Lord Lester condemns spate of resignations from party among those who oppose justice and security bill
A leading Liberal Democrat peer involved in the battle over the expansion of secret courts has condemned former party colleagues who resigned over the issue for being “fairweather friends”.
Lord Lester of Herne Hill, a key member of parliament’s joint committee on human rights and drafter of government-defeating amendments, spoke out following a spate of political departures.
Over the last three days Prof Philippe Sands QC, Dinah Rose QC and Jo Shaw, who formerly led the campaign inside the party, have quit the Liberal Democrats in protest at the coalition government’s backing for the justice and security bill.
Opponents believe so-called closed material procedures – used in cases said to involve national security – deprive claimants of a fair trial by not allowing them to see all the evidence.
The Liberal Democrat party conference has twice voted to reject the expansion of secret hearings into the main civil courts but an overwhelming majority of the party’s MPs voted in support of the measure last week. The next stage in the political battle comes later this month when peers will re-examine the bill.
Lester said: “It’s disappointing that some prominent Liberal Democrats have resigned and gone into the political wilderness because of their dislike of the justice and security bill and its support by the coalition government.
“But instead of being fairweather friends they would have done well to support the work of the joint committee on human rights in building essential safeguards into the bill.
“We Liberal Democrats have made vital changes and will press for more when the bill returns to the Lords on 26 March to achieve a fair balance between justice and security under the rule of law.”
Lester says the outcome of the next vote is uncertain. In the last Lords debate on the bill in November, peers inflicted a series of defeats on the government by majorities of more than 100.
The vote on 26 March, however, coincides with the Jewish religious festival of Passover when a number of peers will be absent, including some key opponents of the bill in its current form.
Some of the key safeguards put into the bill when peers defeated the government last year have since been removed during committee stage in the House of Commons. One of the main Lords amendments that disappeared was the so-called “Wiley balance” – a process of assessment that would have allowed judges to weigh the interests of national security against the wider public interest in the fair and open administration of justice.
Deputy prime minister also uses spring conference speech to play down economic policy divisions at top of party
A newly optimistic Nick Clegg, saved from the near-death experience of the Eastleigh byelection, said the Liberal Democrats have moved from being a protest party to the anchor that will deliver centre-ground governments committed to both a strong economy and a fairer society.
In a speech closing his party’s spring conference, he attempted to paper over the mounting differences at the top of the party about stimulating growth, saying both the business secretary, Vince Cable, and the chief secretary to the Treasury, Danny Alexander, agreed the coalition needed to take a flexible approach to deficit reduction.
He also insisted that being in a coalition government did not dilute the party’s identity, but strengthened it. He said: “There is a myth that governing together, in coalition, diminishes the ability of the smaller party to beat the bigger party. The idea that, in Tory facing seats the Liberal Democrats will find it impossible to distinguish our record, our values, from theirs. But that myth has been utterly confounded. The opposite is true.
“The longer you stand side-by-side with your opponents, the easier your differences are to see. We don’t lose our identity by governing with the Conservatives. The comparison helps the British people understand who we are.”
Clegg said the Conservative party knows it needs to stay on the centre ground to have any chance of speaking to ordinary people’s concerns. “At least the leadership seem to. But they just can’t manage it, no matter how hard they try. They’re like a kind of broken shopping trolley. Every time you try and push them straight ahead they veer off to the right hand side.”
He said he relished the fact that the party was no longer seen as the party of protest, or the automatic “none-of-the-above” choice.
“The Liberal Democrats are not a party of protest, we are a party of change. A party that is for things, not simply against things. A successful political party cannot thrive just by picking up the votes that have been lost by its opponents. Our ambition is to reach out to the millions of people in this country who want a party that strikes the right balance between economic credibility and social fairness.”
In a thinly coded reference to Ukip, he added: “We are not some kind of receptacle for people who don’t like the world – and don’t want to do anything about it. We grapple with the world. We strive to make it better. And the more people who see that, all the better too.”
With Cable saying the balance of risk had begun to shiftin favour of an economic stimulus, Clegg admitted: “Britain’s economic recovery has proved more challenging than anyone imagined. The crash in 2008, deeper and more profound than we knew.”
But he also warned of the dangers still confronting the economy, and the threat of rising interest rates, saying: “Just two weeks ago, the uncertain outcome of the Italian election threatened to plunge Europe back into crisis. Suddenly we were reminded of the danger that looms when markets question the ability of governments to live within their means.
