The Lib Dems' poll woes continue

Why weak poll ratings will strengthen Clegg's hand ahead of the Budget.

Nick Clegg may have enjoyed a more favourable press recently but the Sunday polls make grim reading for the Lib Dem leader. A ComRes poll puts Clegg's party on 10 per cent, while the latest YouGov poll has them on just seven per cent (their joint lowest rating since the general election), with Ukip snapping at their heels on six per cent. If repeated on a uniform swing at the election, the YouGov figues would reduce the Lib Dems to a rump of nine seats. The much-touted "differentiation strategy" has yet to bear fruit.

Ahead of the Budget, however, low poll ratings are something of a blessing for Clegg. The weaker the Lib Dems' poll ratings, the stronger his negotiating hand. As James Forsyth reports in today's Mail on Sunday, the Tories are fearful that the Lib Dems could exit the coalition as early as the start of 2014 (a possibility increased by poor poll ratings) and are determined to keep them on board. In this case, that means giving Clegg at least some of what he wants in the Budget.

The Lib Dem leader is still pushing for an accelerated increase in the personal allowance (with the added support of Ed Balls) funded by a £16bn package of tax rises on the wealthy. On Monday night, David Laws, the Tories' favourite Lib Dem (and the only Lib Dem backbencher not to have rebelled in this parliament), will return to the fray, giving a major interview to Newsnight and supporting Clegg's demands, including the introduction of a "mansion tax" on properties worth more than £2m.

At present, it seems likely that Osborne will offer an accelerated increase in the personal allowance, which is due to rise from £7,475 to £8,105 this April, without making the full leap to £10,000. This will be funded by clamping down on tax avoidance (Osborne could introduce a "general anti-avoidance rule", a law that would require corporations to receive clearance from HM Revenue and Customs on their tax plans before implementing them) and by closing various loopholes, rather than a mansion tax. The Lib Dems have yet to convince their coalition partners of the merits of taxing wealth more heavily and income more lightly.

George Eaton is political editor of the New Statesman.

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Leader: Theresa May and the resurgence of the state

More than any of her recent predecessors, the Prime Minister seems willing to challenge the economic and political orthodoxies of the past 35 years.

Theresa May entered office in more tumultuous circumstances than any other prime minister since 1945. The UK’s vote to leave the European Union was a remarkable rebuke to the political and business establishment and an outcome for which few had prepared. Mrs May recognised that the result was more than a revolt against Brussels. It reflected a deeper alienation and discontent. Britain’s inequalities of wealth and opportunity, its regional imbalances and its distrusted political class all contributed to the Remain campaign’s ­defeat. As she said in her speech in Birmingham on 11 July: “Make no mistake, the referendum was a vote to leave the European Union, but it was also a vote for serious change.”

When the financial crisis struck in 2007-2008, David Cameron, then leader of the opposition, was caught out. His optimistic, liberal Conservative vision, predicated on permanent economic growth, was ill-suited to recession and his embrace of austerity tainted his “modernising” project. From that moment, the purpose of his premiership was never clear. At times, austerity was presented as an act of pragmatic bookkeeping; at others, as a quest to shrink the state permanently.

By contrast, although Mrs May cautiously supported Remain, the Leave vote reinforced, rather than contradicted, her world-view. As long ago as March 2013, in the speech that signalled her leadership ambitions, she spoke of the need to confront “vested interests in the private sector” and embrace “a more strategic role” for the state. Mrs May has long insisted on the need to limit free movement of people within the ­European Union, and anticipated the causes of the Leave vote. The referendum result made the national reckoning that she had desired inevitable.

More than any of her recent predecessors, the Prime Minister seems willing to challenge the economic and political orthodoxies of the past 35 years. She has promised worker representation on company boards, binding shareholder votes on executive pay, improved corporate governance and stricter controls on foreign takeovers.

The shadow chancellor, John McDonnell, has set the ­Labour Party on a similar course, stating in his conference speech that the “winds of globalisation” are “blowing against the belief in the free market and in favour of intervention”. He pointedly criticised governments which did not try to save their domestic steel industries as China dumped cheap steel on to global markets.

We welcome this new mood in politics. As John Gray wrote in our “New Times” special issue last week, by reasserting the role of the state as the final guarantor of social ­cohesion, Mrs May “has broken with the neoliberal model that has ruled British politics since the 1980s”.

The Prime Minister has avoided the hyperactive style of many new leaders, but she has deviated from David Cameron’s agenda in several crucial respects. The target of a national Budget surplus by 2020 was rightly jettisoned (although Mrs May has emphasised her commitment to “living within our means”). Chancellor Philip Hammond’s Autumn Statement on 23 November will be the first test of the government’s ­fiscal boldness. Historically low borrowing costs have strengthened the pre-existing case for infrastructure investment to support growth and spread prosperity.

The greatest political ­challenge facing Mrs May is to manage the divisions within her party. She and her government must maintain adequate access to the European single market, while also gaining meaningful control of immigration. Her statist economic leanings are already being resisted by the free-market fundamentalists on her benches. Like all prime ministers, Mrs May must balance the desire for clarity with the need for unity.

“Brexit means Brexit,” she has repeatedly stated, underlining her commitment to end the UK’s 43-year European
affair. If Mrs May is to be a successful and even transformative prime minister, she must also prove that “serious change” means serious change and a determination to create a society that does not only benefit the fortunate few. 

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories