Lib Dems accuse Danny Alexander of ‘going native’

According to the Independent, members of the Social Liberal Forum have challenged Danny Alexander over ‘straying beyond party policy’ by outlining proposals to maintain the squeeze on spending throughout the next Parliament.

Under the heading “Lib Dems accuse Danny Alexander of ‘going native’ at the Treasury as he backs George Osborne’s plans for more spending cuts” Andrew Grice reports that:

The Social Liberal Forum (SLF), the main pressure group on the party’s Left, has accused the Treasury Chief Secretary of straying beyond official Lib Dem policy by setting out proposals to maintain the squeeze on spending until the 2020-21 financial year. The group fears this would mean billions of pounds of further cuts.

It is believed that Vince Cable, the Business Secretary, and David Laws, the schools minister who is in charge of the Lib Dem election manifesto, have also questioned whether Mr Alexander’s approach is in line with party policy.

Prateek Buch, Director of SLF (incorrectly attributed as co-Chair) is quoted as saying:

Cuts on the scale planned by Osborne just cannot be delivered. So why should Lib Dems endorse the Chancellor’s straitjacket?

It is beyond me why Danny would sign up to what appears to be joint Lib Dem/Tory spending plans going beyond the end of the next parliament, when no such figures have been agreed by his own party.

It is unhelpful to pre-empt the party’s manifesto process in this way. Besides, the plans take no account of the need to invest, or what will happen to GDP. What happened to differentiating ourselves from the Tories?

The article also quotes Vince Cable from a speech he gave last week, which we covered here, in which he said that:

Some of the proposals to extend deep spending cuts on departments and welfare far into the next parliament have more than a whiff of ideology: slashing for its own sake.

 

My party and I believe in finishing the job we started – eliminating the current structural deficit which we inherited from the financial crisis and the last government. However, there are different ways of finishing the job – the totals set out in the OBR do not reflect anything concrete as yet. Not all require the pace and scale of cuts set out by the Chancellor. And they could allow public spending to stabilise or grow in the next parliament, whilst still getting the debt burden down.

 

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26 Comments

  • Bill le Breton 4th Feb '14 - 3:01pm

    What we all need to know is whether in a meeting just prior to the Autumn Statement, along with Cameron, Osborne, Alexander and others committed, the Leader committed himself to a balanced budget in 2019/20?

    It is a commitment such as this which Osborne expressed when indicating that such an ambition required an extra £25 billion of cuts or tax increases, to which Clegg responded that he did not believe a single economists who thought that could be achieved by cuts alone – a noteworthy comment as he did not disassociate him from the target of a balanced budget by 2019/20.

    Note also that a balanced budget is (as Cable reminds us in his speech) over and above the previously expressed target to eliminating the structural deficit. Unless Clegg or someone on his behalf suggests otherwise it remains the inference that Clegg wants to eliminate the entire deficit (please don’t confuse this with the ‘entire national debt – as he sometimes does).

    Joe asks for an alternative. Here are three broad options.

    I repeat this from an earlier post and comment: I believe that our manifest should not go further than a commitment to endeavour to get the deficit down by 2019/20 (the last year of the next Parliament) to 1% of GDP.

    I suggest that within that ‘cap’, Liberal Democrats should commit to raising the income tax threshold to £12,500 (or some other way of helping the working poor a similar amount) which one may assume the Tories will match. Budget for a further £15 billion of tax increases (which the Tories will oppose) and cut the negotiable Annually Managed Expenditure budget by 4% (where the Tories will have to cut it by 11%). There’s some differentiation for you!

    Allowing our manifesto target for deficit in 2019/20 to be 2% rather than 1% probably means that the cuts necessary to the negotiable Annually Managed Expenditure budget could be further reduced to near 1%.

    At the very least here are three draft tax and spend programmes that the Party could debate: the Osborne/Clegg balanced budget by 2019/20 which I think Joe also supports; one with some tax rises but fewer cuts, and finally a third with similar tax rises but even fewer cuts.

  • How can we possibly debate 2019/20 finances when we are not able to forecast the economy accurately more that about six months in advance and that even when it is heading in a fairly straight line with no real external shocks?