“Countries around the world face the same hard truth: we must all pay the piper in the end. I want to make one thing clear: we will not flinch on the deficit. But to be unflinching is not to be unthinking. And the idea that the choice is between a cruel and unbending plan A and a mythical plan B is simply not the case.”
He continued: “Balancing the books is a judgment, not a science. And our plan has always allowed room for manoeuvre.
“Sticking to a plan requires government to be flexible as well as resolute, nimble as well as determined.”
He argued the coalition had already shown flexibility by delaying its deficit reduction programme by two years.
“When economic circumstances around us deteriorated and UK growth forecasts suffered, voices on the right called for us to respond by cutting further and faster. But instead we took the pragmatic choice to extend the deficit reduction timetable. As tax receipts went down we let the automatic ebb and flow of government borrowing fill the gap.”
Clegg denied the coalition was slashing the state, saying: “By the end of this parliament, public spending will still be 42% of GDP. That’s higher than at any time between 1995 and when the banks crashed, in 2008.”
In an oblique reference to Cable’s call for a multibillion-pound direct investment in a house-building programme, Clegg said the government was already “straining every sinew to invest every available pound into UK infrastructure”. The coalition was spending more on capital projects than Labour spent, on average, between 1997 and 2010.
He also referred to the massive investment already under way in construction projects and insisted the Treasury had already made an unprecedented break from the straitjacket of its orthodoxy by offering of £50bn worth of guarantees from central government to people willing to invest in infrastructure and construction.
“No government has offered these kinds of guarantees, on this scale, ever before,” he said in a key passage of the speech. “We will and must do more to mobilise investment into our long-term infrastructure needs. I agree with that. Vince [Cable] agrees with that. Danny [Alexander] agrees with that. But, as we all equally acknowledge, there are no cost-free, risk-free ways of finding such huge sums of money. Not at a time when Labour left the cupboard bare and we still have the second highest deficit in Europe, behind only Greece.”
Clegg also claimed: “We may be the smaller party, but we have all the biggest ideas,” pointing to “the world’s first ever green investment bank. The business bank; the bank levy; the green deal. Better schools and proper vocational learning. Greater shareholder democracy. Flexible working and shared parental leave. Tax cuts for working families, paid for by higher taxes on unearned wealth.”
He then set out his criticisms of Labour and the Tories, arguing that only the Lib Dems offered both economic and social renewal. “The Conservative party knows it needs to stay on the centre ground to have any chance of speaking to ordinary people’s concerns. At least the leadership seem to. But they just can’t manage it, no matter how hard they try. They’re like a kind of broken shopping trolley. Every time you try and push them straight ahead they veer off to the right hand side.”
Referring to the calls from Conservative ministers for Britain to withdraw from the European convention on human rights, Clegg said the Tories would actively take away rights enjoyed by British citizens just to appease their backbenchers.
“Conference, make no mistake, no matter what the issue – safeguarding the NHS, creating green jobs, stopping profit-making in schools, preventing a return to two-tier O-levels – the Liberal Democrats will keep the coalition firmly anchored in the centre ground.”
Clegg went on to criticise Labour for opposing “every single saving the coalition has been forced to make with not a single suggestion for how to raise money instead”. Labour, he claimed, “are embracing opposition in the worst possible way. All they are interested in is striking poses and playing parliamentary games. They try to lecture us about taxing the rich. Even though taxes on the richest are now higher than they were for every year under 13 years of Labour. They conspired with Tory rebels to scupper Lords reform, even though it was in their manifesto.”
Clegg continued: “By now I expected a re-energised Labour party, refocused. The whole point of opposition parties is that they come up with ideas. But they haven’t. Under Ed Miliband and Ed Balls, Labour remain a blank page in British politics. These people were in the government that crashed the economy before. They’ve given us no apology. No solutions. No plans. No sign that they even understand what they did. The truth is, left to their own devices, they’d do it again.”
Social Liberal Forum left frustrated after attempts to put a debate on a shift in economic policy on agenda are outmanoeuvred
The Liberal Democrat leadership has again outmanoeuvred supporters of a targeted growth stimulus by preventing a general debate on the economy at the party’s spring conference.
The steps by the federal party’s conference committee to block the debate – which will keep the issue off the conference agenda for at least 12 months – were denounced on Sunday .
