How the Lib Dems fared...

Mark Pack - head of innovations for the Liberal Democrats - reports a mixed picture for his party

It's the afternoon after and results are still coming through thick and fast, so - between now slightly drooping eyelids - how does it look for the Liberal Democrats so far?

Taking the four yardsticks I blogged about on Wednesday, the scorecard looks like this so far.

First - Scotland. It looks like our vote is up, but we won't be gaining seats, and there is also a similar picture in Wales. Some individually excellent results, including the mammoth vote increase (+20%) for Tavish Scott in Shetland, are mixed in with the less good.

Second - the key Westminster marginals. This is the very good news for the Liberal Democrats today - with gains from the Conservatives in seats like Winchester, Eastleigh, Westmorland and Lonsdale, Cheadle and Eastbourne. If the Conservatives were set to make major gains from the Liberal Democrats at the next general election, they should have been romping home in seats like this - but they weren't.

In some places there is clearly a very large difference between our results in key constituencies and the Liberal Democrat performance in other nearby areas. Where we have suffered badly, as in Bournemouth, it seems to have been on the back of particular local controversies, but as shown by the relatively good results in Bath - scene of numerous controversies over the spa baths - these can be turned around.

This high level of variation in results from area to area is not just good news for the Liberal Democrats but also in part reflects voters' increasing interest in local circumstances and policies - which causes more variation in voting from area to area. That is bound to be good for democracy, regardless of whether we benefit or suffer from such variation.

Third - how well have the Tories done? They will still be a long way short of the level of local government strength that Labour had after 1996 or the Conservatives had after 1978. And the BBC estimate of their national share of the vote is only up 1% on last year.

Fourth - the Labour / Liberal Democrat contest in the popular vote.
Labour look to have just edged the Liberal Democrats (this time round).

I wrote before that, "the result I'll be looking out for most closely [is] the one where I was involved in a last minute legal scramble to sort out problems with the nomination paperwork. Let's hope that hassle was worth it!" It was - chalk up one Liberal Democrat gain.

Mark Pack is the Head of Innovations for the Lib Dems. He previously worked in their Campaigns & Elections Department for seven years.
Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR