Clegg: Lib Dems to pledge larger tax cuts

by Stephen Tall on September 7, 2008

In an interview with the Telegraph published today Lib Dem leader Nick Clegg makes clear that the 4p basic rate income tax cut the party has already announced is just the start:

Mr Clegg has announced that he will cut £20 billion from public spending, which will be ploughed into tax cuts for middle earners. “We are now in a process of identifying what I believe will be the most radical package of tax- cutting measures for people on middle incomes,” he said. “We will bear down on the ballooning government budgets. Vince Cable and I have been working over the summer identifying about £20?billion that should be reallocated and the vast bulk of it given back through tax cuts.

“We have taken some difficult decisions already to provide tax relief and we are doing some ongoing work… to help the vast majority of taxpayers. There are a number of options we are looking at. We have our pledge to cut the basic rate of income tax by 4p but as we do the sums, as we identify where we are going to get the money from we can become very much more creative between now and the next general election.”

Asked whether he meant that he would go further than the 4p cut he said: “Yes.”

Incidentally, there was much debate on LDV last Friday about where the party’s commitment to £20 billion of public spending cuts originated. After a little investigation, and some help from Lib Dem HQ, the answer is: the party’s 2006 conference. The Lib Dems’ Trust in People policy document approved by members stated:

Since the election, the Government has continued to put forward policies which will consume large amounts of public spending for wasteful outcomes – for example, identity cards, or new nuclear power stations. We will oppose unnecessary expenditure and continue to take tough choices on public spending, demonstrated through a costed alternative programme. Whenever we propose to increase government expenditure for specific purposes, we will seek to ensure that the revenue comes from cutting back on lower-priority areas. To facilitate this, we have established a spending review to identify approximately 3% of total government spending (£15bn a year) that we consider to be misdirected, or of a low priority, which can be reallocated to Liberal Democrat policy priorities.

In 2006, 3% of total government spending did indeed total £15bn. Today it totals £20bn.

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[2006 policy document]
“To facilitate this, we have established a spending review to identify approximately 3% of total government spending (£15bn a year) that we consider to be misdirected, or of a low priority, which can be reallocated to Liberal Democrat policy priorities.”

Thank you for clarifying this. I have been puzzled for some time by the relationship between the £15bn savings proposed two years ago and the £20bn savings proposed earlier this year. So apparently it really is the same money.

One obvious question is whether the 2006 “spending review” ever did identify the 3% savings, and if so why Clegg and Cable have had to spend their summer repeating the process.

But obviously the big difference is that in 2006 the intention was to save money so that it could be “spent more effectively, on our priorities”, whereas now “the vast bulk of it [is to be] given back through tax cuts”. Specifically, tax cuts “for people on middle incomes”.

Logically, that means that of the 3% extra we were planning to divert to spending on our priorities, the “vast bulk” is going to fund tax cuts instead. So in today’s terms we have to cut back that intended spending on our priorities by maybe £10-15bn.

That follows, doesn’t it?

by Clegg's Candid Friend on September 7, 2008 at 12:09 pm. Reply #

I don’t get this. The 3%/£15bn from 2006 would seem to include things like ID cards and new nuclear which our spending plans currently have reallocated to alternative spending.

Further to that is additional spending that wasn’t around in 2006 – like a new high speed rail network and and “Apollo project” for renewable energy.

Indeed if our 2006 tax plans added up to be revenue neutral then logically that 3% already had a new home.

At the very least then only a small portion of that 3% could be available for reallocation to net tax cuts. (the 2006 plans had proposals for reductions for many people but weren’t about a net reduction in the total tax take).

So in short, if we are going to go beyond those tax cut plans we’d need to identify further savings.

There must also be problems about the savings from ID cards and new nuclear as the programs will be partly underway by a 2010 election so some of the money will have been spent and more will be a contractual commitment.

The big elephant in the room is if these 3% savings are so easy to find why, 2 years on has nothing else been identified and why did the Tories (who didn’t have our spending commitments) find it so hard to identify them at the last election.

Ideologically I’m pretty neutral on whether we are a tax cutting or tax raising party. But if we’re going to be tax cutting we can’t do that just be hoping for it.

by Hywel Morgan on September 7, 2008 at 12:35 pm. Reply #

I despair. It’s one thing to advocate the party to go in a particular direction, another to keep shifting the goalposts.

by James Graham on September 7, 2008 at 12:40 pm. Reply #

The other thing I can’t fathom is why Ed Davey reportedly said something quite different only four days ago – that the first priority would be to divert the savings to Lib Dem spending priorities and that “the party cannot guarantee net tax cuts”.
http://www.politics.co.uk/news/party-politics/liberal-democrats/lib-dems-eye-20bn-in-efficiency-savings-$1239122.htm

by Clegg's Candid Friend on September 7, 2008 at 12:49 pm. Reply #

Also notice the “We have taken some difficult decisions already to provide tax relief… ”
“We” refers (as far as I can tell) to Vince and Nick. Does the rest of the party get a say in these “difficult” decisions?
Maybe we should not bother with conference and let them decide what our policies are?

by Geoffrey Payne on September 7, 2008 at 1:30 pm. Reply #

This is, quite simply, unacceptable behaviour.

