The latest installment in a very occasional series. Part 4 is “in the can”, so to speak, which is me gazing into a crysal ball. This post will critique the Lib Dem’s record in government so far:
When I first began drafting this article, the scandals involving David Laws and Chris Huhne were still fresh in the memory. That alone shows how long I’ve spent thinking about this issue. Yet it is also a reminder of the honeymoon the coalition once had (which, judging from the poll data, is now over). After all, both had issued leaflets during the election campaign either emphasising their probity (Laws) or their family values (Huhne) that in the light of the revelations looked deeply hypocritical.
Instead, the focus has been on the Lib Dem’s influence in government, which has amounted to little so far, however much they may protest otherwise. Clegg promised a great repeal of civil liberties, but all that seems to have happened is the establishment of a website. He also pledged the biggest shake up to our democracy since 1832, but House of Lords reform won’t be announced until January, and the referendum on AV still needs to be won. Other attractive Lib Dem policies, such as scrapping Trident or a partial amesty on illegal immigrants, have fallen by the wayside.
Barring a 9/11-style upheaval, this Parliament will be defined by the issue of cuts and deficit reduction. It’s been pointed out here that the coalition’s Budget, and its plans for tax cuts, are daft. Hopes that the Lib Dems would be a moderating influence on the Tories have gone largely unrealised. Some Lib Dem policies did get into the Budget, but they were quite watered down. In the TV debates Clegg pledged to raise the threshold at which people started paying tax to £10,000; it will instead go up to only £7,500 with an “aspiration” to eventually raise it to £10K. He wanted capital gains tax – the one which allows CEOs to fiddle the figures and pay less tax than their cleaners – to rise from 18% to 40%. It only rose to 28%. The other policy Clegg points to is a pitiful £2bn levy on banks. Meanwhile, the coalition still managed to find the money (presumably down one of the settees at No. 10) to cut corporation tax.
Instead, the main contribution of the Lib Dems to the budget seems to have been in the rhetoric. George Osbourne showed in the budget he is a skilled performer. How else could he have stood up in the Commons and said that this was a “progressive” and “fair” budget with a straight face?
We now have confirmation – if any were needed – that this talk of a “progressive” budget was window dressing. The budget is regressive, not progressive. To quote Larry Elliott, a report this week by the Institute for Fiscal Studies concluded:
Far from showing that “we are all in this together” (Osborne) or being an example of “progressive austerity” (Clegg), the IFS concluded that the budget was “clearly regressive”. The poorest 10% of households will lose 5% of their income as a result of all the changes to come between now and 2014, while the top 10% will lose less than 1%.
This graph from the IFS report illustrates it nicely:
The response to this report from the coalition has been amusing, if you’ve got as dark a sense of humour as I have. To see Nick Clegg denounce the IFS as “partial” after previously praising it – a hypocrisy also shared by the Tories – I find grimly comic. The Treasury’s defence of the budget – that the IFS ignored their plans for job creation – also seems to miss the point, seeing as economists such as Paul Krugman and Elliott have criticised the budget for making a rise in unemployment and a double-dip recession more likely.
These plans are, understandably, causing some outcry amongst the Lib Dem Parliamentary Party. Previously this was rather low-scale: two MPs rebelled against the increase in VAT and the vice-chair of their policy committee has warned of the party’s lurch to the centre-right. Nick Clegg is now being promised a stormy conference:
Mike Hancock, a veteran Lib Dem MP who has a special status in the party as a founding member of the SDP, attacked the leadership after the institute concluded that the coalition government’s June budget was clearly regressive. The MP for Portsmouth South said: “We didn’t sign up for a coalition that was going to hurt the poorest people in society, and I certainly didn’t get elected to do that ever.”
All sides of the political spectrum, from the New Statesman to the Spectator to the Financial Times, are urging Clegg to give the Lib Dems a separate identity, and give his party “wiggle space” from the Tories on some issues. The upcoming conference is the best place to do that. But I don’t think this will happen, for reasons I have explained earlier.
If they don’t, then the consequences could be disastrous for the Liberal Democrats. I’ll look at those in my next post.