My main criticism of the LibDems is not that they went into Coalition with these appalling Tories, nor even that they are implementing the Coalition Agreement. It is that they have backed so many housing policies that were not in the Tory manifesto, the LibDem manifesto or the Coalition Agreement.
Many of the Tories worst policies are drawn from an agenda that was developed in opposition through the think tank Localis, published in the form of a pamphlet that was written with the help of some leading figures in the housing world, to their shame. Thus policies such as privatising social housing estates, pushing social rents towards market levels, removing security of tenure, and further shifting from capital to revenue subsidies were an undeclared plan in the minds of Tory politicians, and primarily Grant Shapps, before the election was called.
These policies, and others developed since the Election, like the bedroom tax and the ending of the homelessness safety net, have been ruthlessly pursued despite there being no democratic mandate for them. It is no surprise that Eric Pickles and Iain Duncan Smith promote these policies with unbridled enthusiasm. But the LibDems would have been well within their Coalition rights to have refused to back them. At the very least they could have won some amendments or even distanced themselves from them and shown more reluctance. But the LibDems have rolled over every time with Ministers like Andrew Stunnell, Don Foster and Steve Webb promoting this Tory agenda with great conviction.
One worm has seemed more likely to turn than the rest. Dr Vince Cable has recently shown some semi-detachment from the Coalition’s investment policies. In the New Statesman this week Cable calls for ‘greatly expanded’ capital spending to be funded through greater borrowing not cuts elsewhere. It is an axiom of Red Brick that we should be borrowing more to invest in housing; because of the multipliers involved the Treasury would get most of the money back in greater receipts and reduced benefits. Injecting more demand into housing would bolster one of the weakest areas of the economy, construction, and would create few inflationary pressures. Cable’s specific focus is to remove the cap on council borrowing for investment: borrowing that could be funded through the reformed housing revenue account and would be entirely prudential.
Even in the context of Coalition policies Cable says the argument is strong. The IMF has warned that the public finances may deteriorate as a consequence of continued lack of growth, and Cable argues that borrowing for growth would not undermine the central objective of reducing the structural deficit.
Cable goes about as far as collective cabinet responsibility allows. He also repeats an argument that has appeared on Red Brick that any further quantitative easing should be used more creatively; instead of just bolstering bank balance sheets the Bank of England should be acquiring assets like infrastructure bonds.
Whether George Osborne is listening to Cable’s message will not be clear until the Budget, but with Cameron and Osborne increasingly under pressure from their right wing for tax cuts, it seems unlikely that there will be a strong shift in Cable’s direction. The ball will then be back in the LibDem court. The budget and forthcoming votes like the one on Mansion Tax will test their intentions. Mired in problems themselves, will they at last flex their muscles within the Coalition?