Clegg: no overall cut in taxes now, except for low- and middle-income earners

Last summer, when Nick Clegg launched the party’s Make It Happen policy statement, he made a bold declaration for a Lib Dem leader: that we would “get wasteful government spending under control, and look for ways to cut the overall tax burden.”

Today, Nick conceded in an interview with today’s Financial Times what has become increasingly obvious since the collapse of Lehman’s in the autumn, and the plunge of Britain’s economy into full-blown recession – that it’s simply not possible now to cut the overall burden of taxation:

Nick Clegg yesterday abandoned the Liberal Democrats’ short-lived pledge to go into the next election promising net tax cuts, urging his party to confront the painful reality that the state will have to shrink. …

He told the Financial Times that the Lib Dems had to be honest about the need to cut the size of the state and should lead the debate over where cuts could come in the next parliament.

Areas Nick identifies as ripe for cutting include:

* the “wholly artificial target” of getting 50 per cent of children to university, arguing that other vocational courses might be better suited to the needs of some students;
* a review of the pension entitlements of “upper earners in the public sector”; and
* a review of Britain’s Trident nuclear deterrent, while stressing the party favoured trading it in as part of a multilateral deal on nuclear disarmament.

The article continues:

Mr Clegg is positioning his party to fight an election in which politicians from all parties will have to explain how they would curb a deficit which could hit £350bn over the next two years. … Mr Clegg said his long-term aim was still to cut taxes and to reduce the size of the state, although he said there was a case in the short term for some expansion of the state to pull the country out of recession. In the meantime, the Liberal Democrat leader is calling for a redistribution of the tax burden to help low- and middle-income earners, principally by cutting tax breaks and closing loopholes for high earners.

The article concludes on a positive note:

The Liberal Democrats have bounced back above 20 per cent in some recent opinion polls, and Mr Clegg said he was “virtually in campaign mode” as he prepared for June’s local and European elections. “I’ve not seen the party so self-confident and united,” he said. He believes the party will fare well in the European elections, in spite of the Lib Dems’ unfashionable enthusiasm for the European Union and Mr Clegg’s recent decision to reopen the debate about Britain’s euro membership.

This seems to be a sensible move, recognising the current economic reality, and the dire position of government finances – but sticking by the Lib Dems’ commitment to cut taxes for the poorest, and to shift taxation from income to pollution.

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  • I’ve a feeling some of us have been saying much the same for some time – possibly back during the MiH debate.

    Still it’s the second time Vince Cable has come round to my way of thinking 🙂

  • David Allen 27th Mar '09 - 4:56pm

    Great is the joy for the sinner who repenteth.

  • Nick, you’re even starting to impress me!!!

  • “… sticking by the Lib Dems’ commitment to cut taxes for the poorest …”

    By which you actually mean – as always – for all but the richest.

  • David Morton 27th Mar '09 - 11:06pm

    This was inevitable even I would argue on the day of the MiH conference vote. It was also effectively announced at the Climate March. If our opposition to Labours £12.5bn VAT tax cut was to reverse it and use it all on extra state spending then where has the apiration to cut over all tax been for months ?

    I’m confident we have seen the last of this. The priority for the next 5 years at least will be paying of debt and protecting essential services from the spending cuts to come.

    In all probability a Conservative government will be grappling with these problems. There will be no political space to the right of them for a party arguing for even deeper public spending cuts. The political space will be in the humane Butchery department asking if the cuts are been done properly in the right places. In due course the question will return of wether they have gone to far and tax rises are needed to protect front line services.

    I think this is the end of a brief and IMHO inexplicible flirtation with populist tax cutting which coincided precisely with the moment that such tax cuts were completely impossible to achieve.

    Thankfully we can now move on.

  • “Great is the joy for the sinner who repenteth.”

    Indeed. We’re cock-a-hoop that you managed a whole post without claiming Nick was the Spawn of Satan!

  • Before we all get too carried away with our ability to catch up with reality not too long after Ken Clarke did,

    Clegg is “urging his party to confront the painful reality that the state will have to shrink”.

    Well yes. It’s reality. We shall have to confront it. But “painful”? Don’t we still detect a hint of glee in what Clegg is saying on this topic?

    The nation requires a painful surgical operation. It knows that. But is it going to choose, as its preferred surgeon, someone who rather gets a kick out of making deep cuts?

    (PS – Happy now Tabman?)

  • Actually, I do think Nick Clegg deserves credit for challenging the notion that 50% of the population needs a university education.

    I think he’d do even better to extend the alternative of “other vocational courses” to some kind of lifetime entitlement to training and education, with a strong encouragement to defer at least part of the entitlement until after the early 20s.

  • Richard Coe 28th Mar '09 - 8:54am

    Richard Hussey

    This isn’t a smart move –

    Make It Happen was a stupid move –

    Make It Happen reminded me of the Tories voting for Iraq on the back of the dodgey dossier.

  • Richard Coe 28th Mar '09 - 8:57am

    Meanwhile Trident remains much cheaper than buying enough conventional weapons to properly defend the UK.

  • I somehow doubt that indecision and shilly-shally will convince many voters. Oh well, nothing new in the Lib Dems.

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