The Lib Dems must not accept more welfare cuts in return for new taxes

Higher taxes on the rich will not protect the poorest if spending is slashed.

We may no longer be in recession, but the nation still faces a critical year ahead. Choices that the government makes over wealth taxes and welfare spending in particular will shape the political economy, not just for the year ahead but for decades to follow, and recent signs are not encouraging. Beginning with George Osborne’s Autumn Statement on 5 December and culminating with a short and probably bitter Spending Review, the next year or so is the political equivalent of Alex Ferguson's "squeaky bum time" – only with livelihoods, not football, at stake.

The Tory party’s re-toxification under Cameron has continued apace since their party conference, whether through atavistic evidence-free posturing on crime and punishment, employment law or on welfare cuts – the latter, in particular, would ruin any chance the government has of keeping its promise of not balancing the books on the backs of poor.

Osborne doggedly adheres to a macro-economic platform being shown day by day to be more broken and discredited than previously thought. His insistence that reducing the deficit takes precedence over balancing the economy distorts spending decisions, and leaves today’s government and those that follow with their hands seemingly tied to a dangerous spiral of ever-harsher spending cuts. An alarming report from the Social Market Foundation and the RSA shows that closing the deficit on a rigid timetable, primarily through cuts, with neither tax rises nor growth playing a larger role, leaves us facing an additional £48bn of austerity. The knock-on effects on both demand and the quality of public services, and hence prosperity, are unthinkable – there comes a point, when you’re in a hole, to stop digging, and that time is now.

The determination to bring the deficit down by cutting welfare spending stems from the fallacy that feckless workshy scroungers are raiding the Exchequer, when the evidence shows that 93 per cent of new housing benefit claims are from in-work households and that the main driver of higher welfare spending is that we live longer. It’s the failure of wages to keep pace with spiralling cost of living – housing and fuel in particular – that means so many require in-work support. The Tories should be arguing for a living wage and investment in green growth if they want to shrink state spending in the long run, not cutting support to those who lose out in a dysfunctional economy. Senior Liberal Democrats are realising that further welfare cuts are unjustified – the party must not just reject £10bn in welfare cuts but anything in that region should universal benefits for better-off pensioners remain untouched.

Coalition is of course about trade-offs and compromise, but only up to a point. If the government decides to cut yet more from the welfare budget – without fixing the dysfunctional markets in pay and housing that leave millions needing in-work benefits – then is some form of higher tax on property an adequate trade-off? Most Lib Dems would say not, and those who will suffer the most from such a deal would no doubt agree. Alternatives to slashing welfare spending for the poorest do exist, including some from CentreForum, which advocates reforms to tax breaks for the wealthy. Using a mix of such reforms targeted to those who can afford to pay, and further flexibility in the speed of deficit reduction, the poorest could be protected from bearing the brunt of austerity; if only we had a more politically aware Chancellor.

The country faces a crucial twelve months, and of course we need a government that shows coalition can work, a united government. The question is, for whom should government be made to work, the parties who constitute it or the people they serve? Behind which policies should we unite? The Tories clearly refuse to make it work for millions whose living standards have fallen and whose lives have become more insecure, as their refusal to tax wealth and insistence on further welfare cuts shows.

Now more than ever, Liberal Democrats need to do more than just show that coalition works, but that it works for people in real world who are bearing the brunt of our economic malaise. Acquiescing to Tory demands in the vain hope of benefiting from government unity is not enough. The party’s leadership needs to show that the value of having Liberal Democrats in government is more than diluting Tory regressive tendencies, by clearly setting out how they’ll navigate next 12 months, and what they will not countenance.

Prateek Buch is director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee. He writes in a personal capacity.

Nick Clegg speaks at the Liberal Democrat conference in Brighton earlier this year. Photograph: Getty Images.

Prateek Buch is director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee.

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Tony Blair might be a toxic figure - but his influence endures

Politicians at home and abroad are borrowing from the former prime minister's playbook. 

On 24 May at Methodist Central Hall, Westminster, a short distance from where he once governed, Tony Blair resurfaced for a public discussion. Having arrived on an overnight flight, he looked drawn and puffy-eyed but soon warmed to his theme: a robust defence of liberal globalisation. He admitted, however, to bafflement at recent events in the world. "I thought I was pretty good at politics. But I look at politics today and I’m not sure I understand it."

