The Lib Dems' identity crisis just got a lot more critical

Coalition was meant to be a journey to political maturity and professionalism. But it's amateur hour yet again.

Let’s start, as justice demands we must, with the assumption that Chris Rennard, the Liberal Democrat peer and former party chief executive, is not guilty of allegations of sexual harassment levelled against him. They are not proven and he denies them. Still, since we know that Nick Clegg’s office was informed of complaints of that nature back in 2008, there can only be two possible reasons why the matter was not thoroughly investigated.

The first is that no-one really took the allegations seriously. The second is that the allegations were deemed grave and credible but the importance of Rennard to the Lib Dem political operation and the fear of besmirching his and the party’s good name made thorough investigation feel politically too risky. Both interpretations imply contempt for people who say they have been sexually harassed. Either way the party leadership comes out of the whole business looking negligent and disorderly.

That impression has been amplified by Clegg’s handling of the affair – specifically, his tantalising statement on Sunday, dragging Danny Alexander into an opaque narrative of "non-specific" allegations and vaguely sought reassurances. The Lib Dem leader admitted to having known something all along but couldn’t say exactly what it was. It is hard to imagine a response more finely calibrated to send the press pack into a feeding frenzy.

Most of the British press doesn’t need much incitement to sink claw and fang into the Lib Dems. The timing of the scandal – breaking in the middle of a crucial by-election campaign – has lead to some reasonable suppositions of ulterior anti-Clegg agendas at work. The Eastleigh campaign certainly adds electoral piquancy to the story but the Lib Dems can hardly complain about that. Wishing it had not come out now implies that there might have been some better time for it to come out, which is really a way of wishing it had never come out at all and that instinct is what makes the whole thing scandalous in the first place.

This is bad for Clegg. But how bad exactly? Most of the people in Westminster I’ve spoken too in the last couple of days think the Lib Dems will still hold Eastleigh. It is almost impossible to tell whether any of the Rennard-related news cuts through on the Hampshire front line. If it does, I’d imagine a likely consequence will be mildly affiliated Lib Dem voters staying at home on polling day. Since the party’s strategy on the ground relies on a ferocious Get-Out-The-Vote operation, a surge in abstentions would be problematic.

But I suspect the Lib Dems' pain in this saga will go further and deeper than seeing their by-election campaign blown off course. A central problem for the party since joining coalition government has been clarity of identity. They surrendered the vague pieties of perpetual opposition in the hope of graduating into the status of grown-up party of government.

Clegg’s office has a clear enough sense of where they think he and the party can stand on the political spectrum. They are supposed to be more compassionate than the dinosaur Tories and more fiscally rigorous than profligate Labour. Opinion polls don’t yield much evidence that the Lib Dems are actually perceived that way but the aspiration is plausible enough. There is, in theory, a gap in the political market – a Blair-shaped hole – for third-way candidates who combine economic rigour with a social conscience.

But to fill that gap the Lib Dems must above all look like a serious political outfit. The pitch is non-ideological and pragmatic. They are supposed to be the go-to guys for coalition when the voters don’t fancy handing unalloyed power to either of the bigger parties. They are offering themselves as the moderate technocrats who aren’t afraid of compromise and keep Westminster grounded and centred. You aren’t necessarily expected to like the Lib Dems anymore, but, according to Clegg’s strategy, you are supposed to think it worthwhile having them around in government.

The defining feature of this offer is professionalism and it is the absence of that very quality that stands out from the mess they are in over Lord Rennard. The charges themselves (unproven and denied, it must be said), the original handling of complaints five years ago and the sprawling case study in crisis mismanagement over the past week all conjure up the impression of an organisation staffed with chancers and over-promoted amateurs.

It is already pretty hard to overstate the problems with the Lib Dem brand. Not enough people know what they stand for. (Do they even know anymore?) Clegg himself is still seen as a slippery character, a betrayer of promises and a trader of principle for the baubles of office. The electoral life raft that strategists were crafting was fashioned from claims to be delivering stable, effective government. Lib Dem plans for 2015 are based on the hope that eventually some voters will come to look at their record in office and judge them to have been decent and useful. Yet here they are in a colourful parade of shabby and useless.

Nick Clegg renewing his coalition vows earlier this year. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty
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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.