Blog: Lib-Dem slump could bring banking reform

A huge amount of broadcast time and newsprint has been expended since the end of last week analysing the election and referendum results and, in particular, what they mean for the Liberal Democrats.

Quite alot of it has missed some key points, not least in the almost exclusive focus on the proposed NHS reforms as the issue that the Lib Dems can use to put some distance between them and the Conservatives.

I'm not sure it will be that easy for the Lib Dems to claim credit for any changes to NHS policy, partially because Labour is already moving effectively to set the pace and partially because there are many vocal Tory critics of Andrew Lansley's proposals too. For this reason I can see the breaking up of the major banks emerging as one of the key distinguishing issues between the Coalition partners.

But first back to last week's voting and a few thoughts on what it means.

Headlines about 'Lib Dem meltdown' were some way wide of the mark. It wasn't a meltdown. It was a significant drop from last year in as much as (in percentage terms) one third of the people who voted for them last year deserted them this year. Where these votes went is by no means an even pattern across the United Kingdom. In Scotland, they almost certainly went to the Scottish National Party, in the north of England to Labour, in the south of England mainly to Labour but there was some drift back to the Tories as well and in Wales they largely held steady.

These results - apart from Scotland - are not a disaster for the Lib Dems. The third party has been in many worse places in the last fifty years and is certainly not about to drop into a grave for its opponents to dance on.

The referendum on voting reform on the other hand was a disaster for them and one largely of its leadership's making. A fundamental error was made when Nick Clegg and his colleagues decided to rush the referendum through and hold it on the same day as the local, Scottish and Welsh elections. Almost every Lib Dem council leader in the country pleaded with them not to do this but with the same blind arrogance that led Clegg to vote for tuition fees rather than exercise the opt-out to abstain that was in the original coalition agreement, they ignored this sage advice.