Monthly Archives: March 2011

This morning the Liberal Democrats overwhelmingly voted in favour of taking tougher action on banks an bonuses. In a highly topical debate delegates applauded proposals put forward by the Social Liberal Forum to, amongst other things:
• break up banks ‘too big to fail’ into smaller, safer entities
• ensure that in State-owned banks, pay packages larger than that of the Prime Minister are fully disclosed
• split high-risk banking away from ordinary high-street banking, with no State guarantee for the former
• take measures to tackle financial exclusion for the vulnerable.

Naomi Smith, summing up the debate, said:

“Adam Smith said that when businessmen get together it is to act against the public interest – the British Bankers Association affords a classic example of this. We can no longer tolerate the position where profit is privatised and losses nationalised.”

The final agreed motion is on the Party website.

Here is the text of the opening speech given by Prateek Buch when he proposed the motion:

Friends, let me begin with an apology and an acknowledgement.

The apology is for not being Lord Oakeshott – I’m sure you’d have preferred to hear from him but as Matthew can’t be in Sheffield today for family reasons, I get to move the motion we wrote together.

The acknowledgement is for Stephen Willams MP whose motion we may well have been debating now instead of this one – I’d like to say that Stephen’s proposals, not least his scheme to distribute a stake in the State-owned banks to every citizen, deserve to be fully debated and endorsed by Conference and I look forward to doing so soon.

On to our Motion then, which calls for tougher action on banks and bonuses.

It may be fair to say that this Coalition Government – our Coalition Government, has done more to address the deepseated malaise at the heart of our banking system in less than 12 months than the previous administration did in twelve years and more.

With the institution of the Vickers Commission and the Project Merlin agreement between the leading UK banks, we’ve finally begun to reverse decades of under-regulation of the financial services sector.

But let’s be clear on two things. This government could hardly do worse than its predecessors; the previous Labour government – and the Tories before them – were directly complicit in the creation of an unsustainable banking boom that went bust so spectacularly that we’ll be picking up the pieces for decades.

And although I said we’d started down the road to a better banking future, a start is all we’ve made – the aims of Project Merlin were certainly laudadble, but it’s language simply doesn’t go far enough.

It’s easy to see just how far we’ve yet to travel; the continued payment of exorbitant bonuses at taxpayer-subsidised banks – even those that continue to report heavy losses, demonstrates that Merlin was wrong to still depend upon voluntary restraint on pay and bonuses – that really is as likely as pigs soaring above Canary Wharf.

This is why we call for pay transparency requirements to be extended so that we can see just how distorted executive – and non-executive – pay has become. But I wanted this Motion to go beyond tackling manifestly unjust remuneration, because even the toughest action on this risks leaving the underlying structure of banks as it is – a dangerous game to play.

This is why we call for policies such as the separation of high-risk casino-style banking from the vital utility function of ordinary high-street services. Or, the break-up of banks ‘too big to fail’ into smaller, safer entities.

Or even the requirement for large banks to hold greater capital reserves and to make living wills – now on this, I am aware that we need international agreement but let’s not hide behind that as an excuse, let’s lead from the front in calling for banks to be put on a more solid footing than they are today.

The Motion also proposes that the Green Investment Bank be just that – a fully functioning bank and not just a fund, as well as calling for measures that tackle financial exclusion for the vulnerable. The former, that Chris Huhne and Nick Clegg have argued for in the face of some resistance, is vital if we are to design a greener, more sustainable economy than we currently have.

The latter, for me at least, is why Liberal Democrats are needed in government – to stop the obscene iniquities that arise from the poor being charged to withdraw their own money from an ATM, whilst in the next street the millionaire banker rakes in the profit. In an age of public austerity it just isn’t right, we can’t tolerate banks perpetuating financial exclusion and we must help put an end to it in all forms.

And that, ultimately, is what this Motion is about – restoring banking to its rightful place as a service investing in a vibrant, diverse economy, not a sectional interest holding the rest of us to ransom for the sake of short term gain – and that too for the select few.

It’s about bringing rewards in the industry in line with performance and about preventing spillover from future financial crises into the wider economy.

You may as why I, or the Social Liberal Forum and its supporters who signed this Motion, think it’s fair game to intervene in the banking market – that’s not what liberals believe in, is it? I’ll draw my remarks to a close by addressing that question.

As far as I’m concerned, freedom and liberty are what matter – but not that of the banks, that of the people – and people aren’t free to live the lives they have reason to value if unaccountable corporations charge what they want, pay themselves what they want and keep for themselves the means for others to live fulfilling lives.

People aren’t free to pursue their goals as citizens free from the fear of financial collapse if they’re forever liable to bail out reckless banks to the tune of hundreds of billions of pounds.

And ultimately, it’s with policies like these, unashamedly harking back to the Bretton Woods days of a banking system tamed to serve the people, that we can ensure that banks are never again in a position to poison our vision of the Good Society, that they help us instead realise our vision of a fairer, more sustainable economy – with that I urge you to support the Motion and help keep Lib Dems at the forefront of taking tougher action on banks and bonuses

Responding to the overwhelming vote which called for amendments to be made to the Health Bill going through Parliament to get rid of the marketization and enhance accountability, Dr Evan Harris, who drafted the amendment, said:

“It is now incumbent on Nick and his ministerial team to deliver the major changes to the Government’s Health Policy and the significant amendments to the Health and Social Care Bill that the Liberal Democrats have overwhelming called for.”

“Because the health reforms were not in the coalition agreement, today’s vote is the only view expressed by the party on the subject, and sends a very clear message through the minister and our leader to their Conservative Coalition partners that we will not accept market reform of the health service, any fragmentation or destabilisation of NHS services by new private providers or the lack of accountability for the spending of public money envisaged in the model of GP commissioning promoted in the bill.”