A frustrated Prateek Buch, director of the Social Liberal Forum (SLF) pressure group, said: “I cannot understand how a serious party of government can decide, against the democratic will of our members, not to debate the single most important issue that faces our country, if we are unable to discuss a flatlining economy, the biggest issue facing the country?”
The SLF, a left-of-centre pressure group, had first attempted to table a motion for the conference calling for a fiscal stimulus a month ago, but was rebuffed by the federal conference committee on the grounds that it would require a two-hour debate.
In response the SLF submitted a week ago an emergency motion to go forward for a ballot of delegates attending the spring conference in Brighton. A total of nine motions ranging from secret courts, the NHS and the safety of bees had been submitted for two 30-minute slots set aside on Sunday morning.
The SLF emergency motion called for more public investment funded by borrowing, a commitment to build 100,000 houses a year by 2015, increased lending to small and medium enterprises (SMEs) through imposition of net lending targets on semi-state owned banks, a mansion tax and the resistance to pressures to commit to public spending cuts after 2015 election.
The vote would have been a key test of whether the party rank and file was losing faith in the government’s austerity programme, and like the business secretary Vince Cable, believed the balance of risk had tilted towards a stimulus.
The federal conference committee agreed on Friday that the SLF motion could go forward but with one unique stipulation – that it had to come top of the ballot since the issues were so important it would require an hour’s debate.
It was widely expected that an emergency motion criticising MPs over secret courts would come top of the ballot meaning the SLF motion being kept off the conference floor. Aware of the sensitivities, Cable said he would like the motion debated but refused to say if he would support it if it was cleared for debate.
On Saturday afternoon it was duly announced that the SLF motion had come second behind secret courts, but ahead of another motion on the Leveson report that had come third. On this basis the conference authorities ruled the economic debate could take place, but Leveson, third past the post, could.
Conference delegates then moved to suspend standing orders to allow a mini-debate on whether to allow 90 minutes for an emergency debate on Sunday. It was claimed that the issues were so vast that representatives would be queuing round the block to join it. Conference voted by 179 to 177 to suspend standing orders, well short of the two-thirds majority required for a suspension to be granted.
As one disgruntled SLF member argued: “We would have won that vote and the leadership know we would have that vote, so for the lack of 30 minutes, we remain wedded to George Osborne’s deficit plan.”
Buch said: “We hope to return to the matter at our next conference and will seek clarification from conference committee as to the procedural reasons for refusing a debate – lack of time is a poor excuse when we spent 45 minutes on a non-debate about how not to change the party leader.”
It is the second time a motion calling for a shift on economic policy has been blocked. At the main conference in the autumn, the conference committee selected an amendment put forward by the Liberal Left pressure group opposing any deficit reduction plan over a more mainstream Keynesian one put forward by the SLF.
The conference committee declared the hardline motion opposing the government’s entire economic programme would lead to a clearer debate.
Jo Shaw attacks Nick Clegg in resignation speech as Liberal Democrat MPs come under fire at party conference
The leading Liberal Democrat campaigner against secret courts resigned from the party at the rostrum of its spring conference as members voted overwhelmingly for a second time in six months to reject the justice and security bill.
Prominent party activist Jo Shaw accused Nick Clegg of a betrayal of liberal values and employing the shame shoddy realpoliitik as the Blair government.
The Lords are due to look at the bill again this month and Sunday’s vote will strengthen those peers seeking to reinstate protections thrown out by MPs, including most Liberal Democrats, last week.
The behaviour of the Lib Dem MPs was denounced as “quite simply shameful” by leading lawyer and former Cambridge Lib Dem MP David Howarth. He said: “This is not about policy or about deals: it is about who we are. This bill does nothing to help the security services to gain more information or foil more plots. All it does is give them an unfair advantage in cases where they are accused of kidnapping and torture. Again, anyone who cannot see that is fundamentally wrong and not liberal”.
Addressing the Liberal Democrat leader of the Lords, Tom McNally, Howarth said: “Tom, I know the Lords can stop this bill. You know the Lords can stop this bill. They should stop this bill”.
Shaw, a parliamentary candidate in 2010, described her parliamentary party’s handling of the bill as “a car crash in slow motion and a textbook case of political failure”.
Her resignation followed news that Dinah Rose QC, one of the country’s leading human rights barristers, is to resign her membership of the Liberal Democrats in outrage at the coalition’s backing for secret courts.
