Vince Cable on the FSA

[The Conservatives have proposed abolition of the Tripartite system, one leg of which is the FSA.] This is a secondary issue. But it has dominated the recent news and it needs to be dealt with sensibly. So far it is being dealt with very foolishly in the form of an old fashioned bureaucratic turf-dispute between the Bank of England and the FSA with Mr Darling and Mr Osborne egging on the two sides, like two schoolboys cheering on their heroes in a playground punch-up.

The Chancellor, who has evidently fallen out with the Governor and backs the FSA, appears to have set up a Financial Stability Committee based at the Bank of England in the Banking Act 2009, and then a Financial Stability Committee at the FSA and also a Council for Financial Stability, chaired by the Chancellor, in the White Paper. This is like setting up three Competition Commissions to investigate monopoly. There should be one Financial Stability Committee, led and chaired by the Governor of the Bank of England and with representation from the FSA and from the Bank.

Mr Osborne’s proposal is even more disruptive: moving the bank supervisors back from Canary Wharf to the Bank of England. City institutions which straddle bank and non-bank financial services despair at the idea of going back to separate, competing, regulators and at the prospect of endless office politics as desks are moved and jobs are reallocated after this quango war. Of course the Governor must have overall responsibility for systemic stability but he doesn’t need to oversee the accounts of Little Tidbury Building society. I would leave the FSA as a unitary regulator.

I won’t dwell on the structural issues since they are a side issue: the harness rather than the horse. My worry is that we are being deflected from the substance of what sensible regulation means. My party and I encouraged, indeed anticipated, the creative use of capital adequacy requirements to offset booms and busts and I note that this approach is being extended to manage risk across institutions as well as over time. But there is a danger of regulators becoming one-club golfers, albeit with a very adaptable club. Clever bankers will always be looking for ways round the rules. A number of investment banks have already been reported as engaging in the practice of securitising bank balance sheets in order to evade regulatory capital requirements. This type of innovative side stepping of regulations will have to be penalised heavily, otherwise the promised revolution in regulation will be stillborn.

Another significant by-election win

We are not only winning from Labour in affluent areas like Kensington & Chelsea, but also in the deprived north-east of England.

Redcar and Cleveland Borough Council (UA), Dormanstown ward
LD 805 (52.3;+27.2),
Lab 515 (33.5;-18.6),
BNP 145 (9.4;+9.4),
Con 73 (4.7;-18.0)
Majority 290.
Turnout 29.88%.
Lib Dem gain from Lab.

This, from last Thursday, is the third by election win in a row for Redcar and Cleveland Liberal Democrats, all wins from Labour.

LibDems good third in Norwich North

Chloe Smith will take over from Jo Swinson as youngest MP. The full result is:

Chloe Smith (Conservative): 13591

Chris Ostrowski (Labour): 6243

April Pond (Liberal Democrat): 4803

Glenn Tingle (UK Independence Party): 4068
Rupert Read (Green): 3350
Craig Murray (Put An Honest Man into Parliament): 953
Robert West (British National Party): 941
Bill Holden (Independent): 566
Laud Howling (The Official Monster Raving Loony Party): 144
Anne Fryatt (None of The Above Party): 59
Thomas Burridge (Libertarian Party): 36
Peter Baggs (Independent): 23

Turnout: 45.8%

The Green Party and UKIP also polled well, which must be worrying for the Conservatives. More satisfying was BNP down in seventh place, beaten by Craig Murray, who stands for the antithesis of racism.

LibDem by-election gain from Labour

The result in the Colville ward of the London Borough of Kensington & Chelsea was an overwhelming win for Liberal Democrat Carol Caruana. Labour, who originally held the seat, were pushed into third place.

Carol Caruana becomes the sole Lib Dem councillor on a predominantly Conservative council, but hopefully the first of many.

Lib Dem 634 46.9%
Conservative 330 24.4%
Labour 300 22.2%
Green 77 5.7%
Independent 10 0.7%

Vince Cable on banking reform

Liberal Democrat Shadow Chancellor, Vince Cable yesterday delivered a speech to the London Stock Exchange.

