheap and whose prospects remain good. We retain, for example, our Italian TV and telecoms ‘tower’ companies – EI Towers and Rai Way. Their revenues are predictable and their dividends attractive. And we have been adding to some of our European holdings, albeit selectively. We have, for example, been adding to infrastructure group Ferrovial. Its shares have been treated harshly; investors seem to be ignoring the significant proportion of its revenues derived from toll roads in Canada. It also owns a stake in Heathrow Airport, which will remain a premium asset whose revenues will be derived from fees set by the regulator whether the UK is part of the EU or not.

In equities, some European financials may now be almost un-investable and we have lowered our risk profile in this area. Yet there are a handful of exceptions. Moneta Money Bank, for example, which we bought at the initial public offering (IPO). This used to be GE’s Czech consumer lending business. The Czech Republic is a beneficiary of the ongoing economic success of Germany, its neighbour, and unemployment is low. The yield is likely to be around 8%. And beyond financials, prospects for many other European stocks look fine. Interest rates that are ‘lower for longer’ should be seen as an opportunity for many of our holdings – notably real estate companies such as TLG Immobilien  and infrastructure stocks such as Ferrovial – rather than a threat.


For high-yield bonds the outlook is positive. For as long as the ECB continues to print money under the guise of QE it will compel investors to buy high-yield bonds in search for income. The US economy is also performing reasonably well, keeping defaults low. Despite the uncertainty created by Brexit, that oil prices have risen means we can expect default rates to fall.

At the same time, there are a number of legitimate concerns. The greatest, perhaps, is in the Italian banking system. A solution to the problem of non-performing loans needs to be found without wiping out the savings of Italian households (many of whom are direct holders of Italian bank bonds). Finding a solution to this problem that is acceptable both to the EU and to Italian voters will be hard. Other risks are familiar: levels of debt across Europe are too high and growth is still too slow.

* Data from 21 May 2012. Source: Lipper Limited, class I distribution units, bid to bid in sterling to 30 September 2016. All figures show total returns with dividends reinvested. Sector is IA Mixed Investment 20-60% Shares NR, universe of funds is those reporting net of UK taxes.

† Source: Artemis. Yield quoted is the historic class I distribution yield as at 30 September 2016.



Source: Lipper Limited, class I distribution units, bid to bid in sterling. All figures show total returns with net interest reinvested. As the fund was launched on 21 May 2012, complete five year performance data is not yet available.


To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from artemis.co.uk.

The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.

The fund’s past performance should not be considered a guide to future returns.

The payment of income is not guaranteed.

Because one of the key objectives of the fund is to provide income, the annual management charge is taken from capital rather than income. This can reduce the potential for capital growth.

The fund may use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset) for investment purposes, including taking long and short positions, and may use borrowing from time to time. It may also invest in derivatives to protect the value of the fund, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, if the price of the underlying asset rises in value, the fund will lose money.

The fund may invest in emerging markets, which can involve greater risk than investing in developed markets. In particular, more volatility (sharper rises and falls in unit prices) can be expected.

The fund may invest in fixed-interest securities. These are issued by governments, companies and other entities and pay a fixed level of income or interest. These payments (including repayment of capital) are subject to credit risks. Meanwhile, the market value of these assets will be particularly influenced by movements in interest rates and by changes in interest-rate expectations.

The fund may invest in higher yielding bonds, which may increase the risk to your capital. Investing in these types of assets (which are also known as sub-investment grade bonds) can produce a higher yield but also brings an increased risk of default, which would affect the capital value of your investment.

The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.

The historic yield reflects distribution payments declared by the fund over the previous year as a percentage of its mid-market unit price. It does not include any preliminary charge. Investors may be subject to tax on the distribution payments that they receive.

The additional expenses of the fund are currently capped at 0.14%. This has the effect of capping the ongoing charge for the class I units issued by the fund at 0.89% and for class R units at 1.64%. Artemis reserves the right to remove the cap without notice.

Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.

Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.

Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.