Time to develop a liberal choice agenda

British political life currently inhabits a strangely unreal world. Events are moving fast, so fast they appear to be static. This Wednesday, the new leader of the Conservatives – let’s call him David Cameron – will take on the old leader of New Labour, Tony Blair, at Prime Minister’s Questions.

For all that the media will big-up the occasion, this will be merely the opening skirmish of a ‘phoney war’. Mr Blair is increasingly a lame duck leader and we are all awaiting the arrival of the rival, Gordon Brown, at some undefined future point in this Parliament. In the interim, it seems, the public and politicians are content to put their feet up, and put politics to one side, until such time as the parties have got their own houses in order. All of which rather begs the question for the Liberal Democrats: what do we do while we’re waiting?

On the face of it, the party should be satisfied with its position. With 62 MPs, the Lib Dems are the largest third party force since 1929. The opinion polls have us at a steady state 20 per cent in spite of the media’s Tory lurve-fest since Mr Cameron’s ‘rise without trace’. And yet there is a creeping sense of nervousness: suddenly, all the old certainties are gone.

First, our infamous ‘decapitation’ election targeting strategy imploded. This was a bit of a shock to the system. We have become so used to smash ‘n’ grab by-election victories, and to the public’s residual disdain for the Tory party, that we assumed we could knock out such luminaries as Oliver Letwin, David Davis (remember him?) and Theresa May with one more heave. We were wrong.

Then came autumn’s Blackpool party conference, when the media - rather tediously - focused on Charles Kennedy’s chairmanship/leadership. For what it’s worth, let me state my views on this side-issue in five easy-to-digest points:
* Mr Kennedy is an under-estimated leader whose collegial, laid-back, informal style fits our party snugly.
* He has called some of the big decisions, notably Iraq, pretty much right.
* His carefully cultured anti-politician normality has worked well for the party in an age of geek-wonkery, and has helped give us a firm foot-hold in the Celtic regions.
* However, he is still frustratingly waffly in interviews, and has yet to project a resonant narrative for the party.
* He is safe from a leadership challenge as there is no obvious successor. (Simon Hughes is much more sharply intelligent than he is sometimes credited, but is too excitably gaffe-prone; Mark Oaten is too polarising; Ming Campbell is too clearly a caretaker-leader; and Nick Clegg is too promising to be thrust into pole position prematurely.)

The bigger conference debate - which the media largely ignored because it concerned policy, and so made their heads hurt – centred on our political direction. This continues to be portrayed within and without the party (much to my visceral dislike) as a straight ‘left versus right’ battle for the soul of the Liberal Democrats. This is, of course, a crashingly one-dimensional reductio ad absurdum.

Occasionally, it is elevated to a more historical level, and pitched as a battle between nineteenth-century ‘economic liberals’ (who believe in a minimal state and free markets) and twentieth-century ‘New Liberals’ (who believe in big government and state intervention). This still seems to me to be an unhelpfully antiquated approach, and one which ignores the realities and complexities of our globalised market economy.

But, praise be, the Lib Dems are now thinking seriously about economic issues, recognising that, in the real world, robust financial planning must be at the heart of our decision-making. It is not necessarily that voters expect today’s party to be tomorrow’s government. However, they do expect the Lib Dems, which may well hold the balance of power by 2009, to have an affordable, prioritised programme. The current hiatus in the political maelstrom gives us the opportunity to work out what our direction should be, and how that will map across to our next election manifesto.

Any pair of binary ideological labels is, of course, open to the charge of over-simplification. But I hope my party sees itself as being firmly on the side of the consumer, the individual; even when this sets the Lib Dems in opposition to the interests of the producer, whether state or private. Such definitions are designedly vague, so let me be a little more explicit:
* The best, most effective way of delivering public services is via markets where the consumer has free and fair choice between competing providers.
* Market failure is inevitable: both/either because consumers lack purchasing power to be able to buy into a particular market; and/or because producers operate restrictive trading practices which skew the market.
* Such market failure is best corrected by ensuring every consumer has access to those markets which are essential for them to realise their potential; and by ensuring all producers can compete on a level playing field.

What does such economic theorising mean in reality? Well, for a start it means the Lib Dems should junk their knocking of the ‘choice agenda’ for public services simply because it’s being sponsored by Mr Blair. It is too glib simply to say we believe “there should be ‘choice for all’”, as Mr Kennedy did in a keynote speech this summer. Certainly the Prime Minister’s attempts to direct reform from the centre are to be decried. But his Brighton conference speech spelled out, simply and clearly, what should (bar the references to Labour) be the liberal choice agenda for public services:

“The truth is, command public services today are no more acceptable than a command economy. The 21st century's expectations in public services are a world away from those of 1945. People demand quality, choice, high standards. Why? Because in every other walk of life they demand them. And they are paying their taxes, so they feel they are entitled to them.… There's a great myth here, which is that we don't have a market in services now; we do. It's called private schools and private healthcare. But it's only open to the well-off. There is another myth: choice is a New Labour invention. Wrong. Choice is what wealthy people have exercised for centuries. The Tories have always been comfortable with that. But for Labour, choice is too important to be the monopoly of the wealthy.”

To date the Lib Dems have too often appeared to be in denial about the existence of markets in education and health-care. Our approach to public services has been simply to say: more taxes, more devolution. Undoubtedly, proper funding and local power are both essential if we are to have better schools and hospitals. But we would be naïve to assume that they are a panacea. There will never be enough money, and local decision-makers will sometimes make mistakes. We must, therefore, address seriously how we can develop a market in our public services which allocates scarce resources fairly and efficiently, which holds local decision-makers accountable, and in which the consumer has the power to exercise effective choice.

The arrival of Mr Cameron may make our job harder. If, as he self-proclaims, he intends to lead a moderate, modern Conservative Party – one which prioritises the environment, localism, and choice in public services – the so-called centre ground of British politics is going to become more crowded. But that does not mean we should politely vacate our liberal pitch in order to give Mr Cameron some room. We should instead plant our liberal flag firmly in the ground, and proudly state: we were here first.