In the speech, he listed the ways in which the current regulatory model could be improved, and called for:

• RBS and Lloyds to be broken up before they are returned to private ownership
• Highly paid bankers to publish details of their remuneration and confirm they are resident and domiciled in the UK
• The FSA to remain as a unitary regulator
• A long-term role for state banking, rather than the quick sale of state-owned banks
• The scrapping of the ‘woefully misconceived’ Asset Protection Scheme

Vince Cable said; "The Government has yet to grapple with the challenge posed by the Governor of the Bank of England: that if a bank is too big to fail it is too big. One approach is to make it easier for big institutions to fail. My approach to the City is not one of hostility, or of obsequiousness. I recognise its importance. But it needs ‘tough love’, not the freedom to run amok."

No to a national database

What has happened?

• On June 30th, Alan Johnson announced that ID cards would be voluntary for British citizens. This meant the ditching of a scheme that would have made it compulsory for airport staff and pilots at Manchester and London City airports to have them, as part of the ID cards trial.
• Previously, the Govt said they would be compulsory once 80% of the population had them.
• Johnson was also forced to admit that the Govt had previously wrongly presented ID cards as a ‘panacea’ for terrorism.
• Johnson did say he remained a supporter of ID cards and that the Govt was accelerating their role out. The pilot scheme currently being rolled out in Manchester (the city, not just the airport) will be extended across the North West next year.
• However, those applying for a ID card or a passport (after 2011 supposedly, though this keeps moving) will automatically have their details added to the National Identity Register (which is what a lot of people oppose).
• They are now selling ID cards as a cheaper, more convenient, voluntary alternative to a passport.
• IBM has contracted to supply technology for ID cards which will last seven years, despite the possibility that a change in government could scupper the scheme.

What did the Tories say?

• They accused the Govt of “an absurd fudge" and said it was “symbolic of a Government in chaos." They claim Johnson is against ID cards (and would scrap them) but that Brown is making him press ahead.
• They then called an Opposition Day debate in the Commons on July 6th.
• They had supported ID cards at the beginning but were now convinced that Labour couldn’t deliver the scheme. They had concerns about data security and said ID cards wouldn’t combat crime, terrorism or illegal immigration.
• They also confirmed their opposition to the National Identity Register, which we tried to smoke them out on with an amendment to the motion.
• They do, however, remain in favour of biometric passports.

What do we say?

• “This is another nail in the coffin for the Government’s illiberal ID cards policy, which will soon be so voluntary that only Home Office mandarins seeking promotion will have them.
• “Airport workers did not want to be guinea pigs for this deeply unpopular scheme, which has now been reduced to nothing more than a second-rate passport.
• “These expensive and intrusive plans should be ditched now. The vast amount of money would be far better spent on something that will actually fight crime and terrorism - ten thousand more police on the street.”
• We also oppose the register as well as ID cards themselves.
• We have described the cards and register as a “technological solution in search of a problem.” Just because we can do something, doesn’t mean that we should.
• It is telling that the Govt have ditched all plans for compulsory ID cards for anyone eligible to vote at the next election – we have described them in the past as having the potential to be a “laminated poll tax.”
• There is also the issue of thin end of the wedge/mission creep/future Govts argument. The Govt claim that only certain information will be held and that ID cards won’t be necessary to access public services. However, it does not take a huge imagination to see Govt one day arguing the need to put medical records, criminal records, financial records etc on your ID card and making you have one to go to the library; access benefits; visit your GP etc. Then to all intense and purposes, they would be compulsory.
• Our opposition to ID cards has been consistent and principled (unlike the Tories). People should not have to justify their identity to the state when going about their business. We would spend the money on 10,000 police.

What about foreign nationals?

• ID cards are still mandatory for foreign nationals and are currently being rolled out to that group.
• We oppose ID cards for foreign nationals. The Tories don’t. We don’t think that guests in our country should be treated differently from British citizens.
• They are not going to solve terrorism – the Madrid bombers all had valid Spanish identity documents. Neither will it solve the problem of ‘clean skins’ (people without a terrorist record, but with terrorist intentions). Or crime – the police generally have a problem catching criminals, not identifying them.
• Nor will it sort illegal immigration – employers are already required to do checks on worker’s immigration status but may unscrupulous ones do not. What we need is more spot-checks and prosecutions, not ID cards.

What does this all mean for costs?