“The onus is now on the Government to respond fully to the democratically expressed views of the Liberal Democrats.”

The amendments to the motion were carried virtually unopposed – but we are still gathering support for them. If you are a Liberal Democrat and would like to support to the amendments (which you can read in full here), please contact admin@socialliberal.net so we can add you to our growing list of signatories.

The final agreed motion is on the Party website.

Saturday 9.15 – F3 – Community Futures

At end of Motion F3 (line 85), insert:

Conference believes that voluntary work is boosted more effectively by the concrete measures set out in these policies, and by adequate public funding for the charitable and not-for-profit sector when delivering public services, than by mere sloganeering and nebulous references to the “Big Society”.

Saturday 10.45 – F5 – Updating the NHS

Delete lines 6-15

Amend line 16 to read:

Conference welcomes much of the vision for the NHS set out in the Government’s White Paper …

Add after line 38:

Conference recognises however that all of the above policies and aspirations can be achieved without adopting the damaging and unjustified market-based approach that is proposed.

Conference therefore reaffirms existing Liberal Democrat health and localism policies which call for healthcare commissioning to be carried out by locally elected health boards or local authorities, with the ability to vary a fair local tax in order to invest in local healthcare services;

Conference regrets that some of the proposed reforms have never been Liberal Democrat policy, did not feature in our manifesto or in the Coalition agreement, which instead called for an end to large-scale top-down reorganisations.

Conference therefore calls on Liberal Democrats in Parliament to seek to amend the Health bill to provide for

a) more democratically accountable commissioning
b) a much greater degree of co-terminosity between local authorities and commissioning areas
c) no decision about the spending of NHS funds to be made in private and without proper consultation, as can take place by the proposed GP consortia
d) the complete ruling out of any competition based on price to prevent loss-leading corporate providers under-cutting NHS tariffs, and to ensure that healthcare providers “compete” on quality of care
e) the restoration of the NHS as the preferred provider, only allowing new private providers where there is no risk of “cherry-picking” which would destabilise or undermine the existing NHS service relied upon for emergencies and complex cases, and where the needs of equity, research and training are met
f) NHS commissioning being retained as a entirely public function in full compliance with the Human Rights Act and Freedom of Information laws, using the skills and experience of existing NHS staff rather than the sub-contracting of commissioning to private companies
g) The continued separation of the commissioning and provision of services to prevent conflicts of interests
h) An NHS, responsive to patients needs, based on co-operation rather than competition, and which promotes quality and equity not the market

Sunday 9 50 – F 16 – Strategy, Positioning and Priorities

Insert after line 49:

1A Calls for the programme of the Coalition Government in the second half of the Parliament to include Liberal Democrat priorities drawn from our manifesto and policies, and for such a programme to be agreed by the democratic structures within the party and in line with the strategic approach set out in this motion.

1B Calls for there to be effective consultation with the party at large, through its democratic structures, when new Government policies are proposed, which are not included in the Coalition agreement, and which conflict with Lib Dem policy or principles

1C Calls on the Federal Executive and the Federal Policy Committee to
i) review, in consultation with the Parliamentary parties, the challenges of coalition which have an impact on the independence of the party, its policy position or its freedom of political movement
ii) report back on whether the existing constitutional provisions and other arrangements
are sufficiently democratic and
iii) propose recommendations, for any constitutional amendments or other protocols which may be needed, in time for debate in September 2011

Action on banks and bonuses

Conference notes
a) the importance of a healthy banking system to the future of Britain’s economy
b) the regrettable failure of decades of ‘light-touch’ regulation that socialises risk and privatises extraordinary profits at the expense of sustainable investment and growth.
c) that Liberal Democrats have long emphasised the need to tackle disproportionate rewards for risky financial behaviour and the concentration of power in the hands of a few in the City of London
d) that the Independent Banking Commission is likely to postulate significant reforms later this year.

Conference therefore welcomes the aims of the recent ‘Project Merlin’ agreement with the UK’s leading banks to:
• Increase the credit available to British businesses
• Improve transparency over executive pay
• Reduce the overall bonus pool.

However, Conference is concerned that
i) the ‘Merlin’ reforms are insufficient
ii) the language of the ‘Merlin’ agreement is weak and will be hard to enforce, particularly with regards to net lending to business and transparency on bankers’ remuneration, with no disclosure requirement for the highest earners not on the Board.

Conference therefore calls on Liberal Democrats in Parliament, and most importantly those in Government, to ensure that the recommendations of the Vickers Commission are carried out promptly and in full. Conference calls for:
A) Banks supported by the taxpayer to be broken up into smaller, safer entities, with effective competition restored and full disclosure of all pay packages larger than that of the Prime Minister while they remain State-owned.
B) All large-scale banks to divest their investment banking arms, with no explicit or implicit State guarantee for this activity.
C) Pay transparency to be extended to highly paid traders and other employees, not just Executives, with salary and bonuses that exceed an agreed ratio to median salary to be published alongside an explanatory justification.
D) Large financial institutions to hold greater capital reserves and to make ‘living will’ arrangements to act as stabilisers in the event of further market failures such as those seen during the recent financial meltdown.
E) The imminent Green Investment Bank to be a fully functional bank and not a fund, securing much-needed investment in low-carbon technology and jobs.
F) Measures to tackle financial exclusion for individuals and small business, with a Basic Banking Guarantee; a public bank administered through Post Offices; a commitment from high street banks to provide fee-free ATMs within walking distance of all deprived communities; as well as reducing unfair bank, credit card and loan charges.
G) Greater support for local credit unions and mutuals.