Autumn statement: Lib Dem party groups respond

Both Liberal Reform and the Social Liberal Forum have commented on the measures contained in yesterday’s autumn (read winter) statement.

First up, Liberal Reform welcomed many of the measures – particularly the faster increase in the income tax personal allowance – but expressed concerns about the party’s approach to the negotiations on the statement:

Liberal Reform welcomes many of the individual measures outlined in the Autumn Statement. The faster-than-expected increase in the income tax personal allowance and the freeze in fuel duty are particularly welcome, and reflect the Liberal Democrat priority of reducing the tax burden on those on low and middle incomes.

We also welcome the increase in capital expenditure, paid for by shifting current spending. This moves resources to the area with the most positive effect on economic growth, and will begin to undo some of the damage caused by Labour’s swingeing cuts to capital investment in their last months in government.

Liberal Reform is also pleased that many benefits will rise in cash terms next year, although there will be a small real terms cut in a number of benefits. However, we would much rather have seen the welfare bill reduced by stopping the numerous unnecessary payments made to those on high incomes. At a time of austerity it is indefensible to be protecting benefits for the well-off while cutting those for the poorest.

Liberal Reform nonetheless has concerns over the strategy adopted by the Liberal Democrats in the run up to the Autumn Statement. We supported Nick Clegg’s call for wealth taxes to contribute at least equally to any additional deficit reduction relative to welfare cuts. But the party seems to have set out its stall before walking away and forgetting about it.

Any negotiator knows that to threaten an action only to not follow through with it drastically weakens one’s position. In the face of Tory intransigence in refusing to introduce higher taxation on wealth, the Liberal Democrats should have followed through with our promise not to support further savings from the welfare bill. What incentive is there in future negotiations for the Tories to heed our demands if we don’t stick to what appear to be very clear red lines?

And for the SLF, the group’s director, Prateek Buch, contributed the following remarks on the Guardian’s panel verdict:

George Osborne’s autumn statement and the accompanying OBR figures reveal three things clearly. First, the chancellor’s below-inflation rises in benefits penalise the very “strivers” he seeks to help – welfare spending remains high because people cannot support themselves through insecure, low-paying work. This is unpalatable, especially while the economy continues to stagnate – it goes against Nick Clegg and Danny Alexander’s promise not to balance the books on the backs of the poor.

Second, measures to tackle tax avoidance and ensure well-off pensioners contribute are welcome in their own right, but are not a fair trade-off for larger cuts to working-age benefits and services. Clegg rightly shook his head as Osborne refused to tax property – he should have done more than that to ensure the wealthiest bear a greater burden. Moving further towards the Liberal Democrat aim of raising the income tax threshold to £10,000 is welcome.

Third, while the extra capital spending and the requirement for Whitehall to bear its share of cuts are welcome, Osborne’s insistence on disproportionately hitting the poorest is matched by his continued shocking record on green growth. We have seen too little in this statement to create the green jobs of the future that will raise living standards – continuing this discredited approach is not good enough.

* Nick Thornsby is Thursday Editor of Liberal Democrat Voice and blogs here.

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12 Comments

  • A graphic reminder of the economic split in the party.

  • “This is unpalatable …”

    It will be probably be a damn sight more than “unpalatable” to the people who are actually affected by it.

  • Good critiques – I’d hate for LR to become leadership mouthpieces and SLF to simply be the awkward squad – ideas should be considered on their merits, not who had them. I think both critiques demonstrate this.

  • Geoffrey Payne 6th Dec '12 - 1:04pm

    I think the 2 comments are remarkably similar and I agree with Liberal Reform that given what the party leadership were saying at the time of the last Lib Dem conference it is disappointing that they gave in on the welfare cuts. One difference of course is that Liberal Reform say nothing in relation to the green economy.
    What concerns me is that if David Cameron and George Osborne say no, for example on the mansion tax, then it doesn’t happen. When the Lib Dem leadership say no, they mean maybe.
    I would like to ask whether the policy of raising tax thresholds is really such a wonderful progressive flagship policy if it is being funded by welfare cuts for the unemployed and low income earners? Surely it would be more progressive not to do this?
    More fundamentally the real problem we have is that the Lib Dem leadership are locked into supporting George Osborne’s timetable for budget deficit reductions, even though it is not on time and looks like leading us to a Credit Ratings Agency downgrade.

