Getting down to business

Posted On: 
12th September 2013

Former Lib Dem Treasury spokesman Lord Oakeshott warns that time is fast running out for the party to avoid heavy defeat in 2015

Matthew Oakeshott is in his Mayfair office, chuckling to himself at a personal missive from Barclays Bank. The Lib Dem peer, a self-styled scourge of City excess, explains: “I’ve just got a message from Barclays this morning pointing out how they are lending more to business, but RBS aren’t. It’s funny how Barclays are my friends now – after they got rid of Bob Diamond.”

The party’s former Treasury spokesman, who claims he coined the phrase ‘casino bankers’, spent years leading the charge against Diamond and once warned the bank ‘not to put the chief croupier in charge of the casino’.

Oakeshott was famously forced to quit his post after he heavily criticised the Coalition’s Project Merlin plan to get banks lending more. Characteristically, he’s still not satisfied, but he is careful to praise his former boss and close ally Vince Cable for progress made.

Of course it is the peer’s closeness to the Business Secretary that ensures many in his party listen whenever he speaks. And like Cable, it is his own background in finance (“I see the whites of their eyes”) that fuels his own calls for change.

Oakeshott has built up a sizeable pension fund and property investment business (he’s the ‘O’ in OLIM Investment Managers) but laments the way financiers have behaved. “I started my business in one room in this building in 1986, on my own with no money. When I started the business it was very unusual to have any business in the West End, it was all in the City.”

He is coy about his own wealth, although he admits he is ‘comfortable’ and says it is on the public record that his and his wife’s investments are worth £10m. “I eat my own cooking, I reinvest it,” he stresses.

Before he started his own firm, he worked for Warburg’s merchant bank, and before that in politics as a special adviser to Roy Jenkins in the early 1970s. In fact, it was his mentor Jenkins who secured him the job interview.

“He arranged three interviews for me. I went to see the Governor of the Bank of England, Sir Gordon Richardson, Lord Rothschild and Sir Sigmund Warburg. Roy was a good job interview agency,” he smiles. “Gordon Richardson did offer me a job but I thought it wasn’t enough of a change. Rupert Pennant-Rea [who went on to become Deputy Governor of the Bank of England] got it instead.” That prompts the thought that in another life Oakeshott, the banker basher extraordinaire, could actually have ended up a key figure at the Old Lady of Threadneedle Street. “Who knows…?” he laughs.

But Oakeshott is deadly serious about the City’s failures and its responsibility for undermining the British economy. “I was so lucky to go and work for Warburgs…I learned from the best people in the business. I was a merchant banker when the reputable bankers did put the clients before themselves and integrity and trust did matter. That’s why I was so shocked by the way it all went more recently.”

Oakeshott is not giving up his radicalism and at the Lib Dem conference this week he’s putting pressure on the leadership over its flagship economy motion. The peer has helped draft the Social Liberal Forum’s amendments to remove all council borrowing limits to allow town halls to invest in social housing.

“I’m in the pension fund world in my day job and I talk to all the big institutions, the big pension funds and the insurance companies. And they are all desperate to find safe investments. They would invest easily £100bn in social housing if the Treasury was imaginative enough to find a way that could be done. It doesn’t need public sector guarantees, but it does need more creative policies and less hostility to helping public investment. We’ve got the lowest long term interest rates for over a century now; we should be using these as the key to productive capital investment.”

But there is also a political edge to the move. “This motion is not signed by Vince, it’s signed by Nick Clegg. It’s Nick’s motion and I certainly feel we are not North Korea. We are a democratic party, we don’t have to accept every word of a motion that comes down from on high. All motions from the leader can be amended and improved.”

He points out how unusual it is for the party leader to personally table a motion on the economy. “It’s never happened before in the party”, before adding “I think Nick himself will say economics has never been Nick’s special subject. It’s on the record that he read Arc and Anth [Archeology and Antropology] at [Cambridge] University.

Oakeshott reserves most of his scorn for the Chancellor, however. While demanding more action on social housing, he worries the Government’s Help to Buy and other schemes are fuelling a housing bubble.

“The real worry is that George Osborne is now stoking up a classic old-fashioned Tory pre-election boom. I’m old enough to remember the days of Reginald Maudling trying to stoke one up in the 60s. I was special adviser to Roy Jenkins at the time, from ‘72-‘74, when we were warning against the Barber boom and that ended in tears. The Tories seem to try it every time. Now we should be a restraining hand.

“Our leaders in our party talk quite a lot of talk about social mobility but nothing kills social mobility more than high and rising house prices and a lack of affordable houses to rent. It’s even more important than access to schools.”

He warns that the voters are the ones who could suffer. “A lot of people are still very near the edge on debt. And a lot of people are only able to stay in their homes and pay their mortgage because interest rates are so unsustainably low, so there is definitely a cliff edge coming, not too far away. There’s an awful lot of people who, if interest rates go up one or two per cent, as they so easily could, are going to be in a very serious trouble.”

