The Lib Dem conference economy debate: Nick Clegg raises the stakes. He’ll have only himself to blame if he loses

by Stephen Tall on September 16, 2013

After a weekend of averted rows – nuclear power and ‘fracking’ supported, axeing of tuition fees dropped – today’s debate on the economy will see a return to Lib Dem conference tradition: a dust-up between the leadership and the activists.

A year ago, there was a poorly coordinated attempt by Lib Dem members within the Social Liberal Forum and Liberal Left groupings to get the party to change the Coalition direction on the economy, to bring in an explicit Plan B. It suffered a crushing defeat, with Vince Cable, Steve Webb and Tim Farron all speaking in favour of what the Lib Dems were doing in government. It would, said Tim, be “absolutely flipping crackers” for the Lib Dems to abandon the Coalition’s deficit reduction goals.

Besides, it was pointed out, the Coalition was applying its policies more flexibly, both in response to the economic situation and to Lib Dem pressure. In effect, much of Plan B has happened already, by default and by the back door, as Vince Cable has noted:

The government has happily deployed Keynesian techniques where feasible – as in its counter-cyclical fiscal policy. It has been sufficiently pragmatic to allow the fiscal consolidation to drift from four years to seven. The question throughout has been how to maintain the confidence of creditors when the government is having to borrow at historically exceptional levels, without killing confidence in the economy in so doing through too harsh an approach.

And if you don’t want to hear it from Vince, here’s economist Jonathan Portes, a regular critic of the Government’s approach, making a similar point in the New Statesman this week:

… we should give the government credit for not digging us further into a hole by trying to stick to its original plans. Fiscal consolidation has slowed, at least for the time being, and as a consequence it is playing a considerably smaller role in driving economic developments than it did two years ago.

Today Lib Dems will re-visit the debate against a much improved economic outlook. The triple dip recession was averted; the double dip recession has been erased from the economic history books; growth, stronger than was forecast, is returning. Mistakes have been made along the way — most crucially the Coalition’s decision to continue Alistair Darling’s plans to slash capital spending, as Nick Clegg admitted earlier this year — but lessons have also been learned.

The economy motion being debated at 10am – Strengthening the UK Economy (F19) – put forward by the Lib Dem leadership in large part reflects the pragmatism that has defined the Coalition’s approach (which is sharply at variance with the hard-line Tory rhetoric).

The thing that struck me most when reading the SLF amendments to the motion is that there’s little there that an economic liberal like me disagrees with.

Do I think we should have an independent economic policy? Of course.
Do I support increased capital investment and a rebalancing of the economy “away from dependence on unsustainable debt and house prices, towards robust regional economies that raise living standards through sustainable growth”? Yes.
Would I like to “improve the provision for the most vulnerable in society”? Not a difficult one.
And does a liberal like me want to see a shift away from taxes on earned income towards “fairer taxes, especially on wealth and land”? Again, yes.

(I’m more ambivalent about the SLF’s wish to tweak the Bank of England’s mandate. Fine to broaden it beyond inflation, but I’m always suspicious of too good to be true-sounding targets, such as “reduc[ing] the unemployment rate to below 6% creating at least a million jobs”.)

In short, the leadership could — if it wanted to — have worked with the SLF amendments, accepting them at least in part. But instead the decision has been made by the leadership to up the ante, to go to the wire: ‘Nick Clegg has warned his Liberal Democrat critics they would put Britain’s economic recovery at risk and score a huge political own goal if they defeat him in a crunch vote on the economy at his party’s conference.’

Inevitably it’s provoked those who have it in for the leadership, such as the dyspeptic Liberator, to take a pop. More seriously, it’s triggered a row with Vince, who’s happily coming to the leadership’s aid to argue against the 50p higher-rate of tax, but refuses to indulge in this win-at-all-costs squabble on future economic policy. (By comparison he accepted amendments to his tuition fees policy on Sunday while noting he didn’t agree with every line of them.)

My hunch, for what it’s worth, is that the leadership will lose this vote, and that the SLF amendment on the economy will be carried. Why? In large part because Lib Dem members will agree with them, or at least enough of them. In small part, because they’re harmless enough to give the leadership a traditional bloody nose (and to do so, incidentally, without in any way putting the economic recovery at risk). It’s all pretty much unnecessary, a row confected to divide conference and show the leadership toughing it out.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, and editor of the 2013 publication, The Coalition and Beyond: Liberal Reforms for the Decade Ahead. He is also a Research Associate for the liberal think-tank CentreForum and writes at his own site, The Collected Stephen Tall.

One comment

[…] debate, as Stephen Tall points out, was a slightly concocted row over the economy, ramped up by the leadership to give Clegg a […]

by Vince runs away | Westminster blog on September 16, 2013 at 12:30 pm. Reply #

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