She said the revised bill failed to meet the demands of conference or the amendments made by peers. In an emotional speech she said her party’s leadership “could have put a stop to this bill at the outset and have failed. Despite principled objections from party activists from all sides, the leadership has unilaterally decided that civil liberties is not a red line issue.
She concluded: “I joined this party to campaign for my values 12 years ago. A decade ago I was proud to march with my party leaders against the Iraq war. I supported the coalition government because of the opportunities it gave us to put our Liberal Democrat values into practice.
“Today is a sad day at the end of a very sad week because I have come to the conclusion that I cannot continue to campaign to uphold the values of fairness, freedom and openness inside the Liberal Democrats under its current leadership – a leadership for whom the privilege of power has meant the betrayal of liberal values. The party that stood against 42-day detention, ID cards and the war on terror is led now by those who on this crucial issue employ the same shoddy logic, and have fallen into the same anti-democratic realpolitik as the Blair government. It’s not me Nick, it’s you.”
As she resigned Rose offered the hope the party “would finally be led by someone who would act according to liberal principle and scrap this bill’.
Martin Tod, a fellow campaigner against secret courts, said: “Something has gone horribly wrong with our party if committed libertarians like Jo Shaw don’t feel any longer they can remain members.”
But McNally, a justice minister, indicated he was unlikely to lead a rebellion but would instead seek further concessions. He said it was to the credit of the party that it was so troubled by the issue of secret courts, but said the bill’s critics lived in an Alice in Wonderland world.
McNally said: “if we do not have the procedures by which we can examine some of these attacks on the behaviour of our security services, then they will go unchecked, money will be paid in compensation and reputations will be damaged because there will have been no opportunity to mount a defence.”
He insisted the bill returning to the Lords was dramatically different to the one set out in a green paper 18 months ago, adding: “Sometimes you come to that juxtaposition between justice and security where you have to take tough decisions like we did in Northern Ireland and in certain immigration cases.”
“It’s a tough decision; it is a decision you have to make when you are in government. We will make that decision.”
Simon Hughes, the party’s deputy leader, said there was not a parliamentary majority to get rid of the section of the bill introducing secret courts altogether, but said it might be possible to make sure the legislation was temporary, adding that the rules of the secret court should be subject to parliamentary scrutiny.
Caron Lindsay told the conference: “There are some things you just cannot polish. Our instincts must be to protect people from the excesses of the state. The bill is the embodiment of the state accruing power in the name of public good.”
Delegates arriving at spring conference are buoyed by Eastleigh byelection victory
Two of the Liberal Democrats’ most senior figures – Chris Huhne and Vicky Pryce – may be preparing for jail, but the bulk of delegates arrive at the party’s spring conference in Brighton like convicts reprieved from death row.
The victory in the Eastleigh byelection has transformed the party’s mood. Instead of contemplating a general election in which the Lib Dems were reduced to a Celtic south-west rump of 25 seats or so, the party believes it can hold well over 50 seats, and even gain a few. On those numbers Nick Clegg could again hold the balance of power after the 2015 election.
Tim Farron, the party president, underlined the importance of Eastleigh in his House Magazine interview suggesting in advance of the result the party’s survival could not be guaranteed. Deploying a bizarre analogy he suggested: “We’re a bit like cockroaches after a nuclear war, just a bit less smelly, we are made of sterner stuff.”
Vince Cable in his interview with the Guardian also suggested Eastleigh had been critical. “If we had lost by one vote, it would have been a disaster, if we won by one vote, it was going to be a triumph.”
Until recently the Lib Dems did not have the cash to do any polling on the messages likely to work. But courtesy of a new donor, polling now completed suggests the party still has the potential to achieve a 20% share of the vote at the next election. The party believes it is currently polling around 12% and sees the further increase mainly coming from the centre ground being vacated by David Cameron and by Labour’s failure to define itself more clearly.
Clegg believes the Eastleigh result shows the Tories cannot win an outright majority at the next election. One close ally said: “If they can’t win Eastleigh after our MP was done for [perverting the course of justice] and our leader was criticised for allegedly failing to deal with a groping toad then when can they win?”
The leader now regards the May county council elections as the acid test of the Lib Dems’ nationwide popularity. But at this conference he has to heal the wounds created by the damaging allegations against Lord Rennard, the party’s former chief executive.
In a speech to the party on Friday night Clegg admitted: “Women involved in the allegations feel let down. They deserved to have their concerns and allegations examined thoroughly and properly dealt with. But clearly, that has not always been the case.