Blair lost power in the summer of 2007. In the ensuing nine years, he lost reputation. His business ventures and alliances with autocrats have made him a pariah among both the public and his party. A YouGov poll published last year found that 61 per cent of voters regarded Blair as an electoral liability, while just 14 per cent viewed him as an asset. In contrast, John Major, whom he defeated by a landslide in 1997, had a neutral net rating of zero. It is ever harder to recall that Blair won not one general election (he is the only living Labour leader to have done so) but three.

His standing is likely to diminish further when the Iraq inquiry report is published on 6 July. Advance leaks to the Sunday Times suggest that he will be censured for allegedly guaranteeing British military support to the US a year before the invasion. Few minds on either side will be changed by the 2.6 million-word document. Yet its publication will help enshrine Iraq as the defining feature of a legacy that also includes the minimum wage, tax credits, Sure Start, devolution and civil partnerships.

Former leaders can ordinarily rely on their parties to act as a last line of defence. In Blair’s case, however, much of the greatest opprobrium comes from his own side. Jeremy Corbyn inclines to the view that Iraq was not merely a blunder but a crime. In last year’s Labour leadership election, Liz Kendall, the most Blair-esque candidate, was rewarded with 4.5 per cent of the vote. The former prime minister’s imprimatur has become the political equivalent of the black spot.

Yet outside of the Labour leadership, Blairism endures in notable and often surprising forms. Sadiq Khan won the party’s London mayoral selection by running to the left of Tessa Jowell, one of Tony Blair’s closest allies. But his successful campaign against Zac Goldsmith drew lessons from Blair’s election triumphs. Khan relentlessly presented himself as “pro-business” and reached out beyond Labour’s core vote. After his victory, he was liberated to use the B-word, contrasting what “Tony Blair did [in opposition]” with Corbyn’s approach.

In their defence of the UK’s EU membership, David Cameron and George Osborne have deployed arguments once advanced by New Labour. The strategically minded Chancellor has forged an unlikely friendship with his former nemesis Peter Mandelson. In the domestic sphere, through equal marriage, the National Living Wage and the 0.7 per cent overseas aid target, the Conservatives have built on, rather than dismantled, significant Labour achievements."They just swallowed the entire manual," Mandelson declared at a recent King’s College seminar. "They didn’t just read the executive summary, they are following the whole thing to the letter."

Among SNP supporters, "Blairite" is the pejorative of choice. But the parallels between their party and New Labour are more suggestive than they would wish. Like Blair, Alex Salmond and Nicola Sturgeon have avoided income tax rises in order to retain the support of middle-class Scottish conservatives. In a speech last August on education, Sturgeon echoed the Blairite mantra that "what matters is what works".

Beyond British shores, political leaders are similarly inspired by Blair – and less reticent about acknowledging as much. Matteo Renzi, the 41-year-old centre-left Italian prime minister, is a long-standing admirer. "I adore one of his sayings,” he remarked in 2013. “I love all the traditions of my party, except one: that of losing elections."

In France, the reform-minded prime minister, Manuel Valls, and the minister of economy, Emmanuel Macron, are also self-described Blairites. Macron, who in April launched his own political movement, En Marche!, will shortly decide whether to challenge for the presidency next year. When he was compared to Blair by the TV presenter Andrew Marr, his response reflected the former prime minister’s diminished domestic reputation: “I don’t know if, in your mouth, that is a promise or a threat.”

The continuing attraction of Blair’s “third way” to European politicians reflects the failure of the project’s social-democratic critics to construct an alternative. Those who have sought to do so have struggled both in office (François Hollande) and out of it (Ed Miliband). The left is increasingly polarised between reformers and radicals (Corbyn, Syriza, Podemos), with those in between straining for relevance.

Despite his long absences from Britain, Blair’s friends say that he remains immersed in the intricacies of Labour politics. He has privately warned MPs that any attempt to keep Corbyn off the ballot in the event of a leadership challenge would be overruled by the National Executive Committee. At Methodist Central Hall, he said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.”

It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.

It instead endures in a fragmented form as politicians at home and abroad co-opt its defining features: its pro-business pragmatism, its big-tent electoralism, its presentational nous. Some of Corbyn’s ­allies privately fear that Labour will one day re-embrace Blairism. But its new adherents would never dare to use that name.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad