“Can I ask James Graham to stand by?” said the chair at the start of this morning’s first debate. Do I detect the approaching rumble of intergenerational equity?
We shall see, but for now Julia Goldsworthy introduces the motion. The history is well rehearsed, the need for action obvious – Northern Rock, repossessions, over-lending by banks and the collapse of the property market. We told you so is, naturally, the overtone.
The motion would:
- allow councils and Registered Social landlords to borrow against their assets to buy up unsold properties aand replenish the social housing stock, to deal with the current 1.67 million households on the social housing waiting list.
- Introduce a Code of Practice for mortgage lenders to ensure reposessions is only ever the last resort.
- Protect vulnerable homeowners against rogue doorstep compan ies by regulating the private “sale and leaseback” market as a financial service through the Financial Services Agency.
James Graham and Neil Upstone’s amendment would add the following measure:
- Help stabilise property prices and discourage irresponsible credit practices through a charge on all sterling deposits created by commercial lenders, over and above the deposits they secure from private investors.
No, not intergenerational equity, then. James Graham speaking for the amendment referred to the private local currency in circulation in the town of Lewes – it really was that easy, as Lewes had discovered, to print money, and for banks it’s easier still. Regulation was required to make banks take lending seriously.
Vince Cable summated, commenting particularly on younger contributors who have expounded what all this means for the younger generation. He mentioned his own experience, buying his first house “not in the last boom, but the one before” and coming face-to-face with negative equity in the early 1970s. Boom and bust goes on and always has, and yet every generation of bankers and government ministers thinks that prices will go up and up forever.
He suggested that the amendment would essentially put a tax on bank lending, and this is the wrong time for that. Being Our Vince, all he has to do is mildly recommend that conference reject the amendment for everyone to start nodding sagely. He concluded that we have put together a raft of practical and compassionate measures and recommends it to conference.
The amendment was clearly defeated and the motion was carried, unanimously the Chair thought, unamended.
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4 Comments
On this one, I do feel Vince is wrong, though perhaps for all the best reasons. We must be using this current turmoil in the financial markets to make inroads into the banking cartel’s monopolistic control of money supply. Yes, transition to a better systemmay be painful, but beneficial effectively to 99% of the population in the longer run.
The monopoly of credit creation was regarded by our Liberal forebears as something to be tackled. The Great Depression and the changes in banking that happened as a result of corporate lobbying for the Federal Reserve and later fractional reserve banking system cemented a corrupt system that issues money that bears our “name” but completely unaccountable to anyone let alone any kind of democratic or popular mandate.
I personally quite like the Libertarian Party’s recent monetary reform proposal (on the “economics” policy section of their website at http://lpuk.org )
Interesting that, while Vince correctly (IMO) stated that “now” was indeed the wrong time to start taxing bank lending, he didn’t rule this out as a fiscal tool for the future.
In a few years time, as we move “beyond the crunch” (and the world finally drags itself out of a depression to rival the 1930s), a charge on deposits created by the banks will be exactly the sort of policy needed to help stop the whole bloody boom-bust cycle cranking up all over again.
I think Vince’s comments show he understands the fundamental economic truth of this – but he is understandably nervous over a PERCEPTION that we might be sticking the knife in to the banks at the start of the current crisis – albeit that they helped to create it!
In any event, controlling money supply by capturing some of the “interest” that banks levy on deposits they have created out of nothing deserves a proper debate. A motion which clearly states that this is a policy we would phase in AFTER the crunch may be the answer – but we shouldn’t leave it too long.
As Jock says, this is a cyclical problem (cum disaster!) with an authentic Liberal solution. Unfortunately, and despite several references in the motion to “irresponsible lending”, we still have NO POLICY to curb the banks’ unfettered ability to stoke up another massive crash for the next generation.
Not about “intergenerational equity” Alix? Think again!
After my first conference speech summing up on the amendment, I can see that a rehearsal would have been a good idea.
Two points I missed:
– That we need to be cautious to indicate that this is a policy for further work on impacts, but also,
– That banks will CONTINUE making their excess profits from printing money as we borrow money to invest in renewables and other schemes.
I should also point out that the original ALTER amendment included calls for LVT, which is explicitly about intergenerational equity. But the FCC in its infinite wisdom decided to delete that part.