Osborne’s budget: who reckons the Lib Dems would have cheered it if we’d still been in government?

by Stephen Tall on July 9, 2015

A couple of months ago I highlighted a potential pitfall for the Lib Dems of assuming the post-Coalition Tories would “revert to type, that their swivel-eyed, nut-job element will triumph”:

For the past five years, David Cameron has been forced to moderate his policies because of the Lib Dems. Who’s to say he won’t now choose to moderate his policies — indeed, that he won’t find it easier to be himself a moderate because it will now be Tory ministers implementing small-l liberal measures? … if Mr Cameron is able to stick to his guns, then 2020 may prove an even tougher fight for my party precisely because liberalism isn’t actually in retreat.

Item 1: George Osborne’s budget

For sure, there are Bad Things in the first Tory budget in 19 years, most notably the cuts to tax credits which will hit hard the lowest-paid workers. They will find themselves hundreds of pounds worse off in 5 years’ time than they are today. The Resolution Foundation has modelled the changes, for example:

A low earning dual-earner couple with two children both earning £9.35 an hour will be £850 a year worse off. They would need a one-off rise in earnings of 15 per cent to recover these losses, equivalent to 7 years of steady 2% pay rises or a 5 hour increase in the second earner’s weekly working time.

However, I then tried to re-imagine this Tory budget as a Coalition budget. And I found there wasn’t much of an imaginative leap required. Had Nick Clegg and Danny Alexander still been sitting on the front bench yesterday, I imagine they would have supported much of what George Osborne put forward:

  • They’d have welcomed the continuing increase in the personal allowance, to £11,000 — even though this will benefit only 1% of the lowest-paid workers;
  • They’d have praised the increase in the minimum wage (and it’s sneakily inaccurate re-branding as a ‘living wage’) — at least if it hadn’t already been blocked by Vince Cable on the reasonable grounds its impact on unemployment is unknown;
  • They’d have acclaimed the slowing of public spending cuts as proof of the Lib Dems in government successfully moderating Tory excess;
  • They’d have enthused about Steve Webb’s pensions ‘triple lock’ which continues to guarantee above-inflation increases to wealthy retirees at the expense of their worse off grandkids;
  • They’d have pointed out that scrapping the automatic entitlement to housing benefit for 18-21 year olds was a hard-won compromise — originally the Tories had wanted it to apply to 18-25 year-olds;
  • They’d have highlighted the Treasury’s claim that 8 out of 10 workers will be better off as a result of the budget changes;
  • They’d have disowned Osborne’s inheritance tax cuts as a warning of the kinds of policies the Tories would unleash if unhampered by Lib Dem ministers.
  • In short, the Lib Dems would likely have hailed Osborne’s budget as a triumph of Coalition, proof of the party’s impact.

    In reality, though, both leadership contenders, Tim Farron and Norman Lamb, slammed it in damning terms.

    I’m being slightly unfair here. Doubtless the Lib Dems would have won more concessions from the Tories if the party were in government still, perhaps even have blocked the inheritance tax-cut for the wealthiest. The party would doubtless have ensured a greater emphasis on the environment. Student maintenance grants for the poorest would probably have survived. A Coalition budget would, therefore, have been more Lib Dem than was Osborne’s solo effort.

    However, the ease with which Osborne stole the policy clothes of the opposition — while continuing to exploit popular unhappiness at abuses of social security spending (no matter how rare they are in reality) — highlights the dangers for both Labour and the Lib Dems. The Chancellor’s ‘predistribution’ land-grab, promising better pay in return for lower welfare spend, has an attractive simplicity which spikes the guns of the campaigners and economists who’ll highlight its many flaws.

    Osborne’s budget wasn’t a liberal budget (no reason to expect it to be). But it was “just liberal enough”. For five years that was enough for the Lib Dems. Turning the fire on Osborne now, pretending that he’s pursuing a markedly different course to that which he embarked on in 2010, might make for a good soundbite. But the public will see through it.

    The truth is if the Lib Dems had ended up with 30+ MPs in May, we’d likely have been cheering 90% of Osborne’s budget, spinning it as a Coalition victory. Jeering it now might make us feel better, but it looks inauthentic. Probably because it is.


    I’d add that even worse than that the banging-on about a Conservative assault on tax credits before the budget was ill-judged and allowed Osborne to get away with the cuts as they (combined with the living wage gimmick) appeared to be fairly moderate compared to the expectations.
    After all it’s ‘only’ students from poorer backgrounds that will suffer just as much as the working poor from their double whammy of changes to maintenance grants and tuition fee repayment. In the long term I’m afraid will the progress made towards a graduates tax be reversed if the repayment threshold remains frozen whilst the nominal fee rises with inflation.
    It is somehow ironic that the only(/first) liberal coalition policy to be in difficulties is the one we don’t want to talk about.

    by Josef on July 9, 2015 at 10:45 am. Reply #

    I agree about the appearance of the budget but the reality is that a faux living wage has been used as a foil for £12bn of welfare cuts – including: tax credits, lowered benefit cap, Employment and support allowance, housing benefit for young people etc. – that the Lib Dems consistently opposed.

    You’re right that a much diminished party – in seats and vote share – fresh from being routed by the Tories in our heartlands, may have felt it had to swallow this rubbish but that doesn’t mean we should do so now, either in the real world or in this imagined theoretical present.

    by CQ on July 9, 2015 at 12:59 pm. Reply #

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    […] Tall wrote last week that if we had been in coalition, we’d have been cheering the Budget. I don’t think so. Where I disagree with Stephen is that I don’t think that the Budget […]

    by “Soggy Syriza with sandals” – thanks, Danny, for giving Osborne a stick to beat us with on July 16, 2015 at 1:00 pm. Reply #

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