It might have made Aaron’s daily news round-up, but Nick Clegg’s comments in today’s Indy exemplify just about everything I find really irritating about opposition politicians…

State intervention is needed in some areas. We need immediate action to stop unjustified repossessions of homes and business assets. Propped up by taxpayers’ money, the banks must realise that their obligations have changed. They must act in the public interest as well as their own, and it is right for the Government to intervene to ensure that happens.

Okay, yes Nick. So what kind of intervention do you have in mind?

But, outside the financial markets, British families still need the excesses of central government to be reined in…

D’oh!

Look, and this goes as much for Cameron as it does for Clegg, if you’ve actually got some ideas to share then let’s hear them, but if all you’ve got is some vague notion that the government should do something about it but no idea what then just shut up – If I want that kind of thing then I can listen to the chatter on the bus on my way into work in the morning but from politicians what I expect to hear are some ideas and maybe even a suggestion for a policy or two.

To be fair, its not that the LDs are entirely lacking in ideas.

Vince Cable (who else) has suggested that one way to keep the number of house repossessions down might be to allow councils and RSLs to buy out home owners who’re in serious difficulties, either entirely or as part of a shared equity deal. In principle that looks to be an idea that’s worth exploring, at least as far as figuring out what the bottom line might be in terms of cost and whether or not that could realistically be financed without relying on another round of large-scale government borrowing or an increase in taxation.

So, fair play to Vince because the man at least has the outline of a plan – which is more than can be said for the Tories – and I’d personally be quite happy to see the government invite Vince round to the Treasury to try and thrash out the detail over a take-away balti or two, not least because that would quite a pointed but subtle way of rubbing George Osborne’s nose in it as well, which makes it a win-win scenario as far as I’m concerned.

Of course, buying out home owners who’ve gotten into serious difficulties with their mortgage is a last resort measure and one that would need to be managed very carefully to ensure that it provides help to those in genuine need but not an easy escape route for property speculators who’ve just made bad investment decisions, but now that the government has found itself in the mortgage business by default as a consequence of nationalising Northern Rock and Bradford & Bingley’s mortgage book, it has quite a few options to play with and we should certainly take a look at a few.

For example, one thing that would help first-time buyers and people on low-ish incomes get on to the property ladder, and help to get the housing market moving a little, but which has been almost entirely absent from the mortgage market, is long-term fixed rate mortgages.

The commercial mortgage lenders haven’t developed these products because they don’t generate the kind of short-term profit that can be screwed out of variable rate mortgages and that means they’ve not been a priority. But now the rules of the game have changed and the priority for the government in managing out Northern Rock and the Bradford and Bingley isn’t about short-term profit and shareholder value its about the taxpayer taking as small a hit from defaults as possible.

Now, one of the big advantages the state has is that its much better placed to play the long game and can, if necessary, borrow more cheaply than the private sector over longer terms, and, with that in mind, there is something said for the government making use of its position to reshape the mortgage market not by sticking it to the banks with a bunch of new regulations but by using its control of a couple of mortgage lenders to put in place some new and much needed mortgage products – and, as I’ve pointed out previously, if the government goes for building up rather than running down the mortgage books of Northern Rock and the Bradford & Bingley then, when you factor in the equity that the government will be taking in other banks as part of the latest bail-out package, you’ve got the nucleus of nice little sovereign wealth fund once things get back to normal and the fortunes of the banking sector turn round.

With a bit of imagination, out of a crisis can come a medium to long-term win-win scenario, a range of new ‘social’ mortgages to help get first-time buyers and people on low-ish incomes on to the property ladder, defaults and repossession kept to a minimum and, once things turn around, a nice little earner on top.

So how about we start by looking at a policy of offering long-term fixed rate mortgages to sitting tenants if their landlord defaults on a buy-to-let mortgage, especially as we’ve already quite a lot of those (buy-to-let mortgages) on our hands thanks to the Bradford & Bingley.

Let’s face it, if a landlord defaults and walks away then with the housing market as it is, you’ll be lucky to get anything above auction value while if you offer it to the tenant under the right terms you may still make a loss on deal but you should still get a price equivalent to the value of the rent the tenant already pays were that converted into a mortgage, which will more often than not be rather more than the auction price. In the circumstances, that could easily prove to be a better deal than simply letting the landlord go to the wall and you’ve also turned a tenant into a home owner, with all the social benefits that can deliver in the medium to long term, so its got to be worth looking at.