Oakeshott also believes his own party could be in very serious trouble itself in 2015 unless it changes direction pretty swiftly. He repeats his call for the Lib Dems to “disengage” with the Coalition “well before the next election, sixth months to a year before."

Asked how he sees the coming year, he replies: “The prospect is not good. It’s disastrous if we are seen as a tin can tied to the Tories’ tail in 2015.

“Most mainstream Liberal Democrats, our heart beats on the left rather than the centre or the right. Nick Clegg has been using a lot of language lately about we are party of the liberal centre. That’s not where I am coming from and it’s not where most Liberal Democrats are coming from. We are Liberal Democrats remember, not Liberals, that’s short for Liberals and Social Democrats – that’s our history and our heritage. We’ve still got 18 months to go. I don’t see the future of the Liberal Democrats as a version of the [German] conservative Free Democrats, a business friendly party in the middle blowing one way or the other, normally with the right.”

During his summer holidays, Oakeshott has been engaged his own psephological research. “If we are on 15% we would hold 30 seats, if we are on 17% we would hold 40 seats - and if we are on 13% we would hold 20 seats….We need to face facts, there’s quite a lot of complacency going on and self-delusion going on. We are likely to lose seats. It’s very important to maximise our national share of the vote to give our MPs the best chance.”

Although he doesn’t call directly for Nick Clegg to go, it’s clear that’s the logical conclusion of his argument. “Since UKIP came along we do seem to be pretty stuck around 10% in the opinion polls, it’s a pretty narrow band between 8 and 10%. We’ve been like this for a long time, there’s no sign of improvement. Let’s be objective: we have to accept that Nick’s ratings are very poor and have been for a long time. You’ve got to be frank that his ratings are down at levels which if you go back were only seen by Mrs Thatcher shortly before she left and Michael Foot. It’s nothing personal, you’ve got to look at the facts.

“You do have to say well where our prospects at the next election if we don’t have a major and clear change and detachment from the Conservatives and we’ve got to think about the best way to get that message over.”

He points to newspaper polls last summer showing the party would do about three or four per cent better under another leader. “These are things people have to think about given how sensitive the number of our seats will be. It’s for the party to decide.”

And he warns that next May’s combined local and European elections are a huge test. “At each election we’ve had a big chunk of our activist base wiped out. It is very serious. We can’t afford another year like that, another big swathe of our base being wiped away.

“This will be much the biggest test we’ve had on a nationwide basis of our support and our appeal since the general election, so that’s why it will be crunch time. There will be no excuse when everyone has been voting, particularly in important areas like London. I think that’s when everyone will focus on things and I hope we will have a good hard look at our prospects for the election. There will still be time, but next May/June will be the last chance.” 

Oakeshott also thinks the party should be equally bold on party funding. He has a ‘5-5-5’ plan, to limit individual donations to £5,000, to impose a £5m spending cap on general election campaigns and to allow voters to mark on their ballot paper a £5 tax donation to a party of their choice. “Clean politics does have to be paid for, that’s the right solution. Obviously we can’t just hand out taxpayer’s money without giving them control. That really meets all the objection because anyone who doesn’t want to give, doesn’t.

“It also helps with straight jacket voting system where people are often voting against somebody rather than for. If somebody wants to give £5 to the Greens or to Labour in a Lib Dem seat where they are voting tactically, they can do so."

Oakeshott lavishes praise on Ed Miliband for his own boldness of late and says there’s an historic chance to get party funding reform. “I really hope Nick Clegg doesn’t let the Tories put a veto on this. There has been a major change with Ed Miliband being prepared to confront the scandal which we were never able to sort out when we were in the Labour party, of the union bloc funding. We really should have one more go at this before the election. It’s a scandal and an even greater accident waiting to happen if we don’t.”

One of the architects of the mansion tax policy, the peer is clearly still full of ideas on the economy, (he also wants owners of overseas properties to start paying capital gains tax). And given his admiration for Miliband, it’s worth asking whether he could contemplate serving in a future Coalition as a minister.

“Put it this way, I don’t think George Osborne would ever ask me,” he smiles. “But actually I’m very happy running my own business.” And with that, he goes back to work. The City, whether you love it or loathe it, never stops.


“It’s still terrible, it’s still not working, I never thought two and a half years on we’d still be in this situation. RBS is the big problem”.


“In much of the country it is still pretty flat. It’s started to improve but there’s a real danger that it will not improve in a balanced way regionally.”


“The Conservatives will be standing on a platform of let’s get rid of these yellow bastards. They will get nastier and more Lynton Crosbyite as we get nearer the election.”


“We really should be voices for restraint and reason in Government not cheerleaders for American adventures.”


“An old friend and comrade, a terrible loss, he was very brave in politics which is rare and we really miss him all the time in the Cabinet and in the party but there’s no way he can be an active politician again after that.”