Opinion: is a Labour-led coalition possible?

Now that Ed Miliband has apparently embraced the Liberal Democrat agenda (voting reform, civil liberties, fairer taxation, condemnation of the Iraq war, cleaning up ‘the city’, the need for ‘fiscal credibility’ etc.,) he raises an intriguing question. Could Labour form a coalition government before the term of the present one expires?

The maths is intriguing. Labour currently hold 258 seats. Since Sinn Fein refuse to take up their five seats in Parliament the ‘magic number’ for a majority is an attainable 323. Were Labour to win three by-elections by taking seats from the Scottish Nationalists or Plaid Cymru, and were prepared to form a coalition with their ‘sister’ party, the Northern Ireland Social Democratic and Labour Party, Northern Ireland’s Liberal MP (from the Alliance Party), and the Green Party MP, a coalition with the Liberal Democrats would allow them to form a government with 323 seats against a ‘possible’ Conservative led coalition of 322 (assuming the Tories can come to an accomodation with the Nationalist parties and the Ulster Unionists).

I am not saying that such a coalition is desirable or even achievable. The sincerity of Labour’s new leader is not enough to overcome the emnity and distrust that many of his party’s members harbour towards other parties, particularly the Liberal Democrats, The Labour party needs to retreat from its tribalist instincts, particularly at grassroots level in the north, and accept that only they can make the necessary approaches if they are interested in forming a progressive alliance based on mutual respect and a shared agenda.

One point worthy of note for the Liberal Democrats. With Labour less than a handful of seats away from forming a coalition with other like-minded progressives, Liberal Democrat leverage on the Tories may be stronger than we realise. With some deft management we could get more from the current coalition than we perhaps realise.

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  • We should avoid Labour like the plague. If we start cosying up to the statist, fiscally irresponsible, warmongering, anti-growth Labour party then I’m out of the party.

    If we think the Tories are bad bedfellows, Labour will be even worse. They have a distinctly illiberal philosophy at the very core of the party.

  • Tony Butcher 6th Oct '10 - 3:35pm

    Interesting possibility – and one that many Lib Dems will probably be tempted by given the Tory shouting about Trident over the last couple of days.

    However I think it could be dangerous for the Lib Dems – they have a chance to influence current Government policy and demonstrate their ability in power, changing alliance to form a new coalition could, however, give the appearance of Lib Dems being unreliable and that may sit uncomfortably with many voters in the future

  • Seems pretty unlikely that this is ever going to be a serious option – but if it were, I think the party would need to think very very carefully before withdrawing from a five year deal. What credibility would it have as a future coalition partner if it breaks such deals for no good reason?

    In the event that the coalition fell apart disastrously mid-term, I suspect Labour would prefer to seek a new election rather than make do and mend in the way you suggest.

  • Anthony Aloysius St 6th Oct '10 - 3:38pm

    Why would Labour want to try to form a multi-party coalition government with a wafer-thin majority, rather than forcing a fresh election?

  • Colin Green 6th Oct '10 - 3:41pm

    It would be irresponsible and seen as self interested to jump into a Labour coalition before the end of the parliament. Not only unwise but I can’t see the voters approving either. Labour cannot win enough by elections to force the issue. It could only happen if the coalition fails but somehow new elections were not called. I can’t see either us or the Tories making such a big deal out of an issue that it splits the coalition.

  • I think it is finally dawning on the LibDems how the benefit cuts are going to affect their party hence these overtures to the Labour Party. Many like me left the LibDems to join the Labour Party because we felt we could no longer trust the LibDems. So I am not in favour of a Coalition for the moment.

  • Anthony Aloysius St 6th Oct '10 - 3:49pm

    Incidentally, I was interested to see that according to a recent YouGov poll supporters of first past the post now have a significant lead over supporters of AV (40% against 35%). A month or two ago the polls were showing them neck and neck.

  • David Allen 6th Oct '10 - 3:49pm

    The maths is less unfavourable than is suggested. The Nationalists would have a lot of trouble siding with the Tories against Labour if it came to the crunch. The DUP would probably sell out to the highest bidder.

    Of course Gordon had to be booted out last May. Of course the New Labour legacy over Iraq and civil liberties leaves a bad taste that Miliband mouthwash won’t easily wash away. Of course we’d have severe trouble if we caused instability within a year or so of the last election – which is why, as an opponent of coalition, I think the only realistic alternatives in the short term are a renegotiation with the Tories or a supply-and-confidence deal with them. But, but, but.

    We must give ourselves some better leverage in the longer term. These cuts will be disastrous, and we shall share the blame, unless we clearly demonstrate we have mitigated the disaster. To get that leverage, we need to recognise and declare that well before five years are up, a change of governing alliance cannot be ruled out.

  • More likely is that some Lib Dem MPs will cross the floor to Labour after the AV vote end in a “no” and the Liberal vote goes through the floor in the May 2011 elections.

  • David Allen 6th Oct '10 - 3:59pm

    Anthony A St,

    Yes, Labour might very well want to force an election rather than form a coalition. We on the other hand might refuse to help them get the dissolution, while being prepared to consider the coalition. Endless semi-unofficial chats to Labour would, amongst other things, hold a Sword of Damocles over Cameron and gain us some leverage. If, that is, we have a leader who wants to use that leverage for anything other than shifting further to the Right!

  • Why on Earth would the Nationalists want to prop up the Tory Government? Do you know anything about politics?

  • Anthony Aloysius St 6th Oct '10 - 4:37pm

    “Yes, Labour might very well want to force an election rather than form a coalition. We on the other hand might refuse to help them get the dissolution, while being prepared to consider the coalition. Endless semi-unofficial chats to Labour would, amongst other things, hold a Sword of Damocles over Cameron and gain us some leverage. If, that is, we have a leader who wants to use that leverage for anything other than shifting further to the Right!”

    To be honest I think the party is probably stuck with the coalition for the full five years now. What it desperately needs to do is project a distinctive image and maintain a separate identity, rather than blending seamlessly into the Conservative Party. It needs to test the doctrine of collective responsibility to the limit and really rock the boat on occasion, or else it may well face effective annihilation in five years’ time.