And while we’re bouncing round an idea or two, lets make sure that we make the best use of some of the options we’ve already got in order to keep people in their homes. In many cases, the only reason that a repossession happens is because the home-owner gives up, buries their head in the sand and doesn’t turn up at court to contest the repossession order – in effect they’re pretty much intimidated out of their home by the incessant demands of their lender who’ll typically, demand that they repay any arrears over a very short period of time (usually between 12 months and four years) while whacking them with penalty charges and making all manner of noises about clauses that they claim make the home-owner liable for immediate payment of the full balance of the mortgage as a result of their being in arrears.

In reality, the law says something very different.

If someone is in arrears and facing threats of repossession then one thing that their mortgage lender won’t point out to them is the Court of Appeal’s landmark ruling in Cheltenham & Gloucester v Norgan (1995) (28 HLR 443 CA), the upshot of which is that a court can rule that the ‘reasonable period’ that the person in arrears should be given to pay of their arrears can be the full remaining term of the mortgage and not whatever the lender is trying to demand. The court does have to give due regard to the question of whether allowing a home-owner to pay off their arrears over such an extended period of time might place the lender’s security at risk (i.e. where there is negative equity) but otherwise, as long as someone can pay what’s come to be called the ‘Norgan minimum’, the amount necessary to pay off the arrears over the remaining life of the mortgage, courts will only grant a suspended possession order and not grant full possession to the lender.

So, with that in mind, and knowing full well than lender’s don’t like to talk about the Norgan minimum when they’re pushing someone for their mortgage arrears, there’s one or two things that the government could usefully do without getting too heavy-handed and bring out the regulatory stick.

For starters – and I know she’s barely got her feet under the table as yet, but there’s no time like the present – Margaret Beckett, our new housing minister, could usefully pop along to see Jack Straw at the Ministry of Justice and ask him to issue instructions to the judiciary to the effect that they should make every effort possible to apply the Norgan ruling in repossession cases or, I tell what, let’s make thing even more proactive and the judiciary not to entertain a repossession case where the lender has failed to notify a home-owner of the Norgan ruling and offered them the opportunity to restructure their payments down those lines.

Why go to all the trouble of passing new regulations when you can use a judicial precedent that’s already on the books.

And we shouldn’t forget that there are a lot on very good organisations out there, like Shelter, CABs, Law Centres and Housing Aid Centres, who, unlike the mortgage lenders, will properly advise people of their full legal rights, help them with their debt problems and do everything they can to keep them in their homes, so while we throwing billions at the banks, maybe Margaret and Jack could also be juggling the budgets at the MoJ and CLG to see if we can chuck a bit of extra cash the way of the debt advice services who’re currently struggling to cope with the demand for their services. I’m sure there’s something we can stick on the back-burner for a few months or maybe a year or two while we sort all this out…

like ID cards, perhaps?

Oh, and while we on the subject – penalty charges on mortgage arrears. Let’s tell the banks to get shot of them.

I actually helped out on mortgage arrears case a few months back and the family in question were getting hammer for £50 a month for every month they were in arrears on their mortgage, and these charges were getting tacked on to the principle so their lender was also screwing them for the interest as well.

That’s just not fair, not when the normal monthly repayments on the mortgage came in at under £500 a month, in fact it’s basically taking the piss because this wasn’t some kind of ramped up administration charge that they sting people for when they missed a payment or the payment was a bit late, this was a flat rate charge that the lender was screwing them for every month as long as there was any kind of arrears on the account.

But, again, if may not be that the government actually has to do anything new to deal with the business of penalty clauses, not if this is something that the Office of Fair Trading could sort out using the Unfair Contract Terms Act – or it could just tell the banks to lay off the penalty charges as a condition of covering their collective arses.

How the government gets there is not that important, what matters is that they get the job done and done as quickly as possible.

So, while it would take a while and fair bit of work to figure out when Vince Cable’s idea is viable, there is a quick package of measures that the government can pull out using, for the most part, provisions that they already have conveniently to hand, to lend a little bit of support to home-owners who’re currently struggling to make ends meet – and it needs is to think creatively about how you can make best use of hat you’ve already got.