“We” refers, as far as I can tell, to Nick. When Osborne supports Cameron on tax, he does it by opening his own mouth. Vince is not exactly short on eloquence and good ideas, but we haven’t heard much from him about tax cuts. When Nick co-opts Vince in his announcement, but only to point to his work on the search for expenditure savings, what exactly is going on?

by David Allen on September 7, 2008 at 1:42 pm. Reply #

“Maybe we should not bother with conference and let them decide what our policies are?”

Geoffrey, I came to that conclusion a long time ago. Consequently, I’ve not been to conference since Llandudno in 1976.

by Martin Land on September 7, 2008 at 9:39 pm. Reply #

By the way, we see that it’s “middle earners” who are now going to be the winners. It started out as “the poorest”. Then it was “low and middle”. Any advance on middle? How long before Waitrose regain their status as our Party’s official grocer?

It’s true, Captain Ashdown did face rebellion from below decks. The steerage passengers demanded that “pot” should be served alongside the rum ration, and they got it. However, they didn’t demand that the Great Helmsman should relinquish the tiller, or that he should steer to a different economic destination. What they challenged wasn’t his Big Idea or his fundamental principles. So their rebellion didn’t amount to a full-blown mutiny, and our Captain survived, to fight on with distinction.

It is different now. These are murky waters we are entering. The stakes have been raised, and not by the lower ranks. Old China hands can tell the tale of another rogue captain from long ago, one captain Owen, whose brains were likewise addled with the dreaded Orange disease. The damage he wreaked was fearful. But, praise be, we finally saw him off!

by David Allen on September 7, 2008 at 11:02 pm. Reply #

“It’s true, Captain Ashdown did face rebellion from below decks…. What they challenged wasn’t his Big Idea or his fundamental principles.”

Have we had two leaders called Ashdown? My memory is that his big idea (The Project) was pretty widely challenged!

by Hywel Morgan on September 8, 2008 at 12:54 pm. Reply #

Fair point Hywel. I was talking about pot. You’re right, The Project was a much bigger issue. However, there was at least a dialogue of sorts going on within the Party, and I don’t think Ashdown would have tried to sign the deal with Blair all on his own! There was also a judgment element involved, for example many people might have been sceptical but willing to await the final offer from NuLabour before deciding their final stance.

Things are different now. If your leader tries to reposition the Party firmly to the right of the Tories, it is rather difficult to justify being sceptical but willing to postpone judgment. It hardly seems adequate just to try to tinker with his words, or seek some sort of consolation concession.

by David Allen on September 8, 2008 at 4:59 pm. Reply #

Well there was another thread on all this a few hours ago which seems to have disappeared (unless I can’t find my way around here?)

Have I been censored????

If so who by? If not where do I now find it all? (And what I posted to remind myself)? !!

Tony Greaves

by Tony Greaves on September 8, 2008 at 5:31 pm. Reply #

Whoops no – I’ve found it again. Just me having problems coping with this Bally Electric Internetty Thingy…

An Aged Lordship Type Person

by Tony Greaves on September 8, 2008 at 5:33 pm. Reply #

The Great Leader’s Project. Oh yes I remember. Tony Blair smiles a lot; ergo he is a nice guy. New Labour say they believe in some of the things we believe in; ergo there isn’t much difference between us. We both dislike the Tories; ergo there is no difference between us. I was in a tent when I was in the SBS; ergo Tony’s big tent sounds just great.

We want to end Tory sleaze; ergo Let’s sacrifice Liberal Democracy!! Yippee.

Don’t get me wrong. Paddy was a superb leader. It just serves to reinforce my dad’s old adage about leaders, “He came to the rescue just in time, but he stayed on just too long.”

by David Evans on September 8, 2008 at 5:48 pm. Reply #

“I don’t think Ashdown would have tried to sign the deal with Blair all on his own!”

Read his diaries – that pretty much was what he tried to do!

But at least there was never any doubt Paddy had a strategy and an agenda that he was trying to deliver. I’m not sure that’s true of Nick.

by Hywel Morgan on September 8, 2008 at 7:15 pm. Reply #

Weasel response coming up, partly because I’m not that sure of my history, partly because it’s not Paddy’s behaviour that matters now. Paddy certainly negotiated on his own, but I don’t think we ever found out what he would have done had the negotiation borne fruit.

There is a case for the kind of leader who goes out on a limb, makes a big bold move, and then says “back me or sack me”. Another example would be Blair’s internal party referendum on abolishing Clause Four. That was a perfectly fair balance between leadership and democracy (and a rare example of Tony being a pretty straight guy!). Blair didn’t try to get rid of Clause Four one word at a time, or pretend that it wasn’t a big thing, or pre-empt the party’s decision in an interview with the Daily Torygraph.

Whereas Nick….

by David Allen on September 9, 2008 at 12:07 am. Reply #

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