  • Back in May, the arguments against a coalition with Labour were as follows:

    (1) The arrangement would not be stable, because adding together all the Labour and Lib Dem MPs would fall short of a majority.
    (2) Handing the SNP (and to a lesser extent Plaid Cymru) the Sword of Damocles is politically unacceptable. Could we conscientiously trade the union just to stay in power?
    (3) The Labour dinosaurs (including Brown) were determined not to have a Coalition.
    (4) Labour had been comprehensively rejected by the electorate, achieving their 2nd worst result since the War. It would not have looked good to keep the loser in office.

    These were insuperable difficulties. But that was May. With a new Labour Leader who is evidently more amenable than Brown, and a deficit reduction policy that could be heading for the rocks, the situation is a little different. Few difficulties are so insuperable that they cannot be overcome in the right circumstances.

  • David Allen 6th Oct '10 - 4:43pm

    “To be honest I think the party is probably stuck with the coalition for the full five years now.”

    That’s certainly how it feels right now. But five years ago, let’s recall, we were defined by Kennedy’s opposition to Iraq. A heck of a lot changes in five years. A lot will look wholly different in five months when the cuts bite and our polls plummet.

  • Mike(The Labour one) 6th Oct '10 - 4:45pm

    I can’t see it. If things do go mams-up then it will be difficult for the Lib Dems to say “right we sincerely did believe in this, know we sincerely believe in *this*.” With Clegg as third-most influential right-winger I think it’s not til death do you part with the Tories.

    A temporary truce over AV though would be nice, and if AV passes it will give more of an incentive for Labour people to look at PR.

    A Labour-led coalition will hopefully sometime after the next election or two be possible, I just can’t see the Lib Dems being in it. The maths don’t take into account those Lib Dems, the ones in government now, who are ideological rightists who would never seriously go into coalition with Labour.

  • Mike, I see Huhne and (even Clegg on some issues) as a pretty influential left-winger too. Probably best not to a) rely on the Telegraph too much as I’m sure you’ll agree or b) think in left/right terms.

    And whilst I agree that – given a press which views changes of minds as ‘weakness’ and disagreement as ‘fundamental incompatibility’ I am not ashamed to say we might change our minds in the future – it is what real people do. (John Stuart Mill would heartily approve.)

    Perhaps more importantly, the principles which underlie our party have not changed. So this could lead to a change of mind on the present course of action.

    [There is, in my opinion, nothing we ‘sincerely believe’ that is not contextual…]

  • Jonathon Wilson 6th Oct '10 - 5:12pm

    The Tory vote is pretty solid. It is our seats that are more vulnerable to being lost to Labour…

    I think a coalition with Labour (if the numbers could stack up) would do a lot to silence the more reactionary Labour elements. The LibDem/Lab coalition in Scotland seemed to work out well for 8 years. And if we weren’t in this coalition it would probably work out well after May.

  • I for one think that an alliance with Labour is the only policy for a progressive left of centre party like the Liberals to support.

    The present con-dem coalition is a sham – whereby liberals are propping up Right wing Tory policies like cutting public expenditure and the desire for a small state ie reduction in welfare, regulation to protect the consumer etc. Labour is the natural partner to the Liberals as both parties are centre left, progressive, essentially believe at their heart in civil liberties, against big spending on armaments, against foreign wars etc. The last Labour government was an abberation and Labour supporters hated a lot of what Blair etc were doing. The new leadership in the Labour Party means we as Liberals can at last ditch this so called coalition and join with Labour. We might have to ditch Clegg and his Orange group supporters of course. But that would mean returning to true Liberal values and as in the prvious but one elelction and have a proggressive high rate income tax, local government income tax and other Liberal ideas shelved in the last few years.

  • it seems that lib dems would rather stay with government who oppose av and want to ‘cleanse’ london of the poor. The cuts announced yesterday to family allowance put the cat among the pigions. Did just call me dave consult just call me nick at his mansion. There is no way he is going to give up the jet set life to join labour because his country needs him to do so.

  • I couldn’t see a coalition happening at all with Clegg at the helm, he’s far too tainted by the Tories, after all look what happened with GB. The only way it may happen is if the rank and file Lib Dems distance themselves from Clegg as there’s little or no hope of Clegg distancing himself from the Tories.

  • This idea is a non-starter, in my opinion.

    The LibDems are just managing to change people’s perception of hung parliaments and coalition governments. Playing around with the system in this way would be in nobody’s interest -certainly not the Liberal Democrats’ interest. There’d be the same ‘hung parliament’ ads at the next election, too – and they’d be even more damaging than they were this time round. And rightly so! And the LibDems would lose even more trust than they have lost in some quarters by forming the present coalition.

    Moreover, exchanging a coalition government with a reasonable majority for one that can be held to ransom by just one stubborn MP. I am sorry, but that just doesn’t sound right.

    I think it’s better for the LibDems to stick it out with this lot, and to make the best of the coalition we have. Yes, some decisions will be very much against the grain – but I bet it would be the same with a Lab/Lib coalition – and with added agony caused by the marginal majority.

    I think it’s time to stop dreaming of that centre left coalition for the moment and to get on with making the centre-right deal we have work as well as possible – things may look very different after the next general election (which I very much hope will be in 2015)..

  • I was watching channel 4s Dispatches the other day and it was extremely worrying how Cameron is so close to the murdoch empire and how appalling it would be if de-regulation and free market attitude of the Tories could well ensure murdoch starts to stifle true free media debate in this country. How can Liberal stand to watch this anti- European, Sun owning, highly illiberal man turn Britain into a Belisconi style one media dominated society. The Murdoch empire acolytes (chipping norton set) are only a heartbeat away from our (we are all in it together) prime minister and his multi millionaire public school dominated cabinet.

  • If Ed Miliband need Nick Clegg to become Prime Minister, he’ll quickly forget saying Clegg would have to resign.