  • “When the Lib Dem leadership say no, they mean maybe.”

    When they say it to the Tories, it generally means “Yes”. When they say it to the Lib Dem conference, it means “Not until you’ve all gone home”.

  • Geoffrey, I have said all along that raising income tax thresholds is not progressive. By our fear of the dreaded tabloid “tax and spend” description, we have allowed ourselves to be dragged out of our unique position among mainstream parties. It is clear that if we are committed to keep cutting services (for all), then society will continue to become less equal. Instead of comparing the public spending and income distributional situation with that under nuLab, we should be comparing with the mid – 70s, when there was last something approaching fair distribution of goods and services (it wasn’t which was why we campaigned for more to the lower end).

    We should, of course, recognise that this is a resource crisis – energy, especially, is scarce and more expensive than previously. Once this is recognised, and in parallel, that the world will change to a new paradigm, we then need to even things up – which will mean some people giving up a lot. They need to be “helped” to do this by popular and media pressure, before things get out of hand. We have been the party of the new politics – we have copped out of this, and instead become the new “soggies”, but under Tory influence.

  • ‘Stopping the numerous unnecessary payments made to those on high incomes’

    Leaving out those on high incomes may be expensive to administer, and counter-productive. It is the net amount paid which matters.

  • Geoffrey,

    “I would like to ask whether the policy of raising tax thresholds is really such a wonderful progressive flagship policy if it is being funded by welfare cuts for the unemployed and low income earners? Surely it would be more progressive not to do this?”

    The principipal funding method for the raising of the personal allowance since 2010 has been the lowering of the higher rate threshold, bringing in evermore median taxpayers to the 40% rate band – 400,000 more yesterday. Approx 15% of taxpayers now fall into the higher rate bands compared with aroud 3% in the 1970′s.

    Those in the botton decile of the income distribution (including sunstantial numbers of part-time workers on miniumum wage) will not benefit from the increase in the tax threshold and will be most effected by below-inflation benefit uprating.

    In answer to your question. my view is that, increases in the personal allowance is a poor trade-off for squeezing tax credits as it disproportionally impacts the most vulnerable in society.

    We would be far better served to replace the personal allowance with a Citizens Income if we are to realise our mission of building and safeguarding a fair, free and open society in which we seek to balance the fundamental values of liberty, equality and community, and in which no-one shall be enslaved by poverty, ignorance or conformity.

  • Have I missed something. If the Chancellor credits himself with NOT having raised petrol tax for more than 2 years what price Cameron and Clegg’s GREEN agenda?

  • Here’s the IFS presentation on changes to personal taxes and benefits in the Autumn statement:
    http://www.ifs.org.uk/conferences/PTAB_SA.pdf

    In terms of percentage change in net income, the worst hit were households in decile 2 (i.e. the second lowest income group), then decile 1 (lowest incomes), then decile 3, then decile 4, then decile 10 (highest incomes). Households in deciles 6-9 (i.e. all the other deciles with above-average incomes) actually benefited on average.

    So much for protecting the vulnerable. I start to wonder whether the Tories would be so bold without a Lib Dem human shield.

  • John Broggio 6th Dec '12 - 7:47pm

    @Chris.

    They (Tories) wouldn’t & the cynic in me wonders if the LD’s in government are less of a shield but the advance party.

  • Joe Bourke, you may or may not know that a Citizen’s Income was briefly Lib Dem policy in the 90s, until “the realists” in the party, fronted by (Lord) Willie Goodhart took the knife to it!

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