Lib Dem credibility is on the line over fees

How can Vince Cable credibly abstain on his own higher education policy?

After Vince Cable's torturously-worded email put paid to hopes of a graduate tax, the coalition is facing the prospect of its first serious rebellion on fees. The coalition agreement allows for Lib Dem ministers to abstain from votes on higher fees, but how can Cable, whose departmental brief includes universities, credibly defend a policy that even he isn't prepared to vote for?

As one Lib Dem minister points out:

Frankly, it's going to look pretty awful for us if we're in a government that's putting forward a policy that we're not prepared to vote for ourselves. And it's going to be worst of all for Vince if he proposes something in Parliament then abstains on it.

Meanwhile, between 20-30 of the Lib Dems' 57 MPs are expected to keep their pre-election pledge to vote against any increase in fees. Chief among them is Sir Menzies Campbell, who last week told the BBC: "I will vote against any increase in the level of tuition fees. My root objection is to students being saddled with mountains of debt by the time they leave university."

Other Lib Dems, particularly those who represent university seats such as Cambridge, Leeds and Bristol, remain unambiguously opposed to any rise in fees. The creation of a US-style market in higher education -- with variable fees between different universities and courses -- is rightly seen as intolerable.

The Tories have attempted to sweeten the pill by promising that higher-earners will pay higher interest-rates on their loan -- a de facto graduate tax -- but the proposal remains unacceptable. Ed Miliband's promise to "work with anybody" who wants a progressive system of university finance -- a thinly-veiled attempt to woo disaffected Lib Dems -- only heightens the political dangers to the Lib Dem leadership.

One suspects that the Tories, like Labour in 2004, will manage to sneak the measure through Parliament. But the long-term credibility of the coalition -- and the Lib Dems -- is on the line.

George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.