    Who says that Clegg will still be leader after the conservative dominated coalition has finally screwed the North and the poor, the working classes and even the lower middle classes completely!

    All I can see as the Tories use the opportunity of the so called crisis to destroy the welfare state or sell it off in the big society (hoho) is the Labour vote shoot up and liberals continue to disapear into oblivion – unless of course we pull out of this ghastly knightmare ASAP

  • Barry George 6th Oct '10 - 7:59pm

    Simply not possible with Clegg at the helm…

  • George Kendall
    ‘ I’m afraid our political culture doesn’t give politicians any option but to bash their opponents. If the coalition didn’t try to blame Labour for the cuts, then they’d take all the blame themselves. Labour did exactly the same after 1997.’

    This is absolute nonsense when you consider Nick Clegg was selling us a new way of doing politics – being fair and transparent. Not fair if you blame Labour for things they are not responsible for. Or was that another lie of Nick’s. Blaming Labour for everything will only backfire on you. We, the electorate, don’t like being patronised and are well aware that there is a global financial crisis and the financial sector has much to answer for the mess we are in. The easy option was taken to reduce the deficit by slashing benefits first which is idealogical rather than a real desire to reduce the deficit. The cutting of child benefit and then compensating those families with marriage will negate any savings. Surely if deficit reduction was a serious issue then taxing bankers bonuses, dealing with tax evaders should have been a priority which would have yielded more immediate revenue.

  • Ah no edit button. I meant compensating families with married person’s allowance.

  • You seem fairly sanguine while you help destroy the welfare state and bring back mass unemployment ,so I can’t see it happening. Cheers !

  • Jonathon Wilson 6th Oct '10 - 8:32pm

    It’s a five year agreement. But if the AV referendum is lost, as it probably will be, it is going to be a very long 4 years in the Tory lobbies.

  • @BB
    Tax evasion is illegal so I would hope that people would have been tackling it a lot earlier than waiting for the coalition to sort it out.
    Unless you meant Tax avoidance? This can also include any ISAs/NSI savings (the tax free savings offered by Gov to entice people to lend them money) or the such like that you may hold.

    “Blaming Labour for everything will only backfire on you”
    Can’t recall anyone blaming Labour for everything (although I heard a whisper that Gordon ordered the met office to give us a really bad summer – tsch, the lengths they’ll go to) – but for the major bits I’ve seen I think they have to take it on the chin.

  • paul barker 6th Oct '10 - 9:45pm

    There are 2 big problems with this
    1st, moral. We signed a contract & as long as the other party keep their side that is the end of it. We had a special conference where delegates voted 98% in favour of the coalition, isnt it time for the 2% to shut it ? Actually I suspect that a lot of the whingers are Labour Trolls, perhaps they could prove me wrong by giving their local Party ? Mine is Camberwell & Peckham.
    2nd, Labour arent going to survive till 2015. Labour have been boasting about their new membership peak of 180,000 but they also peaked in 1997, at 415,000, in 1979 at 700,000 & in 1952 at one Million. Notice the trend ? Not just 60 years of decline but an accelerating decline.

  • The idea of ‘respecting’ a Liberal Democrat just caused me to be little sick in my mouth. I fear I may have come down with ‘tribalism’.

  • Emsworthian 6th Oct '10 - 10:16pm

    It’s just too soon to even try to answer the question. Since coalitions are likely to be the only vehicle for power nothing should be ruled in or out. The Tories will want to dump the LD’s as soon as they can and we had better get used to it that as a third party it will always be more of a choice based on necessity that love. Dave obviously didn’t credit us with much other than an obligatory “jolly well done Clegg old chap.” today.

  • George Kendall
    ‘I don’t want to increase the bad feeling between Lib Dem and Labour supporters further.’

    You couldn’t increase the bad feelings any more as they are the worst they can ever be. I think LibDems will never be forgiven for supporting and enabling the Nasty Party to cause such havoc and devastation to poor people’s lives.

  • @BB
    “LibDems will never be forgiven for supporting and enabling the Nasty Party to cause such havoc and devastation to poor people’s lives.”

    Sorry, I thought they went into coalition with the Conservatives – damn, mix up on terminology, Labour are the Wicked and Malicious party aren’t they – though what they’ve left behind can be classed as nasty which is why I probably got it all mixed up.

    @George Kendall
    “While Labour weren’t responsible for the recession”
    I suppose it depends on what you mean by responsible, does turning a blind eye to things because they were making lots of money count as being responsible? If not then you’re right, it’s just a shame that the inaction led to such drastic results and all the pain that will be coming our way.

  • Grammar Police 6th Oct '10 - 10:30pm

    @ BB – believe me, the feeling is mutual.

    What you could have done for “poor people” with 13 years of government. Labour a “progressive party”? I am honestly disgusted by the behaviour and attitude of some Labour party members.

  • This course of action would be deeply dishonourable, damaging to our party’s reputation, and one I would oppose absolutely.

    As Mike said in this post’s first comment, Labour are “statist, fiscally irresponsible, warmongering” and “anti-growth”.

  • Intriguing mathematical exercise but we all know Nick has no plan B.
    He is determined to cling on to Cameron and hope for the best as his ‘strategy’ for the next four years.
    What incalculable damage may be wrought on the Liberal Democrats between now and then seems to be viewed by Nick as inconsequential trivia now that he can run around the U.N. attend Cabinet meetings and feel important.

    When the cuts hit Nick’s attitude will have to change.
    He can either by the strong Leader of a viable and separate Liberal Democrat Party or spend all his time being Cameron’s Pet Cabinet Minister. He can’t be both with any credibility as the public are telling us very clearly.

  • @John Ruddy
    I don’t think it was the amount or regulation, after all the Labour Government absolutely loved regulation, they created rain forests worth of it. It was the lack of quality, to little enforcement by the regulator and an unwillingness to confront the problem (thereby losing all that stamp duty/CGT etc) that really caused the issue.

  • Painfully Liberal 6th Oct '10 - 11:55pm

    I admit to an intense level of ignorance about Scottish and Welsh politics, but if we’re playing (highly implausible in my opinion) “what if” games, why is it apparently unthinkable to the nationalists to be included in this new coalittion?