• No one really knows. There is little more murky in public finance terms than the ID card costings.
• The Govt will charge people £30 for the card and for the cost of taking their biometric information (£28 is the rumour for that).
• The Govt claim the total cost of ID cards and biometric passports is likely to be £5 billion over 10 years. But they claim that only £1 billion of this is for ID cards. They also claim that this will be claimed back by charging people.
• However, as soon as the scheme becomes ‘voluntary’, then the cost of recouping the substantial overheads is spread among fewer people. They cannot surely now raise as much money as first thought.
• We have always maintained that the real costs will be far, far higher – they don’t include any costs incurred outside the Identity and Passport Service (such as for example installing card readers in other locations); the Government’s record with large-scale IT projects is they tend to be far over cost and over time; and no one really knows how much this is going to cost until the Govt get further down the line with it, the LSE estimated in 2005 that costs could be anything up to £19 billion.

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Irene who?

The announcement of Irene James' retirement took many AMs by surprise, as they hadn't realised there was actually a member for Islwyn. Others felt that it was impossible to spend more time with her family and friends than she did already.

LibDems at Pontardulais & Pontardawe

South Wales West Liberal Democrats will be out in force at the Pontardulais Show and the Pontardawe Craft Fair. Details nearer the dates.

Unfortunately, a clash of diary dates has prevented us showing as we had hoped at Pencoed (the Bridgend County Show) next weekend.

Transfer of Housing Stock ballot may be delayed

We understand that the proposed ballot of transfer of Neath Port Talbot's council housing to a cooperative mutual has been postponed until the New Year. A special council meeting due to have been held on Friday 3rd July, which may or may not have been connected with the progress of the ballot process, was cancelled at ten days' notice.

On the one hand, this may allow the "No" campaign to build up a head of steam, especially if threats to haul councillors, who back it, up before the Standards Committee are carried out. It may also threaten some grants from the Welsh Assembly Government conditional on a ballot being held before a certain date.

On the other hand, it may push the date for a ballot beyond the next general election, after which a more intelligent and local government savvy Chancellor of the Exchequer will revise the borrowing rules, allowing Neath Port Talbot to hold on to its housing stock and meet the Welsh Housing Quality Standard.

Housing Stock Transfer: what is our party line?

The short answer is: there isn't one (writes Frank Little). I believe that if Anthony Taylor, who challenged me on his blog last Thursday to state the Liberal Democrat position, examines Labour Party national policy, he will find that this is true of his own party, too. (That is not to say that there haven't been Labour party conference votes against it, back in pre-Blair/Brown days.)

The more finessed answer is that the Liberal Democrats recognise Large Scale Voluntary Transfer (LSVT) as just one component of a flexible housing policy. What we have always (from the time of the Thatcher Housing Bill which introduced LSVT) objected to are the outdated, skewed rules on local authority spending and ridiculous public borrowing regulations which load the dice against council investment in public housing.

Some Liberal Democrat housing authorities in England certainly have embraced LSVT, usually as a result of taking control from a Labour council which left its housing in a mess, from which only injection of commercial capital could redeem it.

We are certainly not in favour of well-run and financially stable housing departments being disbanded for ideological reasons. We resent the government bullying councils into holding ballots by fiscal measures or (in the case of Wales) by setting too-high quality standards.

The former leader, Derek Vaughan, and the council's senior officers made repeated attempts at a financial compromise which would have enabled Neath Port Talbot to retain and still improve its housing stock. WAG was intransigent. It is disingenuous to blame this on a Plaid housing minister in the coalition government. It is clearly the Labour government in Westminster which is pulling the strings.

The alternative to holding a ballot this year was a loss of at least one central grant. The least bad alternative on offer to retaining council stock was a cooperative mutual. That was the clear message from the council leader last October, and that was reflected in the Liberal Democrat councillors' vote then. Note that we only signed up to the ballot process, and to the alternatives to be presented to the tenants. We did not promise to campaign for one side or the other, and we certainly reserved the right to question details during the process.

I used the term "conscience" of Cllr Keith Davies' choice to support the "No" campaign. It would be more accurate to state that the difference between us is one of "judgment", in particular that of how much it would cost the council to raise properties to the Welsh Housing Quality Standard and what financial penalties would be imposed by the government if we didn't achieve a "Yes" vote. I believe there will be a large financial downside, Cllr Davies does not.