“When concerns were brought to the attention of members of my team we acted to address them. But this should not have just been the responsibility of a few individuals acting with the best of intentions. It must be the responsibility of the party as a whole.”
He said Helena Morrissey, a champion of women in the boardroom, will lead the inquiry into how the party handled the allegations.
As he was making his speech Vince Cable, the business secretary, was addressing the social liberal forum, and urging a housebuilding programme to lift the economy. It is not clear that Clegg agrees with Cable, arguing any programme would require £40bn of spending to have any real impact, and would be likely only to lead to higher interest rates.
Cable demurs: “To most people it seems merely common sense that in a crisis where the private sector lacks the confidence to invest, the government should do so: building modern infrastructure or giving councils the freedom to build affordable homes. Historically low interest rates mean that government (and local government) can borrow to invest cheaply.
“Some people say we mustn’t frighten the horses. They say that any change in direction, however sensible, is too risky and will cause panic. There is of course a balance of risks and that mattered most when we came into office. But we should ask whether that balance of risks has changed.”
It is clear the business secretary thinks action is necessary and he tells the Guardian the capital injection into council housebuilding should be in the order of £15bn.
Regardless of how the critical debates on spending play out over the next few months, Clegg is astounded by the foolishness of Conservative tactics. He retains good personal relations with Cameron but is disappointed that Cameron has not turned out to be the moderniser he first saw.
The AV referendum defeat, at the hands of old Labour and Tory money, changed the dynamic of the coalition. If there ever was a mushy, close feeling before the vote in May 2011 that has now disappeared. The strategic disaster of the lost Lords reform followed by Clegg’s refusal to reform constituency boundaries meant the coalition turned into a hard-headed transaction.
The deputy prime minister recognises that pulling the constituency boundary reform – critical to Cameron’s re-election – was provocative. He even told Cameron he would be as angry as him if he was in Cameron’s shoes.
But experience has also narrowed the field in which the two party leaders can agree. One says a Venn diagram of the two parties’ policies drawn at the start of the coalition would show a large area of inter-connection, but that common space is now much smaller. It is not likely to enlarge before 2015.
The former energy secretary’s guilty plea means a heavyweight loss not just to the Lib Dems but to national politics as a whole
It is sometimes alleged that if about 1,300 postal votes had not got caught up in the Christmas mail in 2007, Chris Huhne would have defeated Nick Clegg and become leader of the Liberal Democrats. Perhaps, looking at the news, it is just as well for the party that those votes somehow went missing. For, if they had counted, the consequences might have been widespread. It would not just be one former cabinet minister’s career that lay in ruins. Instead it would have been a deputy prime minister who would have been forced to quit parliament and who would now be facing a possible prison sentence after pleading guilty to perverting the course of justice. Instead of just causing a difficult byelection at Eastleigh, as Mr Huhne’s resignation did on Monday, the entire British government might have come tumbling down.
Comment on the Huhne prosecution must await the conclusion of current legal proceedings. Right now, only the political implications can be debated. The first of these is that politics is the poorer for Mr Huhne’s fall. Mr Huhne – who in earlier life worked for this newspaper – was a big figure in his party and in parliament. He came close to the leader’s job twice. He made waves in his party’s internal debates and within the coalition of which he was one of the architects. He was an effective environment minister, who did as much as any politician to ensure that this country takes environmental challenges seriously. He had a grasp that marked him out from the ordinary.
There are two particular reasons why the Liberal Democrats are the poorer for his departure from politics. The first is that the party is not so rich in talent that it can afford to lose its heavyweights. Mr Huhne unquestionably fell into that category. But his departure leaves Mr Clegg and Vince Cable practically alone as nationally recognised Lib Dem figures. This is not to underestimate other senior leaders but simply to state the currently obvious.
The second loss is to the tradition of Liberal Democratic politics for which Mr Huhne spoke. As a young man, Mr Huhne took the SDP route into the party. That meant not just that he understood green and civil liberties issues, though he did that too, but that he also spoke up for social liberal values on welfare and social services and for the Keynesian tradition in Lib Dem economic thinking. Though he was a contributor to the 2004 Orange Book, his approach was significantly to the left, as traditionally defined, of the way that project is now often characterised. He was in many ways – and unlike some of his Lib Dem colleagues – a more natural Labour coalition ally than a Conservative one. As politics evolves towards 2015, the gaps caused by his departure may therefore feel larger not smaller.