  • @John Ruddy
    “I think I see what is going to happen……”

    Both are feasible scenarios, there is a third of course (or third of many I should say):

    Scenario 3.
    The cuts work, growth returns, the tories don’t track rightward and the electorate reward both parties in the Coalition by giving them a huge boost in seats.

    Being at the top of the leader board for cynical attitudes towards politicians (of the all variety), I find it hard to believe that I just wrote that.

  • And BTW Bob @ 10.00pm I’ve been posting here for quite some time but you seem unaware of this so I’ll do the decent thing if you won’t and change my moniker rather than have anyone cause confusion or mischief.

  • @Painfully Liberal
    “…why is it apparently unthinkable to the nationalists to be included in this new coalition?”

    Well, I suppose if they were going to insist that their respective Countries were excluded for the pain, that might be one reason (I believe that was what they were originally trying to put forward when the talk was of a grand coalition)

  • johninwales 7th Oct '10 - 12:11am

    I’d stick with what we’ve got – even allowing for the unlikely twiddling required Labour are untrustworthy partners (ask the LDs in wales or scotland if you can’t remember the 70s)… and although I’d say that we could make common ground with the SNP, any coalition based on the idea that Plaid Cymru could behave responsibly (or even get its own MPs to agree on anything) will deservedly fall apart and lay the way open for the Tories to return to power without us.

    And by the way, in case you don’t know this, Plaid Cymru REALLY hate the Liberals. It’s about the only thing most of them can agree on!

  • There is no way Labour will accept a coalition with the Lib Dems in this parliament, nor will they likely do it in the next, unfortunately for you guys, you are the fall guys in what’s going on, as the polls show.

    The Lib Dems I feel sorry for are the likes of Lorely Burt in Solihull, she has won two of the most unlikely election victories ever in Solihull, there was a boundary change after 2005, which made her re-election even more unlikely and still she won, it’s a shame she won’t win a third as she’s hard working but she will be toast at the next election.

  • It’s not wise to predict the outcome of the 2015 election, which will be held under different boundaries and hopefully with a different voting system. One thing for certain is that the Lib Dems won’t disappear.

    Looking at by-elections we are losing against Labour in areas where people quite simply just hate the Tories. They might not know why they hate them, but they do. They hate us not because we have bad policies or candidates, but because we don’t hate the Tories anymore. Labour are getting hysterical, and have lied about bogus lib dem policies, eg: leaflets suggesting Lib Dem policy is to kick tenants out of their council homes.

    In rural areas, smaller cities, home counties towns, wealthy suburbs we are actually gaining seats from the Tories. Where the arguments are about getting problems sorted, having the right policies and campaigning hard on the issues, we win where we work hard.

    We need to find a way to combat Labour’s hysteria about CON-DEM-NATION!!!!!! AND CON-DEM-CUTS!!!!!! and wrecking the NHS and other such hyperbolic phrases in areas where talk of policies just isn’t listened to.

  • While it would be very unwise for the Liberal Democrats to be permanently associated with either of the two major parties, my understanding is that there is a commitment to see the current government out through a full five-year term of parliament. The only viable reason I can see for reneging on that commitment would be if Labour could successfully win a vote of confidence against the government. Then the Liberal Democrats would have good reason to negotiate with whoever seemed best able to form a new government. But barring such a scenario (which one can only imagine in conditions of extreme crisis) the government ought to run for the full five years.

    I also think that when the next election is called, the Liberal Democrats should resign from government and contest the election wholly independently.

  • It will never happen.

    You’ve got into bed with the devil and realised that he’s a bit of a rascal. Tough. You’ve aligned yourself with Thatcherites and decided all along they were right. The electorate will not forgive you. Clegg, Cable, Alexander + Huhne will be long gone before anyone in the Labour party seeks to work with you.

    Coalition is so grown up isn’t it? After having your Conference speeches reviewed by Dave ‘n’ Gideon – was the favour returned?
    Consulted on Trident? No
    Consulted on the Married Couples allowance? No
    Consulted on Child Benefit withdrawl? Not even the cabinet was – so no.

    Now go and do what you keep telling us you’d do – soften the Tories. Evidence is, you’ve made them even more right-wing.

  • Agree with the consensus that the likelihood in this Parliament is close to zero. The more interesting debate is what happens in 2015. My guess is that the idea of equidistance will have gone almost entirely. We will be or will be widely seen as a party of the centre right. Judging by the comments on here over the past few months I realise increasingly this is what we already are in some parts of the UK. There wlll come a point before the next election where many of us on the centre left of the party will have to determine whether we stay.

  • Anthony Aloysius St 7th Oct '10 - 8:51am

    “The more interesting debate is what happens in 2015.”

    The problem for the Lib Dems is that even if the party maintains something like the level of support it’s enjoyed in the last few elections – which I think is a pretty optimistic assumption considering the steep decline in its poll ratings at a time before the Tories are suffering any incumbent unpopularity at all – it’s statistically unlikely that the support for the other parties will be distributed so as to produce a hung parliament. That’s especially true if the AV referendum fails and if the constituencies are reduced in size.

  • Same old, same old comments.
    Labour supporters still on the “betrayal” “any one not Labour eats babies” tack.
    So a long way to go before the possibility of forming an alliance with them.
    Oh, and Labour has already betrayed the Lib Dems once, in 1997 over electoral reform. And then had 13 years of government with rather mixed results, doing a lot of things that I count as betraying the British people.
    I would count myself well left of centre, and share the aspirations of many Labour activists – but have absolutely nothing in common with the leadership of the Labour party.