Note that neither of our public stances conflicts with the vote we cast in council last year. Since there is no official Liberal Democrat policy on LSVT, for or against, there was no need for Cllr Davies to notify the party of his campaigning for "No", yet he did so out of courtesy.

I am pleased to see that Cllr Taylor is an enthusiast for the cooperative mutual model of housing corporation. This, if I remember correctly, emerged at the grass-roots in Liverpool, probably before Cllr Taylor was born, as a response to the failed central planning of Liverpool Labour's housing department (and, of course, the private rented sector of the time). I don't know that the prime movers were Liberals, but they were certainly acting in the "bottom-up" manner of Liberal politics.

Cllr Taylor's enthusiasm is not shared by several of his Labour colleagues. They are viscerally opposed to losing control of council housing, as private conversations and some of their pointed questions at seminars show. The difference between us and them is that we can express our differences in public without fear of retribution from a party "Star Chamber".

Stock transfer ballot - group position

Following Cllr Keith Davies's decision for personal and constituency reasons to support the "No" campaign, the Liberal Democrat councillor group decided today not to impose a "party line" on the issue. Members will be free to campaign according to their conscience.

Cllr Keogh joins Labour

Word-of-mouth has it that Councillor Dennis Keogh (Ratepayer, Port Talbot) has joined the Labour group on Neath Port Talbot CBC.

Aberavon AM to stand down

Dr Brian Gibbons has decided not to seek re-election to the Welsh Assembly in 2011. The BBC story is here.

Tory agrees with Hain on devolution

See Glyn Davies's blog.

Phone Nick Clegg

There is a phone-in on Radio 4's "You and Yours" tomorrow. More details on Liberal Democrat Voice.

Mick Bates AM to retire at next election

The Wales Online report is here. We understand that he wants to spend more time with his family and on his farm.

Frank Little writes: I hope this resigning from the cockpit of daily politics does not mean that Mick is lost to party activity altogether. His contributions to Liberal Democrat conferences are virtually guaranteed to liven proceedings. Although his enthusiasm for wind power generation goes farther than I would, there is no doubting that he has given a major boost to green politics in Wales from a time when it was not as main-stream as it is now.

Labour leaders hanging on

Rhodri Morgan has given himself a get-out clause. He said at the Assembly Elections that he would retire on his seventieth birthday. He has changed his tune. In case of a "force majeure", he will stay on and Huw Lewis AM has begged him to stay on beyond Autumn http://news.bbc.co.uk/1/hi/wales/8086310.stm.

Now former Neath Port Talbot council leader Derek Vaughan has announced that he will not give up his Neath North seat until there is a general election to "save tax-payer money" on polling costs. We say that the real reason is to save an embarrassing loss of a council seat in a period when Labour is under constant attack.

All the signs are that a tired and discredited Gordon Brown will hang on to power until the law forces him to hold an election. That will be in June 2010. Do the math. The hard-working people of Neath North will have a lame-duck councillor for twelve months. How can Derek Vaughan work for his constituents in Brussels where he will be on a steep learning curve in the Euro Parliament?

We say to Derek Vaughan: do the right thing by democracy and the people of Neath North. Go now!

Make votes count press release

"The Prime Minister's statement on democratic reform was not as bold as billed; in fact on electoral reform he has been far more timid than the circumstances demanded. There is a real urgency to implementing reforms, to restore public trust in MPs and in politics as a whole.

"Voters have shown they are impatient with the main parties, and want real change in the way we do politics. So why does the Prime Minister continue to dither on opening up the debate and on timescales for implementing electoral reform?

"Gordon Brown talks the language of quick change and ending the Gentleman's Club when it comes to expenses. But he fails to bring that approach to the other area MPs still self-regulate and is now under scrutiny - the way in which MPs are elected.

"Elections affect all of us. Decisions on how they are conducted certainly shouldn't be in the hands of the politicians, whether those on the National Council for Democracy or on the Opposition benches, whose jobs-for-life are at stake. Is it no surprise that David Cameron is leading the resistance to change: he and his party stand to benefit the most from the status quo. It is more of a surprise that Brown wasn't even willing in his statement to repeat the 1997 Labour manifesto promise of a referendum on the introduction of a proportional voting system.

