Clegg gambles on a tax cut

Deputy PM calls for Osborne to accelerate introduction of a £10,000 personal allowance.

Nick Clegg's intervention this morning is possibly his boldest since entering government. With the economy on the brink of recession and family finances in "a state of emergency", the Deputy PM will use his speech to the Resolution Foundation to call for George Osborne to go "further and faster" in raising the income tax threshold to £10,000. While Osborne has pledged to reach the target by the end of the parliament (the personal allowance is due to rise from £7,475 to £8,105 this April), Clegg wants him to meet it now.

It's all part of the Lib Dems' differentiation strategy, with the Deputy PM championing a policy that, lest we forget, first appeared in his party's manifesto. And the stakes are high. Should Clegg succeed, he will have concrete proof of Lib Dem influence. Should he fail, he will be mocked for his impotence.

The Treasury has distanced itself from the proposal this morning, describing it as an expression of Lib Dem priorities, not government policy. But Tory MPs, many of whom felt the pledge should have appeared in the Conservative manifesto, have reacted more favourably. Zac Goldsmith, Gavin Barwell and Justin Tomlinson have all posted supportive tweets.

But it's not hard to see why those directly responsible for the nation's finances are more sceptical. For one thing, with Osborne averse to "unfunded tax cuts", where would the money come from? The Tories have already vetoed Clegg's preferred option - a mansion tax - and are unlikely to accept demands for further green taxes, another possibility floated by the Lib Dems. More promising, perhaps, is Clegg's call for measures to close stamp duty loopholes and clamp down on tax avoidance but would these raise enough? By most estimates, the policy would cost around £11.5bn per year.

Nor can Clegg expect much support from Labour, which rightly argues that a VAT cut would be a more effective stimulus. Too many taxpayers will simply bank the money they save and the policy will do nothing for the three million households that earn too little to pay income tax, including many pensioners and part-time workers.

But the Deputy PM's intervention is at least evidence that some in government realise that it must depart from the script. As real incomes are continually squeezed, the state must act to relieve the burden.

George Eaton is political editor of the New Statesman.

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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