  • charliechops1 7th Oct '10 - 9:42am

    There is an illusion in all this. If Labour believes that it can win a General Election without any understanding with the Lib Dems, why would it bother? A more likely outcome of the next few weeks is that a group of Lib Dem MPs will break away as an informal group and vote with Labour on specific issues. I believe that Charles Kennedy has conducted talks along the lines with Labour. A development such as this would split the Lib Dems along lines that have always been probable. The cost of participating in Government for the Lib Dems will be the break up of the party, with most of the Lib Dem members of the Government staying loyal to the Government. There are no policy differences between Clegg and Cameron. Such an allignment would produce a General Election with two Lib Dem parties one of which would not be opposed by the Tories. Hold on to your seat! Who is responsible for this? Why the membership of course who voted a Tory into itsparty leadership.

  • charliechops1 7th Oct '10 - 10:49am

    I listened very carefully to William Hague’s speech about locking in a veto on any future enlargement of EU powers. Basically his position is nonsense. Under the Lisbon Treaty there will be a great many changes in the future that would have the effect of the acretion of political iniatives to the EU. What is he proposing? Referenda ten times a year? Similarly with Cameron. He maintained that there would never be a future occasion when someone in a Scottish gaol could be released on health grounds. What is he proposing to do? Make Constitutional changes to the Scottish constituion. A case of good bye Scottish Tories! Those who place themselves in impossible positions can expect the worst. After a while no one takes you seriously

  • @Tony
    “it is YOUR chancalor that has cut mortgage interest relief for some of the most vunrable”

    Relief on mortgage interest repayments was removed on 6 April 2000 – which I believe can be credited to one Mr Gordon Brown – just checked and I don’t think he is the Chancellor now.

    “it is YOUR PM eho wants to cut benefits to peeps he thinks are undeserving”

    Suitably vague, care to be a bit more specific?

    “it is YOUR government that is swinging the axe and……”

    And the suitable response to that is, of course, that you can only work with what you have inherited – if Labour hadn’t screwed up things so badly then the actions being taken now wouldn’t be required. Of course, you may have preferred to keep Labour in power – even if it meant we became some sort of third world socialist banana republic. Like I say, it may be your view and I respect your right to believe in it – but thankfully enough people disagreed to allow an attempt at rescuing the situation.

  • “This course of action would be deeply dishonourable, damaging to our party’s reputation, and one I would oppose absolutely” says Stuart, regarding a link-up with Labour. Are you remotely serious? And so propping up the Tories (they and Cameron are no more elected than Brown was) has enhanced the LibDem reputation?. My political philosophy is quite simple, it runs along the lines: there are no circumstances imaginable whereby the British public could be well served by the election of the Tory party. I supported the LibDems until early May 2010. Never again, they made a fools of themselves and me. I take heart in knowing that there are enough voters with my political philosophy (in varying degrees) to put the LibDems out of business at the next election, Bless their little Tory socks!

  • John Fraser 7th Oct '10 - 9:39pm

    Does anyone remember those laughable arguments put by many in our (Lid Dem ) party that if we didn’t have a Con-Dem coalition the Tories would be comfortably ahead by October and we would be wiped out. next time someone says that rediculous ‘There is No Alternative’ thing. Remind them of what they probibly said in May .

  • @tony
    “I of course mean SIM and not MIras and am thinking you know that”
    Pray tell, how exactly was I supposed to know that? But before we have any further misunderstandings perhaps you can clarify whether you actually do mean SIM or SMI.

    “Look at Ireland and Spain ….”
    Who both waited until it was to late to do something. As a matter of interest, what are your thoughts about the fact that the Government were being warned as long back as 2003 that there were problems in the mortgage market. I don’t suppose that the reason they held off doing anything was because they were making buckets full of cash from stamp duty/CGT etc? Perhaps if they hadn’t allowed the housing bubble to go to such extremes then a lot of the current problems wouldn’t have happened. As for a collapse in the housing market – umm, what do you think has been happening for the last couple of years?

    “a reduction in our credit rating”
    With the plans Labour had in place (or should I say, the lack of plans), there was a very good chance that this would have happened if they were re-elected. We kept our current rating because the credit agencies believed that the newly elected Government were serious about sorting the financial out.

    “empiracl evidance that is emerging ”
    Would that be in the envelope that Labour Party HQ sent you?

    “The economy was being supported ”

    To the cost of your children, grand children and great grand children (as a bare minimum). At what level of debt do you think Labour should have stopped borrowing? 2 Trillion debt? 3 Trillion debt? Bearing in mind that even now the expected debt level will be 1.3 trillion in a few years – I would hazard a guess at 3 trillion, sound about right to you?

    “Conservatives who made the biggest reductions in MIRAS”
    Yes, I’m also aware that in 1988 there was a chance of the housing market going into meltdown, prices were going through the roof and the reduction in Miras was an attempt to slow things down. The chancellor in question admits that he made a mistake in not implementing it straight away instead of giving 4 months notice as this just caused a mad rush.

    You’ll notice from that comment that some one admitted a mistake and no doubt learnt lessons. The problem with Labour at the moment is that they are in denial – it is all some one elses fault, a bad man made them do it, it all started in America etc. This means that they won’t learn the lessons and they will, no doubt, repeat all of the same mistakes again if they get re-elected.

  • @ tony
    Posted 9th October 2010 at 10:27 am | Permalink

    “he pedantic correction is a bit of a give away is it not”
    It wasn’t a correction, it was a question, both abreviations are in use and you still haven’t made it clear which one you mean. I will assume for the moment that you actually mean SMI, now apparently the % being used was resulting in a 92% over payment rate, do you think that is advisable when money is short?

    “now to turn to the correction in the mortgage market well we know that this is according to some well overdue probably they would say it goes back a long way further than 2003”

    I think you are deliberately misunderstanding what I wrote, I’m not talking about a market correction, I’m talking about problems in the mortgage industry. However you are right, some people believe that the Chancellor should have let the market correct itself in 2001 instead of stoking it up (and storing up problems for later, i.e. now). So what are your thoughts on the fact that the Chancellor was warned about problems in the mortgage industry in 2003?

    “now we have had a fall in prices a slugish performance but we to date have not had a collapse”

    So I assume that you class a figure of around 20% to be a collapse? In which case the market collapsed in 2009, as I said, it has already happened. There has been a recovery, initially due to the fact that people stopped putting their house on the market, so there was not enough housing to meet demand. There was probably a blip earlier in the year when HIPS was dropped and then house prices where more or less where they were prior to the bust (which most people believed was to high anyway).

