So the UK has a new government. Many have been the doomsayers who have criticised the negotiating process which led to the formation of the Tory/Lib Dem coalition (notwithstanding the fact that it was achieved pretty rapidly compared to the coalition negotiations that take place elsewhere in Europe, e.g. Germany). “If you choose proportional representation, this is what you’ll get after every election” critics have said. But is this a bad thing?
What it means, as we have discovered from the Tory/Lib Dem deal, is that the more extreme policies of both parties have been ditched for a more consensual (and, I would argue, a more sensible) position. In the case of the policies that affect the City, lo and behold the absurd Conservative policy to abolish the FSA now looks as if it will be ditched. Instead of giving the entire job of regulation to the Bank of England, it seems the latter may only have “overall supervision of banking” with the detailed supervision of individual banks being left to the FSA. And the idea of splitting big banks into retail and separate investment banks, instead of being immediately implemented is instead to be examined by an independent commission. The idea of a UK Glass Steagall act, long since ditched in the US and with no-one there arguing for its reintroduction, was heavily promoted by Ken Clarke. It would be nice to know on what basis? Northern Rock had no investment banking activities – that didn’t help it. A mature examination by a commission of experts will, I hope, reach a sensible conclusion.
So PR (even in the diluted form now being put to a referendum) may lead to more coalition governments in the UK. If in turn it leads to more sensible government that cannot be a bad thing.