Don’t you just hate those bankers? They’re the parasites of our society, the folks who get bailed out by the government and then pay themselves massive bonuses. Aren’t they?
Well it’s not quite as simple as that. True, the banking world has played a big part in the mess we’re in by its reckless lending and paying out of obscene bonuses. And of course it’s galling when banks that were bailed out with public money are found to be still paying big bonuses just a few months after receiving state help.
But there’s a simple truth in all this – if bashing the banks were straight forward, you can be sure the government would have done it long ago.
The problem is that taxes from banking make such a sizeable contribution to the money governments have to spend – one estimate I read put it at 12 per cent – that if we bash the banks, we will find there’s less money available for many of the things we take for granted that the state currently funds.
So how do we get round the problem? The task is to find a solution that keeps the banks contributing to the economy without them enjoying a position where they effectively hold the government to ransom.
Labour’s approach has been to introduce a tax on bonuses. That sounds all very reasonable, except it doesn’t work as there are so many ways round it.
We’re not exactly sure what the Conservatives would do if they got into government. I can understand David Cameron keeping his cards close to his chest, but it does mean he’s asking voters to take a leap of faith in supporting his party, and given the close links between Conservatives and bankers, I have no confidence that any action a Tory government would take would amount to more than tokenism.
The Lib Dem approach is to concentrate on taxing bank profits, not bank bonuses. That way the overall operations of a bank get taxed rather than just bonuses. Apart from being fairer, it would have the additional benefit that we’d avoid discriminating against people working at the lower end of the banking industry who get a large part of their modest pay in bonuses.
We have other finance policies too that are relevant to the bank issue, such as breaking up the banks that are in state ownership so they don’t become massive units that can’t respond to changing conditions; insisting that state ownership should mean an obligation to lend to solid British companies; and closing tax loopholes for the very rich so everyone pays the amount of tax they should be paying.
Despite the understandable public anger, dealing with the banks is a balancing act. What the Liberal Democrats have is a policy that aims to build a banking system of the future that is viable for the country as well as the banks themselves. That is more constructive than policies that offer a sop to popular anger, or offer nothing of substance at all.
Wednesday, 27 January 2010
Wednesday, 6 January 2010
IF YOU'RE A FRIEND, VOTE FOR WHAT WE STAND FOR
The great tennis champion Steffi Graf once told me she had difficulty making friends. It wasn’t that there weren’t people wanting to be her friend – the trouble was working out who were genuine and who were just in it for the reflected glory.
I sympathised then, and I sympathise even more now. As Liberal Democrats, it seems everyone currently wants to be our friend, but there are two very different types of suitor.
The first are those who are attracted to what we stand for, who recognise that while Labour and Conservatives may cramp the centre ground of British politics, the Lib Dems do have something different to offer, something ‘radical’ in the true sense of the word (changing from the roots).
The second are those who think they might need our support after the general election, as a ‘hung Parliament’ looks a distinct possibility. Both David Cameron and Gordon Brown are making noises about how there isn’t really that much that divides the Lib Dems from the main parties, which most people rightly see as little more than a charm offensive in the hope that they can woo post-election Lib Dem support.
As a result, journalists are now desperate to know who the Lib Dems would support – whether in formal coalition or just in Commons votes – if there was a hung Parliament. The question is even seen as reasonable, especially by those whose primary motivation is to see Brown jettisoned as prime minister or Cameron never make it to No 10.
Well it isn’t reasonable, in fact it shows a lamentable failure to understand anything other than a two-party system.
The majority of European countries have coalition governments, and the feature of them is that, in the run-up to an election, all parties campaign as if they are going to form a government. Only after the election do they start doing the sums and seeing what arrangements can be made. Failure to do it that way means parties lose their identity.
That’s why Nick Clegg is quite right not to be falling for the political interviewers’ bait. He and the rest of us want to see a Lib Dem government. We’re realistic enough to know that it probably won’t happen after this election, and may take a generation or two to happen at all. But we believe in our policies to provide the kind of government Britain needs, and we’re not going to be knocked off track by those who want to know whether we’re more blue or more red.
We stand for fairer taxation, reform of the banking system, a better deal for primary school children, reducing the burden on small businesses, and making Britain carbon-neutral by 2050. In my view, that would make a very good government programme – and it’s neither blue nor red but gold!
If we have a hung Parliament, then the sums will be done to work out what alliances would create a working majority. If we hold the balance of power, we will see how other parties have fared, notably who the biggest party is.
But that’s for then. For now, we are asking for voters to vote for a Lib Dem government. That’s why the only friends we value are those who share our view of a socially, economically and environmentally fairer Britain.
I sympathised then, and I sympathise even more now. As Liberal Democrats, it seems everyone currently wants to be our friend, but there are two very different types of suitor.
The first are those who are attracted to what we stand for, who recognise that while Labour and Conservatives may cramp the centre ground of British politics, the Lib Dems do have something different to offer, something ‘radical’ in the true sense of the word (changing from the roots).
The second are those who think they might need our support after the general election, as a ‘hung Parliament’ looks a distinct possibility. Both David Cameron and Gordon Brown are making noises about how there isn’t really that much that divides the Lib Dems from the main parties, which most people rightly see as little more than a charm offensive in the hope that they can woo post-election Lib Dem support.
As a result, journalists are now desperate to know who the Lib Dems would support – whether in formal coalition or just in Commons votes – if there was a hung Parliament. The question is even seen as reasonable, especially by those whose primary motivation is to see Brown jettisoned as prime minister or Cameron never make it to No 10.
Well it isn’t reasonable, in fact it shows a lamentable failure to understand anything other than a two-party system.
The majority of European countries have coalition governments, and the feature of them is that, in the run-up to an election, all parties campaign as if they are going to form a government. Only after the election do they start doing the sums and seeing what arrangements can be made. Failure to do it that way means parties lose their identity.
That’s why Nick Clegg is quite right not to be falling for the political interviewers’ bait. He and the rest of us want to see a Lib Dem government. We’re realistic enough to know that it probably won’t happen after this election, and may take a generation or two to happen at all. But we believe in our policies to provide the kind of government Britain needs, and we’re not going to be knocked off track by those who want to know whether we’re more blue or more red.
We stand for fairer taxation, reform of the banking system, a better deal for primary school children, reducing the burden on small businesses, and making Britain carbon-neutral by 2050. In my view, that would make a very good government programme – and it’s neither blue nor red but gold!
If we have a hung Parliament, then the sums will be done to work out what alliances would create a working majority. If we hold the balance of power, we will see how other parties have fared, notably who the biggest party is.
But that’s for then. For now, we are asking for voters to vote for a Lib Dem government. That’s why the only friends we value are those who share our view of a socially, economically and environmentally fairer Britain.
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