    However, the reverse is now happening, people are not interested in buying houses at the moment, they are trying to save for a rainy day and reducing their current debts as fast as possible (which I would hope that you think is a good idea). Add to this the fact that the banks are now closing the stable door after the horse has bolted, so it won’t be as easy to get a mortgage (no more 5, 6, 7 times annual income mortgages) and definitely harder to get anything on the self certification front. This has had the effect of reducing the house prices as the supply of houses is now greater than the demand. Will the house prices fall further – most probably, but as the cost of housing in now back to the state of being almost unaffordable then that would be inevitable.

    “… the gloom goes on really …”

    Well it obviously does in your circles. But most of what you descibe is where we were headed anyway, we have a far better chance of not going there now.

    Also – Labour would have had to make a lot of these cuts anyway, it’s just that a lot of them guessed that they were on the way out so didn’t bother actually specifying it. After all, if you’re going to be in opposition it’s a lot easier slagging off the other side if you’ve never actually committed yourself to anything. Instead they just tried to lead people down the garden path with some fantasy scenario that they would make “cuts to lower priority spending”.

    The only person who really walked out of Government with his reputation intact (on finance) was Alistair Darling, but look what he had to go through, character assassination, being briefed against, threats of losing his job and the knowledge that if Labour did win then Balls would take his job and the work he had started to try and sort things out would have been wasted.

    “… U turn for your party …”
    I don’t belong to a party, I’m a floating voter who happens to believe that the coalition is the best bet we have for sorting out your mess. I wouldn’t blame either of the parties in the coalition if they did continue to remind people of the fact that this all happened on Labours watch until such time as Labour faces up to what it did and learns the lessons, how long do you think that will take?

  • @George Kendall
    Posted 10th October 2010 at 1:34 pm

    Thanks for the kind offer George – but I think it is likely that I’ll stay non-aligned – I can upset everyone then (I believe in equality 😉 )

  • Yes we should be strategising now on how to form and administration with Labour if they end up with more seats than the tories after the next election and look at subtle ways that we can make this outcome happen – AV would help. A long-term relatiohsip with the Tories is not in our interest – historically this has been the great “killer” of the liberal tradition (1922, 1945 etc) – whilst any modest electoral success we have achieved in the past century has been achievded by definining ourselves as progressive rather than conervative , and with at least a loose understanding of the leaders of progressive movements (including Labour and the Unions). Fundamentally, the Tories do not believe on the same ideals as we do “freedom from poverty, ignorance and conformity”. So whilst our current coalition is a necessity to redress some of the policy errors of the last adminstration and the current economic crisis – we must not get enveloped in the conservaties’ way of thinking if we want to be distinctive and progressive.

  • @tony
    First of all – apologies but I’ve only just seen your posts, although I’m not certain why as I’ve tried to check back before now. Because it is late, I won’t have time to reply in one go – however to start with SMI.

    the figure I quoted is direct from the DWP web site – so if it is a convoluted formula it will be the sort of one used by all governments.

    You may recall that I said that Labour would have had to make a lot of cuts, but weren’t honest enough to admit it? Well you may be interested in an extract from the report “Social Security (Housing Costs Special Arrangements) (Amendment) 2009, etc – Merits of Statutory Instruments Committee” (as published on the Parliament Publications site.

    “The December 2009 Pre Budget Report confirmed that “the standard interest rate used to calculate SMI will be maintained at 6.08 per cent for a further six months, benefiting around 220,000 homeowners. Once the freeze ends, the Government intends to move towards a fairer, more affordable approach, that more closely reflects mortgage interest rates.””

    So it was coming anyway, but it is convenient for Labour to “forget” that it intended to do this and to let the coalition take the flak for implementing their policy. If you are saying that the reduction will cause a housing crash, then the crash would have happened had Labour won the election.

  • @tony
    Posted 15th October 2010 at 11:46 am

    😀 Nice try, but you didn’t think I’d let you get away with that did you. It wasn’t a review, it was an announcement of a cut to a committee that most people wouldn’t have heard of and was probably not even on the radar of most news organisations. The most telling word though is “affordable”, in other words they knew it wasn’t affordable to continue the overpayments, but kicked it into the long grass – post general election.

    I hadn’t seen the bit about the bye election, I can’t say I’m overly surprised about the turnout – people have been getting more and more p’ed off with politicians for decades. One day there will be some form of election when the turnout will be a single figure in % terms (unless of course politicians some how manage to persuade people that they are trustworthy).

  • How we got where we are – The Banking Myth

    The Labour Spin machine has been very successful in convincing not only the party faithful that the problems in the UK were caused elsewhere, but it is also becoming a fable heard generally. But like many political lies, it starts unravelling as soon as you stop listening to politicians and start doing your own research.

    As a starting point, if the global crises is the sole reason for the issues in the UK/rest of world you would expect all countries to have suffered to more or less the same degree. However this is not the case and the UK has been hit badly by what happened, i.e. one of the first in the G20 to go into recession and the last to come out, ONS reports that it was the longest and deepest recession since World War 2 whilst ( You may remember that the Labour Party tried to do a hatchet job on their own Chancellor when he said this), other countries reported the worst recession that they’d experience in the last 10 to 20 years.

    So in truth the global crises actually acted as a trigger for something far worse in the UK economy, the only question left is what were the causes of the worst recession in 60 years.

    Without a doubt the collapse/near collapse of the UK banks had a bad effect,the money that had to be pumped in to prop up to banks could have been used to boost other areas of the economy, so it’s not the only reason but it is one of the big ones. So who was responsible for making sure the banks behaved themselves and didn’t destroy the Country, well that would be the FSA, set up by one Gordon Brown in 1997 to remove control from the BofE. Why did the FSA fail in it’s task, we have some telling insight on this from a few sources, how about:

    The Turner Review – Mar 2009
    The repot raised the fact that there was a common belief (globally) that markets would “self correct”, so the FSA was spending time regulating other things and not paying enough attention to the overall build up of risk in the UK economy. Regarding the institution that kicked the whole thing off though:

    “it is clear that in the specific case of Northern Rock, the FSA also fell short of high professional standards in the execution of its supervisory approach, with significant failures in basic management disciplines and procedures which have been set out in its Internal Audit report.”