Mr Huhne’s public disgrace will not help the Liberal Democrats. But it is uncertain how much extra damage it will do. The Lib Dems lost a quarter of their 2010 electoral support within a few months of joining the coalition and there is no evidence that they are regaining it. The Eastleigh byelection will be a pivotal test for the party and its morale. If they hold Eastleigh, where Mr Huhne had a 3,864 majority over the Tories in 2010, Lib Dems will feel that they can go on to hold the bulk of their Lib-Con marginals in 2015. Lose it, however, and they may panic. Much will depend on how the Tories behave in the coming weeks, starting in the debate on gay marriage, and on whether Ukip maintains a credible challenge. But it is not inconceivable that Mr Huhne’s departure may in the end save a party leader, Mr Clegg, whom he might have challenged if he had remained in the Commons.
Mr Huhne’s fall is not good for politics either. But beware of assuming that it will do lasting damage to anyone other than the disgraced MP himself. A Hansard Society survey last week reported a significant improvement in the reputation of parliament that may indicate a more thoughtful and less contemptuous mood than in the recent past. Mr Huhne has gone. But the important things he stood for matter as much as ever, and maybe more.
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Government criticised for autumn statement plans to impose three-year squeeze on range of benefits
Labour accused the government of imposing a “strivers’ tax” and a “mummy tax” on Thursday as it criticised government plans to impose a three-year squeeze on a range of benefits aimed at both those in and out of work.
In the autumn statement this week George Osborne announced that most benefits will rise by only 1% a year for the next three years.
The government said maternity pay would rise by £135 in 2015, but did not challenge the claim that this would mean a real terms cut due to the effect of inflation. It also insisted working people will benefit from lifting personal allowances by approximately £260 a year, or £5 a week, and this would be more than the impact of the benefit squeeze for the vast majority of households.
But the shadow minister for women Yvette Cooper said: “This real terms cut in maternity pay is effectively a £180 mummy tax on working women – and it’s bad for the whole family. Evidence shows women on low income are less likely to take their full maternity leave because they can’t afford to stay off work.”
The party’s Treasury spokeswoman Catherine McKinnell said: “In the budget the small print was the granny tax and in the autumn statement the hidden detail was George Osborne’s mummy tax, as maternity pay is cut in real terms.
“The government claims they are targeting the work-shy and benefit scroungers, but it’s just not true. They are hitting millions of working families, and mums taking time out from work to look after their newborn baby.
“And all this is happening on the same day that millionaires get an average tax cut of over £100,000. It’s completely unfair.”
The Tories and Liberal Democrats plan to challenge Labour to vote for the 1% yearly rise in an uprating bill probably in the new year. If they refuse to do so, the coalition will accuse Labour of not being serious about reducing the deficit.
The shadow work and pensions secretary Liam Byrne claimed the 1% rise over three years will save £6.7bn, and claimed only 23% of that saving will come from jobseeker’s allowance, employment support allowance (ESA) and income support.
He said “The rest of the balance will come from tax credits, maternity allowance, maternity pay, sick pay and housing benefits, which are all claimed by working people. The ‘strivers’ and ‘battlers’ whom the prime minister promised to defend at his party conference will pay the price for the government’s failure.”
Byrne also said £14bn had been taken out of tax credits, and the autumn statement will take another £5bn by 2016-17.
Steve Webb, the pensions minister, taunted Byrne by asking if he would abstain on the vote or reject the squeeze. Webb said: “He sounds sympathetic and angry, but when it comes to the crunch and there is a vote, he disappears and is not to be seen.” Webb said that disabled living allowance, attendance allowance, carer’s allowance and the support component of ESA will all rise in line with inflation.
In practice it is likely that Labour will vote against the uprating partly because they see the break between benefits and prices represents a historic change in the way benefits are paid.
In narrow party political terms, at least Mr Osborne produced a plan. The same cannot be said of the Liberal Democrats
He may not have an economic strategy, but George Osborne showed he has a clear political game. And it is, in essence, a Thatcherite game: to rally the hard-grafting and upwardly mobile against those they imagine respond to economic adversity by lounging about. In the parlance of the hour, he seeks to set the strivers against the skivers.