    The fiscal forecast is as sensitive to growth outurns as it is to fiscal policy.

    @ Prateek Buch
    “That pain you describe? It’ll be infinitely worse if we follow Osborne and place absolute surpluses ahead of securing a genuinely strong economy and fair society…”

    Fiscal “pain” of reducing a deficit is always easier if you can manage to ignore it and pretend it will just go away of its own accord – just look at Labour. They’ve invented a totally pain-free fantasy land in which you can magically increase the deficit while actually reducing it. Paul Daniels would be proud of them.

    Would an economy be “genuinely strong” if it were to be burdened by constantly rising public debt levels? I don’t think it would.

    I think the differentiation comes in allowing some increase in overall taxation, but the margins of differentiation will not be large, because the realities of the fiscal situation are so (de) pressing.

  • David Allen 4th Feb '14 - 3:50pm

    Joe Otten, “There is a danger that by emphasising the choice of pain curves we are neglecting taking credit for clearing up Labour’s mess, and failing to identify the source of all the pain in events prior to 2010.”

    Translation: Austerity is forced upon us by our need to win votes. Unless we rigidly maintain the pretence that good medicine must always taste nasty, we shall not be able to maintain the charge that Labour are too soft-hearted to nake good doctors. Never mind the real economy, it is votes that must come first.

    Anyway, the economy will probably bounce back sooner or later, under its own steam. It’s boom and bust, you know. Then we will claim the credit.

  • Joe Otten Were you around in 1997? When our party pressed (rightly) for a more speedy pick-up in public spending, to remedy previous underinvestment? To continue to maintain that “we are clearing up Labour’s mess”, ie cutting public funding where we are again “underinvesting”, is hypocritical, to say the least. I am sorry to throw this one at you, rather than those more obviously responsible for the current “mess”, but you always seem to come out of the woodwork as an economic loyalist!

    Mark Pack’s latest Newsletter highlights the need to “regain the votes of the public sector workers” to recreate some sort of coalition. It is NOT just “public sector workers” who value public spending, it is also the low paid, who Mark maintains have been helped by the increase in Income Tax threshold. Such a policy does not help them – we need to maintain public spending, in order to maintain their incomes (and spending power).

  • Paul Pettinger 4th Feb '14 - 5:15pm

    If Prateek spelt out an alternative he would be attacked for micro-management and making impossible demands of Lib Dem Minsters. Instead Conference, overwhelmingly, set out a flexible vision for Lib Dem Ministers and the Party to work from. Danny Alexander does seem to be ‘going native’. and Joe Otten is, disappointingly, trying to reopen a debate that we recently had. On the future Conference decided:

    “Conference recognises that the electorate will expect all major political parties to present their own distinctive economic policies during the 2015 General Election campaign. Given the need for healthy government finances in a balanced, sustainable economy, Conference therefore believes that the principles behind the Liberal Democrats’ economic policy beyond 2015 should be guided by:
    • increased capital investment in people, business and infrastructure
    • rebalancing the economy away from dependence on unsustainable debt and house prices, towards robust regional economies that raise living standards through sustainable growth
    • improving the provision for the most vulnerable in society; and
    • a recognition that beyond 2015, the burden of fiscal consolidation should be shifted further towards fairer taxes, especially on wealth and land.”

    From: http://www.libdems.org.uk/siteFiles/resources/docs/conference/2013%20Autumn/Policy/F19.pdf

  • Bill le Breton 4th Feb '14 - 5:23pm

    RC – ” The fiscal forecast is as sensitive to growth outurns as it is to fiscal policy. ”

    (and even more so to Monetary policy)

    Yes of course, but at some point possibly prior to or possibly immediately after the 2015 budget, the major Parties will have to supply their broad spending, taxation and borrowing assumptions to the OBR – or to have its own calculations judged against that body’s calculations published in their Economic and Fiscal Outlook (EFO)March 2015.

    You cannot get away with saying, then, that we are only going to provide figures up to say 2016/17. Spending programmes now operate with greater lead in times. You’d be laughed out of court by opponents and the media.