    When Lord Turner appeared before the Treasury Select Committee in Feb 09, he made the following comments:

    “There was a philosophy rooted in political assumptions which suggested the key priority was to keep it light rather than to ask more questions.”
    (when queried about the FSA and whether it was independent from political pressure).

    When asked if the FSA was fit for purpose:
    “We have to get it right in the future…it [the FSA] is going to be fit for purpose given the changes we are making.”
    In other words, it will be fit for purpose in the future, but it wasn’t then.

    Paul Moore
    The FSA admitted that it had warned HBOS as far back as 2002 about the risks it was taking. Later on, Paul Moore alleged that when he tried to raise the issue he was sacked by the head of HBOS, who later went on to high office in the FSA (he denied that the allegation was true, but resigned from the FSA stating it was ‘the right course of action’.

    Hector Sants
    When taking over in 2008:
    “There is a view that people are not frightened of the FSA, I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA.”

    In other words, people thought that they could get away with risky things (and they obviously did).

    So there we have it, the whole system set up be G Brown was hopeless and led to a large part of the problems we now face. This is hardly surprising, if you build your whole approach on the fact that banks will always make money and house prices will always go up you don’t want a regulator messing up the message.

    Now you may think that this is all dry, acedemic and beyond the point, but this lack of enforced regulation (or a light touch if you prefer) has allowed many things to flourish, including the misselling of self certifying mortgages. The FSA estimated that self certification mortgages accounted for almost half of all new mortgage advances between 2007 and Q1 of 2010. When you consider that these types of mortgages were really designed for people who may be self employed etc who could pay but would have problems getting evidence, then that “almost half” figure should have had sirens screaming at the FSA. There is a very good chance that this area is going to become the next big “misselling” scandall, with plenty of web sites already offering advice for people wanting to make claims. Many are telling potential clients that they may have a claim even if they lied about their income on the form to gain the mortgage, which is amazing as it is effectively telling people that they can claim compensation for committing fraud.

    People were warning about the rise in this sort of thing long before the big bust, but it would seem that these warnings were ignored.

    But is it fair to really blame people for this? After all, the housing market was in a huge bubble and it may be that people thought that they only way they could get on the ladder was to lie through their back teeth. Regardless of this, the lie will have left many of these people in a very precarious position, even if they keep their job then they are going to fail when interest rates start going up (which is bound to happen eventually as inflation is on the way up). This is the real time bomb in the housing market tbh, not the SMI issue. There will also be huge problems for the people who did this, if they default their credit rating will be effected. But if they claim for misselling on the basis that they lied about their income then the next time the look for a loan/mortgage they’ll probably find that most good lenders won’t touch them with a barge pole.

  • @tony
    Posted 15th October 2010 at 9:38 pm

    In reply to your points:

    “…. and may be paying 10% this is evidentally the case….”

    Yes it will, there were so many products on the market that it would be amazing if that wasn’t the case. However in the same answer to the Committee the Government stated that “we believe that the majority of customers are likely to have interest rates that are below 6.08%”.

    So the question then has to be do we maintain the current payments, even though we realise that the majority of people will be overpaid (i.e. we pay off the capital on their mortgage, as opposed to the interest which SMI is designed for and supposed to be limited to)? Obviously the Labour Gov decided that the answer should be no – but only after the GE.

    “I do think that something other than the slashing for all claimants as done would have been Labours response”

    😀 See, that is probably the main difference between us – you still manage to believe in a Party regardless, where as I don’t particularly have a great liking for any of them.

    But seriously, anything is possible but I would have to say that this scenario is way down the list of probabilities. It would act counter to the way Labour have done things over the last 15 years on the news management front (aka Spin). It is an acknowledged fact that Labour managed all news releases, good news was spread out to maximise the effect, bad news was released on busy days or in a surreptitious manner, or if that wasn’t possible in bundles to minimise exposure for each bad news item.

    In this particular case, the bad news was released extremely quietly (as mentioned before), however I have not found any items anywhere that suggest that Labour were planning anything new or were going to make the changes you suggested (and I’ve even checked the Labour Party Web Site, the last mention of SMI I found was the extension to Dec 09). So unless you have some items, then I’m afraid the conclusion would have to be that it wasn’t going to happen.

    On the final point (is it only to reflect interest rates), aside from the obvious that it is to save money, I don’t know. I would doubt if there was much more (at the moment anyway) as it was an “easy win” to do something that the previous Gov had already said they were going to do.

  • @tony
    Posted 18th October 2010 at 8:02 pm

    “You assert that the majority are overpaid ..”

    Actually Tony, I didn’t assert that. The three main parties are asserting it, Labour in January and now the coalition.
    What I was asserting, and you seem to have a problem with, is that it can not be right that the majority of people (as asserted by the 3 main parties) are being overpaid, with the result that the capital amount on their mortgage is being repaid. SMI was never intended for this, it was supposed to be like the old systems that only covered mortgage interest payments.

    “..and really do not show it…”
    No, but as it’s not my assertion why would I. However, as you are saying that all 3 parties are wrong, do you have any hard evidence to show that what they are saying is incorrect?

    “…they have the info on file to be fair but are not doing it they are applying a blanket device…”

    And we come back to the central point of the discussion, your assertion that Labour would be fairer. This is, after
    all, the method put in place by Labour and you now seem to be saying it was unfair (plus Labour were planning to do the same and not introduce anything new, so by extension they would have still been unfair if they had won the election).

    “I think that the primary purpose is not to save money….”
    So what do you think the primary reason was for 3 political parties stating that it would be cut to save money? You
    haven’t actually stated why you think this wasn’t the case and what you base that belief on.