So, just in case any Labour MPs happen to swing by Lib Con looking for a policy idea or two – what are we waiting for?

As Mills Lane used to say in ‘Celebrity Deathmatch’…

(Mmm… Cameron vs Chuck Liddell… boy, does that have possibilities…)

…’let’s get it on!’

UPDATE – 10/10, ‘THE CLEGG IDENTITY’

In comments, Darrell has kindly provided a list of Clegg’s ‘ideas’ which are worth a few moments of consideration…

Politics Home reports that Nick wrote to Gordon with his ideas….so it’s more than a little unfair to say the Lib Dem’s have none…just in case you missed it….

Errm, I didn’t say that the Lib Dem’s were lacking in ideas, in fact just about the first idea I commented on was Vince Cable’s suggestion that local authorities and RSL could buy out or offer shared equity deals to hard-pressed homeowners, which I do think has enough merit to be taken seriously and worked up to see if the numbers stack up.

As for Clegg, that’s a bit of different matter…

Liberal Democrat Leader Nick Clegg has urged the Prime Minister to take steps to remove the senior banking executives who were involved in the excessive risk-taking which contributed to the current crisis.

Ah, yes Cleggy – a dish best served cold.

Well, Northern Rock and the Bradford & Bingley are already under new management, HBOS will be dealt with when the Lloyds TSB deal goes through and anyone else who’s stuffed up badly will have to answer to their shareholders so what purpose would the government piling in serve other than that of looking like you’re doing something when you’re not?

In a letter to Gordon Brown today, Clegg proposes that board members of banks should be barred from taking bonuses, to stop them following distorted short-term business models.

Again, I’m that shareholders, especially the big institutional investors (i.e. pension funds) will have plenty to say about the bonus and incentive structures in the banking sector, unless Cleggs’ referring to bonuses accrued before the current crisis that are yet to paid, in which case he’s suggesting that the government just tear up some people’s contracts when the sensible thing is to let shareholder’s deal with the matter.

The letter, which asks for clarification on the oversight and conditionality of the financial rescue package, also calls for:

- Measures on the structure of executive pay to be introduced now for all banks

What, even the ones like HSBC that are well capitalised and have limited exposure to toxic debt?

There’s a couple of obvious problems with this hairshirts business.

First, this is a global market and if you start unnecessarily interfering in executive pay then the competent one’s you want to hang on to, to help you sort out this sorry mess, will just bugger off to other countries and/or industry sectors where their pay isn’t capped by the government – so our banking sector loses its best people.

Second, there’s the question of fairness.

For my sins I’m a West Brom fan, born and bred, and one of the constant themes over the last few years, as the club has bounced in and out the Premiership, has been a constant stream of carping about the club’s chairman, Jeremy Peace, over his decision to run a tight financial ship and not open the taps on the cheque book and pay silly money for players in a desperate attempt to establish the club in the top flight. Coupled with the fact that JP took the club off the AIM market and into private ownership last year and the rumour that some fans have been all too keen to buy into has been that he’s been lining his own pockets rather than coughing up for the players that some fans think we need to nail down a place at the top table.

Yesterday the Mirror ran with this graph (pdf) showing the levels of debt accrued by Premier League clubs (oh, and the figure for West Ham is wrong, it’s more like £140 million, not £4.1 million) and there’s my club say happily in the bottom three with estimated debts of £4.1 million (all secured on capital infrastructure, I might add) while other clubs a running debts of £50 million, £100 million going right the way up to Manchester United who’re in the hole to the tune of over £600 million.

Now, looking at those numbers, if the club turns a profit this year and JP wants to pay himself a bit of bonus, then as a supporter I’ll happily shake his hand and carry the cheque to the bank for him…

…and the shareholders of those banks who’ve done a good job of riding out the current storm and adopt prudent business strategies will no doubt feel the same way about their executives.

You don’t stop rewarded success just because someone else has screwed up badly, it sends entirely the wrong message, its petty and more than a little bit vindictive.

- Qualified new directors to be appointed to the boards of banks that the Government takes a stake in to represent the interest of taxpayers

Qualified in what sense? Who do you want adding the boards, Nick? More economists? More accountants? What?

Who are these ‘qualified’ new directors and where are you going to find them?

