EDITORIAL : THE GUARDIAN, UK

         

 

Local and devolved elections: Yellow alert

As of this morning, the Lib Dems' path from pavement politics to national power will be tough indeed to tread

The cliche in reporting diffuse elections is to describe a mosaic, with many technicolour parts that tell a complex tale. As of the earliest hours of this morning, that image seems fitting enough for two of Westminster's three party leaders. David Cameron may have gone to bed worried about suburban losses, but will be heartened by his referendum hopes, as well as by some results in his solid south, such as in Castle Point where Labour once held the Westminster seat. Ed Miliband's spirits will have been cheered by Labour's reconquest of northern citadels it should never have lost, and more particularly by progress in parts of the Midlands. But he will have glanced north to unfolding events in Edinburgh with shuddering fear – for Alex Salmond looked set to snatch a second tartan term in commanding style.

Nick Clegg, by contrast, was still hoping against hope for any sort of mosaic, as opposed to a canvass of unremitting black. It is premature to assume that some glimmers might not emerge from the Liberal Democrats' darkest hour, not least because in more than half of the 279 English councils where voting took place, counting does not get going until this morning. But Labour's capturing of his home turf of Sheffield from his party's minority control is an intensely personal blow, as Lib Dem deputy leader, Simon Hughes, lost no time in pointing out last night. A savaging in other industrial cities, such as Liverpool and Hull, has shredded the third force's once proud boast to be the only party able to hold its own equally well in city and shire alike. The first Scottish seat to declare, Rutherglen, pointed to a collapse north of the border as well. In the (still far from certain) direst scenario, there could also be haemorrhaging to the Tories in the south and west as well, and politicians with yellow rosettes would then have nowhere left to hide.

The effect on political organisation is predictable and grim. As the representative of the Lib Dem councillors told the Guardian, these people serve as the all-important sergeants of local campaigning. Starting out with so many fewer MPs than their rivals, the Liberal Democrats' path from pavement politics to national power has traipsed through townhalls, from Somerset to Stockport. As of this morning, this path will be tough indeed to tread.

The councillors newly elected this morning, have won themselves a miserable job – meting out the very harshest of those coalitional cuts that are coming so dangerously thick and fast. No local politician of any stripe is going to do everything they might like to for their population in this fix, and especially not since Britain's fiscal centralism blocks every theoretical escape. But when retrenchment is in train, it is more important than ever that town halls are run by people prepared to risk middle-class wrath to protect services for same poor people. After being dealt a horrendous hand in last year's election and binding themselves in with the Conservatives, the urgent question for the Lib Dems now is how they can now persuade electors they stand for something distinctive.

The pre-mortem got going even before the first ward had declared, with Paddy Ashdown blasting the Conservatives on Question Time, and telling the Guardian that their "regiment of lies" will settle the terms on which the coalition ends. The elder statesman is only one of those agitating for a final line to be drawn under the "marriage in May" tone which Mr Clegg over-indulged right throughout last year. The pitch will have to become far sharper, and make less reliance on over-hyped income tax cuts which get lost in the mix with national insurance and VAT as tax credits are snatched away. Along with Scottish problems, Mr Miliband may potentially have a dash of southern discomfort. Mr Cameron's own mosaic of local difficulties could be serious, but that awaits the settling of the dust. For Mr Clegg, by contrast, the questions are now obvious – if not the answers.

Banks: The protection racket

The PPI racket casts a light on how much needs to be done to clean up the banks

Company results can tell you about much more than the fortunes of an individual business; they sometimes reveal the worrying state of an entire industry. So it is with yesterday's quarterly figures from Lloyds. Sure, the company-specific stuff gets its full and ugly reflection. Taxpayers and other interested observers can see for themselves that the state-owned bank remains in fragile condition, racking up losses of £3.47bn in the first three months of this year. And the group continues to pay a heavy price for earlier misadventures in the Irish property market. Lloyds shares are now bouncing around 55p, about 25% below the price the government paid for its stake, which raises serious questions about when and how taxpayers will get their money back.

But yesterday's results tell us about more than one messed-up balance sheet; they help paint a picture of a rotten industry practice. Because the bank's single biggest source of red ink is due to losses in a business that most of its high-street competitors were also in up to their necks: payment protection insurance.