"The Prime Minister talks about starting up the debate on electoral reform. But we've been having that debate for over ten years. In January 2008 the Government published as "a contribution to the ongoing debate" its long-awaited review of those proportional voting systems already introduced. The Alternative Vote Plus (AV+) was a system recommended by the Jenkins Commission back in 1998 after long and careful deliberations involving plenty of opportunities for public engagement and debate.

"There is still just enough time left for completing an open public debate and then holding a referendum before or at the time of the next election. The referendum would give voters the chance to register their feelings twice: once to get rid of a tainted MP in the General Election; and once in a referendum to choose whether to get rid of a rotten system and change things for good.

"Even after his statement [on Wednesday], Gordon Brown still has the opportunity to be bold and start exploring this referendum option; to show he is able to go beyond the self-interest of the political elite and give power back to the man and woman on the street."

MVC's Welsh campaigns officer, Owain Llyr ap Gareth, has an article in the Western Mail.

We still believe that STV is a better electoral system, in that it allows voters to choose between candidates of the same (or no) party. Nor do AV systems threaten "safe" seats. However, we can hardly object if the proposal of the Jenkins Commission is put before the electorate in a referendum. The commission was set up as the result of an agreement between Labour and the Liberal Democrats before the 1997 general election, and was chaired by a distinguished member in turn of both parties.

First thoughts on the European Parliament elections

Of course, the results for Liberal Democrats in Neath and Aberavon were disappointing. We were not alone, though. There was a small rise in the percentage vote in Wales but in England it was down, and, across Europe, Liberal parties suffered losses (though we don't seem to have lost MEPs in Britain). It looks as if ELDR no longer holds the balance of power in Brussels/Strasbourg. However, the rise in the size of the Green bloc means that the Conservative and Socialist groupings will still not have things all their own way.

In both our constituencies, the BNP came within one hundred votes of Liberal Democrats. This is not, I would suggest, due to my talking up the BNP by drawing attention to their dangers or mocking their electoral communications, but as a result of the party targeting Neath. Their two leafleting campaigns clearly achieved the desired publicity, including good coverage in the Evening Post, colour photographs and all.

Labour bucked the national trend by topping the poll here and pushing the Conservatives into third place, just ahead of UKIP. Plaid Cymru will draw satisfaction from being a very good second.

I hear Labour spokespeople blaming the exposure of MPs' expenses for their poor showing overall. Sorry, but that won't wash. Tories were just as mired in that scandal as Labour - indeed, the most headline-grabbing claims were by Conservatives - yet they topped the poll in Wales and did well in England.

And, finally, Welsh has a gender-balanced representation in the EP. Kay Swinburne of the Conservatives and Jill Evans of Plaid make up for Derek Vaughan for Labour and John Bufton of UKIP.

Frank Little

Update: The full figures are now available on the council's web-site as pdf files: http://www.npt.gov.uk/PDF/Elections_EPE2009_results_Aberavon.pdf for Aberavon, and http://www.npt.gov.uk/PDF/Elections_EPE2009_results_Neath.pdf for Neath.

Why do the Tories resist PR?

We in Wales already realise the benefits of even a nobbled system of proportional representation to the Conservative Party. Without the top-up list, they would have had no more than one representative in the first Assembly, when there was clearly widespread support for the party across Wales. The party can now point to five AMs elected directly from a constituency, but would it have achieved this success without the credibility which eight AMs elected from the regional list in 1999 gave them? One of those was, and continues to be, Nick Bourne, their leader.

Now comes a beautiful example from last week's English local elections of first-past-the-post benefitting Liberal Democrats to the detriment of the Tories. This table shows the results from Cambridge City wards:

June 2009	Candidates
Party	Stood	Elect	U/O	Votes	%
Conservative	14	0	0	7153	21.7
Labour	14	2	0	6930	21.0
Liberal Democrat	14	11	0	12121	36.7
Green	14	1	0	5159	15.6
UKIP	3	0	0	475	1.4
Independents and Others	2	0	0	1181	3.6
Totals	61	14	0	33019	37.4

I reckon that means that LD have 0.91 seats per 1000 votes, Labour 0.29, Green 0.19 and UKIP & the Tories zero.

Look at it another way: in Cambridge it takes only 1,102 voters to put a Liberal Democrat in, but nearly 3,500 for Labour and infinity for the Conservatives!

Frank Little