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.