The theory behind PPI was simple: you take out a mortgage or a credit card, but are worried about falling sick or losing your job – so the bank sells you an insurance policy that covers your payments. Unfortunately, as so many customers over the past decade found, the theory behind PPI rarely translated into practice: according to industry sources, most banks paid as little as 15% of their PPI income to claimants. And many of these costly policies should never have been sold in the first place; yet the banks had no compunction about flogging protection against redundancy to, say, self-employed plumbers. This was a racket, yet when the industry came under fire from the press (the Guardian was the first national paper to report on the PPI profiteering), consumer action groups and bloggers, it clammed up. Institutions batted off claims for compensation; and the British Bankers' Association took its own regulators to court. The best that can be said for Lloyds is that at least it has woken up to reality. By setting aside more than £3bn to compensate swindled customers, it has done the right thing – and upped the pressure on RBS and other rivals to follow suit.

But the bottom line is this: the PPI racket casts a light on how much needs to be done to clean up the banks. Just making the system safer, as regulators are urging, is not enough; it needs to be made more useful. Even in their pomp and glory, British banks lent like drunkards and ripped off their PPI-buying customers. They must not be patched up and allowed to go back to business as usual. Because as PPI reminds us, business as usual was rotten.

Barack Obama: Belief returns

'No one can say whether this has been a pivotal week for the US president, but it has certainly been an extraordinary one'

No one can yet say whether this has been a pivotal week for Barack Obama's presidency, but it has certainly been an extraordinary one. You don't need polls to judge how far he has travelled in just a few days. All you have to do is compare what his friends were saying about him before Bin Laden's killing and what his enemies are saying now. The New Yorker culled a litany of barbed judgments from the foreign policy establishment two weeks ago. They ran: Mr Obama does not strategise, he sermonizes; he leads from behind; he's no John Wayne. And now? "The administration deserves credit," says Dick Cheney. "I admire the courage of the president," claps Rudolph Giuliani. "I want to personally congratulate President Obama," says Donald Trump, the man who hounded the Democrat for his birth certificate.

Not all of this can be attributed to Harold Macmillan's explanation of what blows a term of office off course: "Events, dear boy, events." Mr Obama placed himself firmly at the centre of this event. It was he who instructed Leon Panetta to make the hunt for Bin Laden the CIA's number one priority; he who was briefed on a possible lead six months ago and repeatedly since; he who determined they had evidence to go; he who insisted on the riskier helicopter raid, rather than one well-placed bomb. This last decision will earn him the respect of his military. It is safe to say that questioning his national security credentials is a game that can be played no more. Nor will Republican attempts to paint him as a liberal out of touch with the nation's values find such fertile ground. But is something bigger going on, or will it all soon be back to business as usual in the beleaguered West Wing – raging budget deficits, unemployment and petrol prices?

When Mr Obama walked into the fire station in midtown Manhattan yesterday and said that his commitment to making sure justice was done transcended politics and party, and that his audience would always have a president and an administration who has got their back, he was conscious of addressing an audience larger than the firemen who had lost 15 of their colleagues 10 years ago. He has made calls for national unity before. He has attempted to position himself above the partisan fray and fallen woefully short. He has appealed before to his political opponents' higher instincts, only to be roundly defeated by them. Yesterday he had a chance to make the same grab for the higher ground and remain on it. No longer as a dangerous, possibly even un-American liberal intent on pushing through unpopular reforms in stormy times but as a leader who can harness the mood of the nation. This is potent stuff. If he succeeds in winning re-election it will be because he has re-assembled many of the constituents responsible for propelling him into power. Until now, they have been clobbered in the battles of his first term – the most likely to be unemployed, or to have had their home repossessed. As they lost faith in the man who heralded change they could believe in, the independent voter lost faith too. And in many states with strong military connections this has the power to change the political map.

There was a sign yesterday that the Republicans, too, were changing tactics. They conceded their plan to overhaul Medicare was unlikely to succeed and offered to open talks with the Democrats on the budget. They have not got long – two weeks before the debt will hit the limit of $14.3tn, and before Congress faces a difficult vote to raise the ceiling. Much will still depend on the economy and on jobs. On these fronts, Mr Obama has yet to show the audacity of hope. But if a leasehold of the centre ground starts to grow in political value, then it has not come a moment too soon for his presidency. This does not mean that Mr Obama will come good on his promise to change America. But it may mean more Americans start to believe in him.