That core idea was reflected in the mini-budget’s biggest-ticket item, diddling benefit claimants of the cash they’ll need to cover rising prices for the next three years. But there were other aspects to the white-van Conservatism in which the chancellor plans to escape from the “posh boy” bar in which he has been drinking since cutting top tax in March – most notably a giveaway at the pumps. One backbencher crowed that the duty freeze put “fuel back in the tank” of working-class Toryism, but using desperately scarce resources like this also pours petrol upon the pyre of Cameronian greenery. The chancellor’s enthusiasm for fracking underlined the point.
There are risks here, most obviously renewing the nasty party tag which Tory modernisers once toiled to bury. After Thursday’s newspapers explain how (defensible) fiddling with thresholds will mean more strivers paying 40% tax, Mr Osborne could find that the resentment he had hoped to rouse against the workless will turn back on him instead. Indeed, once working families discover that it is they, and not the workless, who will absorb 60% of the near-freezing of benefits and credits, the strategy could sour. But with no growth, any decision will offend someone. In narrow party political terms, at least Mr Osborne produced a plan.
The same cannot be said of the Liberal Democrats. A year ago, they fought a noble battle to protect the poor from resurgent inflation. On Wednesday, they sold the pass – not merely for one year, but for three in a row. Nick Clegg sat sombrely on the frontbench while the chancellor knocked down his rational hopes for new property taxes with prime ministerial prejudice. In return for compliance with all of this, the Lib Dems secured a modest move against the tax perks of big pensions, bringing in about a quarter of the cash raided from welfare, and a small increase in the personal allowance, worth about half the funds spent on petrol. Dubiously, the Lib Dems have made the allowance the talisman of their achievement in office, even though it was always money showered far and wide. And the chancellor spread Wednesday’s modest rise even further, by sharing it with higher-rate payers too.
The party pleads that welfare would have been cut more savagely without their efforts behind the scenes. Perhaps so, but counterfactual claims are not an electoral strategy, particularly not for a party that recently came eighth in a byelection. Ahead of a spending review, now set for next spring, which will signal the way that the unending pain is to be shared beyond the election, Mr Osborne has thrown down the gauntlet. The Lib Dems are yet to respond, and the clock is not on their side.
Tax incentives and a new body to encourage shale gas development to be unveiled
Up to 30 gas-fired power stations will have to be built across the country, ensuring that more gas will be produced in Britain by 2030 to guarantee energy supplies, the government will announce this week.
Tax incentives and a new body to encourage the development of controversial shale gas will be unveiled as part of a new gas strategy which will be published alongside the chancellor’s autumn statement .
George Osborne, who is expected to admit that he will fail to meet his target of reducing debt as a share of GDP by 2015-16, will use his statement on Wednesday to claim he is committed to promoting economic growth when he outlines major reforms to the Private Finance Initiative (PFI).
The chancellor, who will announce that the government is on course to save £2.5bn in more than 100 PFI schemes, will speed up the process of procurement and give the taxpayer a minority stake in a new company overseeing the new model known as PF2.
A Treasury source said: “We’ll be showing that we remain committed to solving today’s problems but also preparing for tomorrow’s challenges and equipping Britain in the global race.”
Osborne pledged in opposition to reform PFI, which was first used by Sir John Major’s government, and was rapidly escalated under Tony Blair, to fund public sector infrastructure projects using private capital. Osborne, who said that the last government used PFI to play down the government’s liabilities, will create a cap on “off balance sheet” liabilities.
Katja Hall, CBI chief policy director, welcomed the PFI reform. She said: “Today’s announcement ends months of uncertainty for the industry by setting out a new model to channel private finance into the development of UK infrastructure. The pipeline of projects also offers good news for an under-pressure construction sector.”
The government will declare in its gas strategy that an extra 26 gigawatts of gas will have to be produced by 2030, which will require 30 new gas-fired power stations. Some of these will be created by modernising existing plants.
The strategy will say: “Both now and in the future we need a diverse generation mix that balances risks and uncertainties of different technology options … the government expects that gas will continue to play a major role in our electricity mix over the coming decades, alongside low-carbon technologies as we decarbonise our electricity system.”
The strategy will add: “In 2030 we could need more overall gas capacity than we have today.”
The government will also announce that it is to consult on introducing tax incentives to encourage the production of shale gas and will create an Office for Unconventional Gas. This is designed to co-ordinate responsibilities across government. Davey is to make separate decisions on the highly controversial process of fracking to extract shale gas.