    So it is possible now to take the OBR’s EFO of December 2014 available here http://cdn.budgetresponsibility.independent.gov.uk/Economic-and-fiscal-outlook-December-2013.pdf ) + figures accompanying the Autumn Statement and predict what the political debate will be.

    The Treasury is already providing figures for the Coalition. Decisions are already taking place about plans for the next Parliament. You can reproduce the ‘figures’ that the Treasury is using by referring to those two documents.

    Osborne and Alexander have said they are aiming for a balanced budget by 2019/20. I believe Clegg agrees with this.
    With existing OBR figures (and they are unlikely to change hugely by March 2015) that requires the identification of £25 billion in tax rises or spending cuts. ( They have both put in sufficient funds to finance a raising of the income tax threshold to £12,500 by 2019/20).

    Osborne wishes to achieve this through cuts. Clegg has said he’d like to see a greater burden on tax rises,

    Of course we could tolerate a borrowing path that leaves a 1% or 2% deficit deficit by 2019/20. This would provide funds that would allow for a lower level of cuts in the five years to 2019/20.

    Saying things could change is not relevant to the political debate on public finances over the next 15 months.

  • Bill le Breton 4th Feb '14 - 5:26pm

    Paul P, I have set out two alternatives above.

  • Bill le Breton 4th Feb '14 - 6:57pm

    Thanks Joe, we could put that through the Treasury model, tomorrow, then. 😉

  • jedibeeftrix 4th Feb '14 - 8:30pm

    “Some of the proposals to extend deep spending cuts on departments and welfare far into the next parliament have more than a whiff of ideology: slashing for its own sake.”

    The radical ideology of trying only to spend that portion of the national wealth with which the electorate is willing to part with in taxation?

    Heady stuff!

  • Funny, actually, Joe, my leftwingness translated (in the 60s) to Young Liberal! There were plenty of other “leftwingers” around, who adopted a variety of labels and loudly trumpeted their differences!

  • jedibeeftrix 4th Feb '14 - 9:30pm

    The narcissism of small differences?

  • Peter Hayes 4th Feb '14 - 11:04pm

    I must have to say that Dannys recent statements have not encouraged me to consider being an active deliver in the next weeks.

  • Not sure about narcissism, jbt, but there was plenty of anger around!

  • Surely whatever policy we adopt – and personally I am closer to the Danny view than the Vince line – it would be better for Danny, Vince and Nick to sit down, agree the policy and then all go out and present it in the same way (more credible than Labour, fairer than the Tories)? Arguing amongst ourselves in public is daft.

  • At the beginning of this thread someone uses the following words ” … you are calling for the pain to be avoided, rather than just reprofiled. Popular among those who will buy it, but not credible.”
    If there is any pain to be REPROFILED, perhaps the pain I feel at the English language being strangled in this way could be take into account.

  • Mark 5th Feb ’14 – 7:55am
    ” Surely whatever policy we adopt – it would be better for Danny, Vince and Nick to sit down, agree the policy and then all go out and present it in the same way ”
    Mark might like to think about the role of the other 40,000 members of the party in this. Danny Alexander going native, would not be improved by him going native in agreement with Vince and Nick. In fact it would be worse.

    There is a disturbing tendency in politics of all parties nowadays to treat party members as mere followers. If people want to Join a Fan Club I expect ‘One Direction’ may offer a better deal.

  • “If there is any pain to be REPROFILED, perhaps the pain I feel at the English language being strangled in this way could be take into account.”

    It’s so not fair to decontextize a quote like that.

  • Tony Dawson 6th Feb '14 - 12:10am

    @JohnTilley

    ” If people want to Join a Fan Club I expect ‘One Direction’ may offer a better deal.”

    I always though that they were called ‘Wand Erection” True or not, whyever would one want to follow the One Direction of the present Leadership? What capacity for strategic thought have they collectively demonstrated to date?

    NB ‘More than Milliband’ , though probably true, does not constitute a serious attempt at an answer.

  • John – I meant (but failed to say) a policy that balances the views of the membership as a whole with what they deem sensible and deliverable…. Mark

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