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

by Stephen Tall on March 27, 2009

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 🙂

by Hywel on March 27, 2009 at 3:31 pm. Reply #

This is a smart move and very welcome. I don’t think the sums ever made much sense, and I don’t think we ever developed a clear narrative of how we would cut taxes without sacrificing the party’s spending commitments.

It will be interesting to see how Nick wants to revisit the Trident debate.

On education, he is right to suggest more support for vocational degrees and opposition to artificial targets. However, I think we need to be clear that this is about providing a full range of educational opportunities to everyone, and not a return to higher education as the preserve of the privileged few. Education is a positive social good and the most positive stimulus for personal freedom and self-directed self-improvement.

Also, I think the party will have to be very careful in talking about “reducing the size of the state”. That phrase could easily be twisted into an attack on much-needed public services, rather than an attack on bureaucracy and the snooper state.

I remember a Newsnight Munz poll a few years back, which showed that one of the public’s favourite pieces of rhetoric in 3 leaders’ speeches was Ming’s attack on state wastefulness and the lack of delivery for Labour’s increase in public spending. This is about delivering services in a more responsive, efficient and personalised way, and we need to develop a language that distinguishes that from heartlessness and hostility to public services.

On a broader point, Nick has had a great 2009 so far.

by Richard Huzzey on March 27, 2009 at 3:37 pm. Reply #

Great is the joy for the sinner who repenteth.

by David Allen on March 27, 2009 at 4:56 pm. Reply #

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

by crewegwyn on March 27, 2009 at 7:31 pm. Reply #

A much clearer, viable and believable position to put before the electorate. A definite move in the right direction !

by Barrie Wood on March 27, 2009 at 9:39 pm. Reply #

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

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

by Anonymous1 on March 27, 2009 at 11:01 pm. Reply #

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.

by David Morton on March 27, 2009 at 11:06 pm. Reply #

“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!

by Tabman on March 27, 2009 at 11:19 pm. Reply #

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?)

by David Allen on March 27, 2009 at 11:43 pm. Reply #

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.

by Anonymous1 on March 27, 2009 at 11:49 pm. Reply #

Thank God for that!
That policy was such an embarrissment. What I would now like to see is a genuine committment to the public sector, and to meet Stern’s recommended 2% of GDP to be spent on tackling global warming – the most important issue facing us today.

by Geoffrey Payne on March 28, 2009 at 12:18 am. Reply #

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.

by Richard Coe on March 28, 2009 at 8:54 am. Reply #

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

by Richard Coe on March 28, 2009 at 8:57 am. Reply #

Except that Trident is not going to help us in dealing with our current enermies such as Al-Qaeda, or the far bigger threat to our security that emanates from global warming.
It is hard to imagine any scenarios where Trident could possibly be of any use to us.

by Geoffrey Payne on March 28, 2009 at 12:10 pm. Reply #

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

by Anonymous on March 30, 2009 at 9:59 pm. Reply #

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