The Labour-Conservative consensus on "light touch" regulation has failed us (Oxford West and Abingdon Liberal Democrats)

Oxford West and Abingdon Liberal Democrats <info@oxwablibdems.org.uk>

The Labour-Conservative consensus on "light touch" regulation has failed us

March 28, 2009 11:31 AM
Originally published by Wantage and Didcot Liberal Democrats

Labour and Conservative politicians not only failed to foresee the economic downturn, they dismissed Liberal Democrat warnings about the risks to the economy out of hand, and encouraged the culture of reckless risk-taking that led to the economic crisis. The Government boasted of their regime of 'light touch' regulation while the Conservatives argued that even this was too much of an imposition on business.

On 13 November 2003, Liberal Democrat Shadow Chancellor Vince Cable MP at Treasury questions warned that British economic growth was being sustained by consumer spending pinned against record levels of personal debt secured against volatile house prices. Gordon Brown, as Chancellor of the Exchequer, responded: "The hon. gentleman has been writing articles in the newspapers, as reflected in his contribution, that spread alarm, without substance, about the state of the British economy."

At Prime Minister's Questions, 26th March 2008, responding to a warning from Lib Dem Leader Nick Clegg that "the crisis facing British home owners today looks at least as bad as the Tory recession of the early 1990s" Gordon Brown said: "I do not know when the Liberal party will ever learn. … We are dealing with a quite different situation and the reason is that we did not take the advice of the Liberal party, but pursued policies for economic stability."

In a treasury press statement dated 24 May 2005 and entitled 'Chancellor launches better regulation Action Plan', the Labour government's spokesman said: "The new model we propose is quite different… Not just a light touch but a limited touch. Instead of routine regulation attempting to cover all, we adopt a risk-based approach which targets only the necessary few."

In the same month, Gordon Brown said in a speech to the CBI: "I want to work with you so that over time we apply the concept of risk not just to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all." Again in November 2007, he explained to the CBI: "Our risk based approach to deregulation… now extends from the light touch of the Financial Services Authority right across to reducing inspections by local authorities"

Meanwhile, the Conservatives' George Osborne in June 2006, in a speech to the finance industry, explained his Party's view: "Many of the regulations that affect the City, such as the Markets in Financial Instruments Directive, originate with the European Commission. I fear that much of this regulation has been burdensome, complex and makes cross-border market penetration more difficult. This is exactly the wrong direction in which Europe should be heading and it threatens the global competitiveness of the City of London."

Dispelling any doubts about where he stood, Osborne said in March 2007 in a speech to British Venture Capitalists: "We need a change of direction from Government, tax reform to move towards simpler, lower taxes (and) reducing the burden of regulation."