High Peak Liberal Democrats

Our double disgraces live on -

Nick Clegg

The usual suspects are preventing reform in politics and banking Nick Clegg

For two professions, 2009 has been a shameful year: politicians and bankers. Both had their worst vices and darkest secrets exposed to public view. Such is the disdain in which these two groups are now held, any rational observer would expect significant consequences: radical reform driven through by public outrage. And yet, as 2009 draws to a close, the stark truth is that both politicians and bankers are being let off the hook.

Nothing is fundamentally changing in Westminster or bankers' boardrooms. Nothing is changing because the two old parties, Labour and the Conservatives, have chosen to duck reform.

In politics, some simple and welcome administrative changes are being made to iron out the worst excesses of the expenses system. But attempts to go further and really clean up politics, addressing the causes of this scandal instead of just its symptoms, have been blocked.

Proposals to give people the right to sack their MPs were voted down by Labour and the Conservatives. Efforts to get big money out of politics have been stifled by the influence of the donors who control those parties. And still there is no action in sight to elect the House of Lords or create a truly fair voting system.

Our political system has become a glorified stitch-up between the two old parties: the warped electoral system that allows Gordon Brown to govern with little more than 22% of the electorate's vote; the murky system of party funding that allows offshore donors to the Conservative party to avoid answering questions on whether they pay full British taxes; a House of Lords that has become a dumping ground for political poodles obedient to the government of the day; a Westminster culture still steeped in the 19th-century tastes of the political classes (the House of Commons has a shooting gallery, but not a crèche).

Unsurprisingly, the Labour and Conservative parties have an interest in maintaining this system. They act as vested interests do in all walks of life: trying to get away with the minimum amount of change in order to protect their interests. This is a betrayal of everyone who hoped for a silver lining from the expenses scandal - everyone who hoped it would be the beginning of a new, decent political system.

In banking it's the same story: yes to cosmetic change but no to real reform. The past few months have been dominated by displacement activity. The government talks tough about the excesses of the Square Mile but refuses to reform the City for good. Plans for a one-off tax on bonuses are little more than a symbolic pinprick. It will be easy for banks and their employees to avoid and, because it is a one-off measure, it will change nothing about the fundamentals of the banking system.

For years, banks took mad risks with other people's money until eventually the system collapsed. But they didn't have to pay the price for their failure: we did. The banks have had to be propped up at enormous cost to every one of us. Only a fool would say we do not need substantial reform to stop this happening again.

It is vital that the high-street banks on which consumers, households and small businesses depend are never again put at risk by the casino culture of investment banking. As the governor of the Bank of England has repeatedly recommended, we need to separate high-street and investment banking for good.

Until this split can be introduced, the banks will remain the beneficiaries of a unique, open-ended guarantee against failure from the taxpayer, a guarantee for which they should pay a fair price. That's why Liberal Democrats are arguing for the introduction of a new banking levy of 10% on the profits of the banks until they can be split up.

But why are we the only voice at Westminster arguing for far-reaching reform? The government and the Conservatives claim it's too tricky to split up the banks. They won't get behind a tax on banks' profits that is both necessary and fair. Just as both of the old parties act as vested interests blocking reform of the House of Commons, so too the vested interests in the City appear to have succeeded in getting the old parties to block real reform of the banking system too.

In banking and in politics, then, real reform is being stifled. The consequences will be profound. If we don't reform politics from top to toe, we leave in place the ingredients for a repeat of this summer's scandal. If we don't reform banking, we leave in place the ingredients for another financial collapse sometime in the future. If we do not act now, while momentum and anger still remain, we will live to regret it.

2009 was a year of scandal and wasted opportunities. But history is not yet done with those scandals. There is still an opportunity for real change. We must make 2010 a year for doing things differently.