    “..how does this fig stack up against say housing benefit…”
    Well, you are now introducing a totally different element to the discussion, does this mean that you feel that perhaps that future Labour aren’t as wonderful as you originally thought? After all, the same point would apply now if Labour had won the election.

    “..forts have been made to prevent riseing repo’s and these have been eeerrr succesfull or maybe just succesfullish..”

    You may remember that I said that Labour would have had no option but to start cutting to repay the debt? I never
    actually commented on the success or otherwise of what they had done so far (though I did point out that, using your criteria, there already had been a housing crash). However, what they did do was very expensive and a Country can’t live on credit for ever. They would have been forced to do the same as the coalition are doing now, the alternative would have been to risk the Countries credit rating (credit agencies were firing warning shots before the election about public expenditure) which would have resulted in a big hike on the amount of interest paid which would have meant totally savage cuts later on (and the cuts are already going to be bad anyway).

    “… cut in SMI is an example), will contribute to the upcoming reccession”

    Well, at least we can say we’re getting nearer on agreement on this as you now think it may contribute to a recession, rather than being the cause of one. However, you’re still looking in the wrong place for a housing crash, the brutal truth is below.

    If there is a recession caused by the price of housing, SMI may be a contributing factor, but it will only have a very
    minor role to play. On the post that you want to come back to later, you’ll notice that I said the Self Cert scandal
    was “… the real time bomb in the housing market”. Between Apr 07 and Mar 10, there were 2.2 million mortgage
    approvals, of that total 45% were self cert (figures from housepricecrash.co.uk and FSA websites) which means there were approx 990,000 mortgages using this scheme. We have absolutely no idea how many people upped the amount that they declared as their income (potentially, all of them did), but lets say only half did, that means that 445k mortgage holders out there may struggle badly when the interest rates start going up from the current historic low. Interest doesn’t even have to go up much either, a .5 rise to 1 % may double the interest payment for these people, if it goes to as little as 3% then these people could find that their interest payments have jumped by x6.

    Now SMI has a 2 year limit, so the people who went onto it in Oct 08 are now going to start losing it which may result in repossessions starting soon. Balanced against that is the realisation by most lenders that it is not in their best interest to repo a house as they may lose money, so these people may get help from their lenders. Over the next 2 years all the people currently on SMI will lose entitlement, anyone starting on it now will not be on it in 2 years time.

    The total number of people on SMI is approx 220k (figure from Gov website) but according to ALL of the parties, at
    least 110,001 people were being overpaid so it is possible but highly unlikely that all 220k are going to lose their
    house. If we want to be really pessimistic, lets say just over 2 thirds lose their house over the next 2 years, that
    will equate to a monthly rate of 6500 houses coming onto the market, it is possible that the housing market could
    absorb that amount without to much stress as, even at the height of the downturn in 08, there were still over 30k
    mortgage approvals a month (it’s currently running at over 40k). Now that is obviously heart breaking for the home owners concerned, but to be brutally honest it probably isn’t enough on it’s own to send prices crashing.

    However, the self cert issue is something completely different, if interest rates go up sharply then there is a good
    possibility that those 445k mortgage holders on Self Cert may all start struggling at the same time and the market
    could be flooded with repo houses, especially as lenders may find out that people coming to them for help actually lied about their income and any that will be futile. That is why I think this is the real danger and not SMI.

    But self cert it isn’t the only danger. Lenders are now insisting on 25% deposits so people are having to save longer to get a mortgage, they are no longer offering self cert (even the FSA have just banned them – about 5 years to late of course and also after lenders stopped offering them anyway) so that is half the mortgage market gone, people are not going to be able to get large multiples of their income from lenders so they either won’t be able to afford the average price or will have to save even longer for an even larger deposit.

    Plus there are other things as well. People are currently trying to reduce their debt which means not so many are
    buying houses. This can be seen on the Credit Action web site, average household debt in Oct 2008 was £59,350 but in Oct 2010 it had dropped to £57,810. Banks are obviously not able to lend as much money at the moment, so fewer houses will be bought and then, I believe, they have to start repaying the Gov next year so there will be even less money available for mortgages. On top of that, if all the lawyers get their way then lenders could also be paying out huge amounts of cash for misselling claims – assuming that the lenders don’t retaliate by reporting all the claimants to the police for fraud (in the early 90s, the self cert market was worth about £100 million a year, however that rose in the final years to £1 billion a month).

    So we have a combination of misselling/fraud, people repaying debt and a reduction in the pot of money available for mortgages which means that supply may well outstrip demand, with all of that, the best that can be hoped for is a gradual reduction in house prices to a more sensible level, or that house prices remain static long enough to allow inflation to carry out the work of deflating the prices.

    This is the true Labour legacy and if you are going to gloomy, then this should be your real worry.

    “…Recession….now you hold this not to be the case well…”

    Actually, that’s not what I said, what I said was …”the global crises actually acted as a trigger for something far
    worse in the UK economy…”

    “….rgument re the reemoval ofHIPS has some merit….”
    I didn’t give it any merit, all I said was “…There was probably a blip earlier in the year when HIPS was dropped ..”
    This was reported at the time, where people took advantage of not having the upfront cost to put their house on the market to see what they could get.

    “…As for continueing to support/ believe in Labour….”
    Sorry, but you have all the signs of a “believer”, being a believer is great for religion but when it is applied to
    politics it causes blind spots. I’ve consistently shown you that Labour were going to cut SMI and had not put anything in place to replace it, but as a believer you have come out with statements such as “..I do think that something other than the slashing for all claimants as done would have been Labours response…”, but obviously there is no evidence for this as Labour planned to do exactly what I said (as based on evidence).

    However, your last post seems to have moved away from this slightly, so perhaps the blinkers have fallen away and you may realise that if you want the truth then you have to go and find it instead of accepting what politicians claim as the truth – in this day and age it is easy to find most information on the web. Also, don’t think that just because I write on LDV that I will somehow start believing everything the coalition say, I will be doing exactly the same for them.

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