by Stephen Tall on December 1, 2011
The political aftershock of George Osborne’s autumn statement is just beginning to sink in: the Coalition’s 5-year austerity programme, designed to end in 2015 by the time of the next general election, is now a 7-year programme straddling two parliaments.
This poses problems for the future of the Coalition, and for the Lib Dems in particular, encapsulated here by the FT’s Philip Stephens:
Here’s the paradox. The effect of sticking to economic plan A has been to shred the coalition government’s original political strategy. In the heady days after the 2010 election the Conservatives and Liberal Democrats signed up to austerity on the assumption they would reap the political rewards at the next election. Hard times would be a prelude to a return to the sunlit uplands of growth tax giveaways. Things are not turning out like that.
Instead the Coalition is now sticking limpet-like to Plan A until 2017, two years beyond the next election. But with Plan A dragging on longer than was expected, Mr Stephens points to what he calls the Coalition’s three-part political Plan B:
1) Blame others.
The Coalition has long laid a significant part of the blame for the UK recession at the door of the last Labour government. Partly this is justified: the warnings of Vince Cable and others that the debt bubble was unsustainable were brushed to one side. Partly it is unjustified: all parties were committed to increased government spending — both the Lib Dems’ 2005 manifesto and David ‘share the proceeds of growth’ Cameron.
But the charge against Labour has, to date, stuck. And to that charge can now be added the Tories’ favourite bugbear: Europe. With Greece, Ireland, Italy and possibly Portugal and Spain dragging the Eurozone down, and with the EU accounting for 40% of UK exports, it’s not unreasonable for the Coalition to point to wider economic conditions exerting a negative impact on the British economy.
2) Do something.
Here’s Mr Stephens’ verdict:
[P]art two of the new political strategy is calculated to show the government is doing all it reasonably can to ameliorate the impact. Hence the latest blizzard of schemes to boost infrastructure spending, help small and medium-sized companies and get more young people into work. The initiatives span the good and the dubious. Some will work, some will never be heard of again. But whatever the eventual impact, ministers concede it will not be felt before the next election.
This was Margaret Thatcher’s favourite line: There is no alternative. Mr Stephens’ take again: ‘The markets would not forgive any relaxation of the fiscal squeeze. As much as you may be angry with the government, this argument runs, would you trust Ed Miliband and Ed Balls to do better?’
It is this TINA defence that should worry Labour most because we know that in poll after poll the Tories’ Team Osborne score better economic trust ratings than Labour’s Team Balls. This matters because Labour’s hypothesis, Ed Balls’ so-called 5-point plan for rescuing the UK economy, will never be put into practice — voters will be asked to take it on trust that it would have been a better alternative to the Coalition’s austerity programme, Plan A. That’s some ask.
That’s fine for the Coalition, but what can the Lib Dems say and do?
This, then, is the Coalition’s defence. And on the face of it it’s not such a bad one, with enough truth in each of its three parts to be credible.
But it’s not comfortable for the Lib Dems. We were at least as identified as Labour in the boom years with wanting additional public spending. We were advocates for joining the Euro. We have pressed for new infrastructure spending, but know this is a long-term dividend. The party’s trust ratings on the economy trail even those of Labour. And as for invoking a Mrs T mantra… well, even the most Orange Book Lib Dem may turn a little yellow at the thought of that.
In pre-Coalition days we could point to Vince Cable as our economic soothsayer, our get-out-of-jail-free card on the economy. But now he’s embedded in the Coalition and just as complicit, even if sometimes reluctantly, with the government’s defence.
The Coalition has its economic Plan A. The Coalition has its political Plan B. Both may work. But if they do it’s most likely the Tories who will benefit.
Neither Labour nor the Lib Dems have yet come up with a convincing answer to how a government can achieve social justice at a time of necessary austerity: put simply, what is the point of progressive politics when the money’s run out? However grim it might appear for the Tories today, the reality is that it’s the Lib Dems and Labour who have the biggest political problems right now.