The new gas strategy, which follows differences within the coalition over onshore windfarms, will prompt speculation that the Tories and Liberal Democrats are once again in disagreement over energy policy. Ed Davey, the energy and climate change secretary, told the Guardian recently that the Tories would try to “big up” gas when he unveils the new strategy on Wednesday. “It’s an over-used phrase,” he said of the term dash for gas. “We are some way off from thinking we have too much gas. I am quite relaxed about the gas strategy that will be published at time of the autumn statement.
“I am sure the Tories will big it up, but Liberal Democrats have always said gas has a role. If there is a danger that we are locking in too much gas, we will still have tools to reduce it.”
Lib Dem sources told the Guardian last night that they were relaxed about the new gas strategy even though it will signal an increase in the amount of gas. The sources said they were reasonably relaxed because the overall level of fossil fuels in the “energy mix” will fall because oil and coal, which are more expensive and more carbon intensive, will be reduced. Lib Dem also say that they are as keen as the Tories to ensure continuity of Britain’s energy prices and to keep fuel bills down.
Jesse Norman, the Conservative MP who advised Osborne in opposition, welcomed the announcement on PFI. He said: “The PFI has become notorious for its cost, inflexibility and lack of transparency. It is very good news that the government’s new PF2 is addressing all of these issues.”
Lord Oakeshott says leader must show more independence if autumn statement is not bold enough on economic growth
Supporters of Vince Cable, the business secretary, have urged Nick Clegg to show greater independence from his Conservative coalition partners if this week’s autumn statement fails to set out a big enough package to lift the UK economy out of its current stagnant state.
Lord Oakeshott, the Liberal Democrats’ former Treasury spokesman in the Lords, said he wanted Clegg to show the same vigour and forthrightness as he had demonstrated over his response to the Leveson report.
He suggested that if his party did not collectively raise its game it was “heading for relegation from the Premiership”. He said the party’s byelection results last week had been disastrous.
The warning from Lord Oakeshott reflects wider fears among senior Liberal Democrats that the focus in the runup to the autumn statement on how to distribute the pain of further deficit reduction between pensions reliefs for the rich and cutting welfare misses the deeper fundamental failing over the absence of growth.
Some in the cabinet now fear that the economy will either slip back into a third recession or at best continue with growth stuck at 1% or 1.5% for the rest of the parliament.
They believe the scope for further quantitative easing is over and the best option now is a large-scale direct government capital injection for a housebuilding programme, something the Treasury resists.
Cable has openly argued for a 100,000-a-year housebuilding programme, creating 500,000 jobs. Faced by the continued slowdown, he has in essence shifted his emphasis in the past few months away from focusing on deficit reduction to a Keynesian demand boost.
His allies believe that spending could be undertaken without breaching the government fiscal rules on the current deficit or leading to a negative reaction from the credit rating agencies. It is expected that George Osborne, the chancellor, will reverse some of the cuts in capital spending in the autumn statement, but not as much as the Liberal Democrats want.
The scale of unease over the direction of economic policy in the Liberal Democrats has been masked by an order from Nick Clegg to colleagues not to repeat the leaks that undermined the budget earlier this year and angered Osborne. But there is growing concern in the party at the imminence of the general election and the threat the party faces.
Oakeshott told the BBC’s Sunday Politics: “The problem we have got is the economy outside London is going backwards. We did start cutting the deficit and now it is slipping back again, and the government must be much bolder in getting the economy growing. The two black holes are banking and building.
“We need to have a much more vigorous strategy and fight much harder to get the economy growing. We need to up our game, change radically and we need to start Thursday and if the autumn statement does not do the things that need to be done to get the economy growing I hope Nick Clegg – he has been very forthright on Leveson – will say the same on the autumn statement because many of us Liberal Democrats certainly will.”
The dearth of housebuilding, he said, was not about planning permission. “There are half a million housing permissions out there. It is about making the banks lend and letting housing associations and councils build.” He described the Royal Bank of Scotland as a zombie bank failing to lend to business.
In his conference speech, Cable started to mark out distinctive ground, sympathising with Osborne’s dilemma over the deficit but saying “right now we are fighting recession. The need is for a demand stimulus. And that does not just mean pumping more money into the banks. That great liberal Keynes had exactly the right analysis of the problem we now have – not enough spending power in the economy. And not only him but also the International Monetary Fund, who no one could accuse of financial irresponsibility.”
He added: “The central point is that the country must not get stuck on a downward escalator where slow or no growth means bigger deficits leading to more cuts and even slower growth. That is the way to economic disaster and political oblivion. We will not let that happen.”