- Conditions of the bank rescue package to include that banks only repossess family homes as a last resort

I though the Lib Dems were supposed to prefer bottom-up to top-down solutions?

Look, putting a moratorium or near moratoriums on repossessions from the bank’s end of things doesn’t solve people’s debt problems, it just defers them.

Clegg’s obviously never worked in the field of debt counselling/advice or any of its related fields (e.g. welfare benefits advice), but I have and harsh as this may sound, its often the case that people have to get the point where they receive the paperwork for an application for a repossession order before they’ll actually face up to the their situation and try to do something about it.

The banks can certainly help, but any such help has to come from the bottom-up not the top-down and it needs to be joined-up to debt counselling services, which need more funding at a time like this, and the courts.

In the current crisis, its actually more important to ensure that banks don’t start calling in overdrafts or pulling the plug on people whose credit card balances are at or near their limit and, therefore, unprofitable, but who are otherwise keeping up their minimum payments – its the smaller lines of credit that make all the difference, as is the case with small businesses, not the long term debt.

Liquidity and cash flow are much more important issues than capital for Joe Public, much as they are for the majority of the banks.

- Banks to be banned from withdrawing credit lines from small businesses

Again, a total moratorium is just plain dumb because not all small businesses that find themselves in difficulties in the present climate will necessarily come out the other side as viable entities.

Banks need to be judicious in their decisions and not withdraw lines of credit from small businesses who might otherwise be doing fine and that have a good prospect of picking up when the economy takes a turn for the better, but some small businesses are just going to be flat-out failures no matter what largesse they get and these are often best put of their misery rather than being allowed to pile up even more debt that they’ll never be able to repay.

Again, this kind of thing needs to joined-up with support from the likes of the Chambers of Commerce and Business Link to try to ensure that good businesses don’t unnecessarily go to the wall due to short-term liquidity/cash flow problems, but if your business is a minger then I’m sorry but it’s time to cut your losses and start again.

We need to offering prudence not licence.

The most that can be said for Clegg’s letter is that its so poorly conceived that its likely to have given Gordon a few chuckles on its way to the recycling bin and if proves anything at all then its the wisdom of the old adage that its better to remain silent and be thought a fool then speak up and remove all doubt.

Its a nothing contribution, a bit of quasi-populist showboating aimed at getting Clegg’s face in the paper and reminding everyone that he still exists, which is altogether a shame not to mention a misreading of the situation.

Brown is currently getting a run of pretty good press on the back of being seen to be actually doing something and bringing forward concrete proposals – and it’ll be interesting to see how that plays in the polls over the next few weeks – while the Tories are just all at sea. In that climate, Clegg could make an impact, not on Brown but on Cameron, if only he’d follow the government’s lead and focus on doing rather jawing. His biggest asset is, of course, Vince Cable, who’s been the go-to-guy for the media since Northern Rock whenever they want a bit serious opposition commentary with gravitas, which is a hell of reflection of George Osbornes qualities as, notionally, the leading opposition spokesman on economic affairs.

A more astute and confident leader would have the good sense to give Cable his head in this situation and ask him to work up his proposals on limiting repossessions, put some flesh on the bones and pull together some estimates of what it might cost and how it could be paid for, not on the basis of a bit of blue sky thinking about what the Lib Dems would do if they were in power but on how the package could be implemented within the framework of the governments current tax and expenditure profiles.

If the Lib Dems can make the an exercise in serious politics and approach the government with a clear and properly costed plan then, while it might not give them much a gain over Labour on recent performance it would assert a measure of ascendancy over the Consersatives on the economy that could be parlayed into gains in the polls, setting themselves up as a real opposition party on economic issues against Cameron’s young pretenders.

There’s a serious question of political strategy and vision underpinning this issue – does Clegg see the Lib Dems as serious contenders, in which case he needs to make full use of Cable’s abilities to put the squeeze on Osborne, or does he them as, at best, junior partners to a future Cameron government, in which case he can keep on selling the abilities of certain members of his fron bench team woefully short and concentrate on finding way of profiting from public dissaffection with Labour. It’s straight choice for Clegg, does he chase the ‘confidence’ vote – as in building public confidence is his party as beign one capable of governing the country, or does he stick with recent tradition and keep right on chasing protest votes.

Personally, I’d like to see him give the latter a serious try as that would make for much better politics and a more effective contribution from the opposition.

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