Letter from Westminster 26.09.08
“IT’S the economy, stupid.” That was the expression, first coined by an aide to Bill Clinton, that came to sum up the debate in the 1992 US presidential election when Clinton beat the first President Bush who was then taking credit for a series of foreign policy successes.
The sentiments at least might also sum up the political debate in this country in the last few weeks. Certainly it was the economy that dominated the Liberal Democrat conference in Bournemouth last week. In years gone by that would have been bad news for the Liberal Democrats as it was a debate in which we were often marginalised and sometimes eclipsed. Not so this year as the party’s much admired treasury spokesperson, Vince Cable, rarely seemed to be off the television screens explaining and commenting on the latest development in the drama. Contrast Vince’s ubiquity with the Conservatives’ David Cameron and George Osborne and their near invisibility. If I were a Conservative MP I would be feeling slightly uneasy. Big leads in opinion polls can go just as quickly as they came. Messrs Cameron and Osborne are still untried propositions. It is difficult to imagine a more substantial political figure like Ken Clarke having so low a profile at such an important point.
The most dramatic development of the week was, of course, the sudden demise of Halifax Bank of Scotland (HBOS), taken over by Lloyds TSB. The full shape and consequences of that change have yet to become apparent but the quite remarkable thing was the speed with which it all went ahead. For years banks have been telling us that they cannot possibly clear a cheque in less than three working days but suddenly they can agree a merger overnight.
Of course the truth is that the merger was not agreed overnight but there had been talks going on for much longer. These talks were given a real urgency as the HBOS price went in to freefall and the agreement of the takeover was necessary to avoid a meltdown of the sort that we saw with Northern Rock last year. In normal circumstances the merger of two financial giants like this would trigger a lengthy and detailed examination by the competition authorities. Not so this time. Rather than risk the government having to buy another bank the takeover was given the blessing of the Chancellor and the Prime Minister citing a little known power in the Enterprise Act. The Enterprise Act was one of the bills on which I served my apprenticeship in the first parliament, having been a member of the committee that scrutinised it line by line.
I certainly do not recall any minister saying at that stage that the Act could or would be used in this way. That, of course, was in the days when every new Labour minister would proudly boast that the days of boom and bust were behind us. Sadly, they were only half right.
Alistair Carmichael MP