Friday, 25 June 2010

Is this the end for the Liberal Democrats?

On Tuesday Chancellor George Osborne delivered what he described as his ‘unavoidable’ emergency budget, outlining cuts to public spending and tax rises aimed at dealing with the ballooning deficit; they were he said ‘tough but fair.’

Tough? Talk about public school understatement, capital gains tax up to 28%, child benefit frozen for three years, add to this the cuts in spending on welfare and to every departmental budget apart from those of the NHS and for overseas aid and you can see the bad times not just starting to roll but damn near turning into an avalanche.

Much of this is necessary to fill in the black hole caused by the spending policies, roughly translated as if a project isn’t working throw some more money at it, of the last government and all of it will be unpopular. There are also questions to be answered about the long term effects on society, particularly on the most vulnerable of its members.

Acting Labour leader Harriet Harman, in a speech containing the sort of passion that was so sadly missing when she was in government, attacked the budget as ‘reckless’. She poured scorn on the plans to raise VAT from 17.5 to 20%, something both parties forming the coalition had fought shy of in their election manifestos.

This was, she said, ‘the chancellor’s first budget but we have seen it all before, it is the same old Tories, hitting hardest at those who can least afford it and breaking their promises.’

Often mocked as a shrill metropolitan liberal with little idea how ordinary Britons live Harman made a telling point, however hard the chancellor tries to persuade us otherwise this budget will hit people on low and middle incomes disproportionately hard for the simple reason the they, unlike the rich, don’t have access to accountants and tax lawyers who will find the loopholes that will keep their costs down. All of which makes you wonder why Ms Harman didn’t throw her hat into the ring as a candidate for the Labour leadership, maybe she’s waiting for the winner of the current race to coma a cropper before sweeping in to ‘save the party’. A risky strategy since in politics people who await much tend to come away with little.

Harriet Harman saved the most vicious of her attacks though for the Liberal Democrats, saying their presence in the coalition government was a ‘fig leaf’ for long held Tory ambitions to cut the size of the state. Fears, she said, that the UK would follow Greece into economic and social turmoil were,’no alibi’ for their complicity in sanctioning such a harsh budget.

Again Ms Harman, an unlikely carpenter at the best of times, has hit the nail squarely on the head. This might not be the budget that breaks the coalition, but it could very well be the one that breaks the Liberal Democrats as a party, much to the benefit of David Cameron’s Tories.

On Tuesday George Osborne may have played the wicked fairy at the christening by making the new government a gift of an ‘age of austerity’, but in the longer term it is Chief Secretary to the Treasury Danny Alexander (a Lib Dem) who will have to play the real bad guy. It is he who will catch the flack in and out of the commons when ministerial budgets and local services start to be cut.

Before the election the question was whether or not Nick Clegg has the steel to grasp the chance of taking his party into government for the first time in almost a century as part of a possible coalition. The chance came and buoyed up by a positive performance in the televised leader’s debates he grasped the nettle, the unfortunate thing about nettles is that they tend to sting.

The cuts, if they work and so far the credit rating agencies have been positive, which in this context probably matters more in the short term than public opinion, will still be deeply unpopular with most members of Clegg’s party. For this they will pay a heavy price at any future by-elections and could see a steady drifting away of disaffected members as the Labour Party did when Tony Blair junked most of its principles, before too long it might not be a case of the Lib Dem’s propping up the Tories so much as the Tories holding out a lifeline to a party on the brink of oblivion.

It is no small irony that the big chance for the Liberal Democrats to move into the political big time could also be the almost certain guarantee of their demise as a party.