Lansons Conversations

Six months into the Lib-Con coalition Government

Six months into the Lib-Con coalition Government and the first real strains are beginning to appear. On spending cuts, welfare reforms and, of course, financial services reform, tensions are being felt. There has been no better time thus far to examine the coalition’s track record, and with this is mind the Financial Services Forum and Lansons Public Affairs hosted a breakfast discussion looking at the performance of the coalition in the last six months and the challenges ahead, with a particular focus on financial services. Speaking from the panel was Andy Love MP, Labour member of the Treasury committee, Mark Garnier MP, a newly elected Conservative MP who also sits on the Treasury committee and John Springford, a senior researcher with the Social Market Foundation think tank. Kicking off the discussion John Springford painted a bleak future for the Liberal Democrats, saying the party was in trouble and there was a real tension between the social democrat rank and file members of the party and the more economically liberal leadership. Describing the conundrum facing Clegg’s party, John doubted the Lib Dems would get credit for the success of a governing agenda which they had broadly opposed before the election. Furthermore, they will receive some blame from the electorate for the unpopular elements of the coalition agenda which they have gone along with, he said. Looking ahead to the next general election in 2015 John suggested that the Lib Dems would have difficulty in maintaining their political identity. Sounding an intriguing note, John suggested that the coalition experiment may mean the strengthening of two party politics if the tensions in the Lib Dem party become too heavy to sustain. Speaking on behalf of the Lansons Public Affairs team, Chris Bose discussed the surprising ambition of the coalition programme. Coalition Government hadn’t, as many predicted, scaled down the Government’s ambition. On financial services regulation, deficit reduction and public service reform the coalition have set out radical measures, he said. Looking to the period ahead Chris focused on the risks of under delivery – contrasting the political landscape of now with that of 1997, he raised questions over whether there was the political will and benign circumstances in which to pursue such lofty ambitions. Picking up on the theme of ambition, the Labour MP Andy Love cautioned that against a backdrop of uncertainty this strategy poses risks. Recognising that the Liberal Democrats had often been the beneficiary of disaffected voters, he said the challenge for the Lib Dems was to keep both this vote and the core liberal support. Focusing on the central issue of political debate, Andy Love questioned the speed and depth of the Government’s cuts. On the question of political tension Andy talked about the disagreements between the Chancellor and Tory backbenchers on a further burst of quantitative easing. Conservative member of the Treasury Committee Mark Garnier said the big fault line in British politics was between the Lib Dem front and back bench. He praised Clegg and his leadership team for taking the difficult decisions of Government. As a newly elected MP himself, Mark mentioned the learning curve new MPs and new ministers have had to embark on. On the topic of fiscal retrenchment Mark spoke of the need for the private sector to grow to maintain economic recovery.   Opening the debate up to the floor the panel answered questions on issues ranging from planning regulations, the ability of the mainstream parties to connect with the working class vote, to the separation of retail from investment banking and how the banking sector can be made more competitive. Rounding up, the chair of the discussions, Ralph Jackson asked the panel for their thoughts on the next six months for the coalition. John Springford said the referendum on the Alternative Vote would be huge. Mark Garnier said business confidence will be a key indicator of our economic recovery. Sounding a pessimistic, if not unrealistic note, Andy Love said things will get worse and the coalition will struggle. Ending on what had been a leitmotif of the debate he said the Lib Dems were caught in a trap and would remain unpopular.