Why did the Lib Dems really U-turn on spending cuts in 2010?

Andrew Adonis's 5 Days in May offers new evidence of the party's disastrous economic misjudgement.

The Lib Dems have received no shortage of criticism for their failure to keep their tuition fees pledge (prompting that infamous apology from Nick Clegg) but there's been surprisingly little scrutiny of a far more significant U-turn, that over spending cuts. 

Although it's now hard to recall, the party ran on an anti-austerity platform at the general election, opposing any in-year spending cuts. In March, for instance, Clegg declared that "merrily slashing now is an act of economic masochism", adding that he would not compromise on this point in any coalition negotiations. "If anyone had to rely on our support, and we were involved in government, of course we would say no." On 1 May, less than a week before polling day, he reaffirmed his position: "My eight-year-old ought to be able to work this out -- you shouldn't start slamming on the brakes when the economy is barely growing. If you do that you create more joblessness, you create heavier costs on the state, the deficit goes up even further and the pain with dealing with it is even greater. So it is completely irrational."

Yet once the results were in and parliament was "hung", the Lib Dems made no attempt to keep their pledge to oppose immediate cuts, abandoning it even before they entered coalition negotiations with the Tories. Nor was this merely a pre-emptive attempt to appease Cameron and Osborne in the hope of concessions elsewhere. As Andrew Adonis's excellent 5 Days In May (which I have reviewed for this week's NS) reveals, the Lib Dems insisted in their talks with Labour that "there could and should be immediate in-year spending cuts for 2010/11 and 'further and faster' spending cuts than Labour's plans thereafter."

When challenged a month later to explain his Damascene conversion to austerity, Clegg cited "the complete belly-up implosion in Greece" and "a long conversation a day or two after the government was formed" with Mervyn King. The claim that the Greek crisis proved the need for cuts was odd coming from a man who had earlier warned that premature austerity would lead to "Greek-style unrest" and, as for King, Chuka Umunna has previously noted on The Staggers that the Bank of England governor told him during a Treasury select committee hearing that "he had given Clegg no new information on the debt situation during their chat". (Clegg, never a stickler for consistency, later confessed that he had changed his mind before the election.) 

But Adonis's invaluable account has revealed a new justification. He writes that during the talks between the two parties, Chris Huhne argued that "immediate cuts were now possible without jeopardising the recovery because the depreciation of sterling in recent weeks 'has provided a large, real, extra stimulus to the economy.'" This claim was repeated in a later meeting by David Laws, who argued that "the fall in the value of sterling made immediate cuts possible without an impact on the recovery." 

This, to put it mildly, is not a judgement that has aged well. After the coalition entered power and imposed £6bn of immediate spending cuts, including to infrastructure programmes such as Building Schools for the Future, the recovery that had begun under Labour ended and Britain fell into a double-dip recession. Those, like Ed Balls and Martin Wolf, who warned that tightening fiscal policy was the last thing a government should do during a slump were entirely right, and those, like Huhne and Laws, who argued that the economy was robust enough to bear early austerity were entirely wrong. As the UK endures the slowest recovery for more than 100 years, the Lib Dems do not to deserve to avoid their share of responsibility for this dismal outcome. 

Chris Huhne, Danny Alexander and David Laws leave the Cabinet Office following talks with the Conservatives on 9 May 2010. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Lord Empey: Northern Ireland likely to be without government for a year

The former UUP leader says Gerry Adams is now in "complete control" of Sinn Fein and no longer wants to be "trapped" by the Good Friday Agreement

The death of Martin McGuinness has made a devolution settlement in Northern Ireland even more unlikely and has left Gerry Adams in "complete control" of Sinn Fein, the former Ulster Unionist leader Reg Empey has said.

In a wide-ranging interview with the New Statesman on the day of McGuinness’ death, the UUP peer claimed his absence would leave a vacuum that would allow Adams, the Sinn Fein president, to consolidate his hold over the party and dictate the trajectory of the crucial negotiations to come. Sinn Fein have since pulled out of power-sharing talks, leaving Northern Ireland facing the prospect of direct rule from Westminster or a third election in the space of a year. 

Empey, who led the UUP between and 2005 and 2010 and was briefly acting first minister in 2001, went on to suggest that, “as things stand”, Northern Ireland is unlikely to see a return to fully devolved government before the inquiry into the Renewable Heat Incentive scheme is complete -  a process which could take up to a year to complete.

“Adams is now in complete control of Sinn Fein,” he said, adding that it remained unclear whether McGuinness’ successor Michelle O’Neill would be “allowed to plough an independent furrow”. “He has no equal within the organisation. He is in total command of Sinn Fein, and that is the way it is. I think he’s even more powerful today than he was before Martin died – by virtue of there just being nobody there.”

Asked what impact the passing of McGuinness, the former deputy first minister and leader of Sinn Fein in the north, would have on the chances of a devolution settlement, Empey, a member of the UUP’s Good Friday Agreement negotiating delegation, said: “I don’t think it’ll be positive – because, for all his faults, Martin was committed to making the institutions work. I don’t think Gerry Adams is as committed.

Empey added that he believed Adams did not want to work within the constitutional framework of the Good Friday Agreement. In a rebuke to nationalist claims that neither Northern Ireland secretary James Brokenshire nor Theresa May can act as honest or neutral brokers in power-sharing negotiations given their reliance on the DUP’s eight MPs, he said: “They’re not neutral. And they’re not supposed to be neutral.

“I don’t expect a prime minister or a secretary of state to be neutral. Brokenshire isn’t sitting wearing a hat with ostrich feathers – he’s not a governor, he’s a party politician who believes in the union. The language Sinn Fein uses makes it sound like they’re running a UN mandate... Gerry can go and shout at the British government all he likes. He doesn’t want to be trapped in the constitutional framework of the Belfast Agreement. He wants to move the debate outside those parameters, and he sees Brexit as a chance to mobilise opinion in the republic, and to be seen standing up for Irish interests.”

Empey went on to suggest that Adams, who he suggested exerted a “disruptive” influence on power-sharing talks, “might very well say” Sinn Fein were “’[taking a hard line] for Martin’s memory’” and added that he had been “hypocritical” in his approach.

“He’ll use all of that,” he said. “Republicans have always used people’s deaths to move the cause forward. The hunger strikers are the obvious example. They were effectively sacrificed to build up the base and energise people. But he still has to come to terms with the rest of us.”

Empey’s frank assessment of Sinn Fein’s likely approach to negotiations will cast yet more doubt on the prospect that devolved government might be salvaged before Monday’s deadline. Though he admitted Adams had demanded nothing unionists “should die in a ditch for”, he suggested neither party was likely to cede ground. “If Sinn Fein were to back down they would get hammered,” he said. “If Foster backs down the DUP would get hammered. So I think we’ve got ourselves a catch 22: they’ve both painted themselves into their respective corners.”

In addition, Empey accused DUP leader Arlene Foster of squandering the “dream scenario” unionist parties won at last year’s assembly election with a “disastrous” campaign, but added he did not believe she would resign despite repeated Sinn Fein demands for her to do so.

 “It’s very difficult to see how she’s turned that from being at the top of Mount Everest to being under five miles of water – because that’s where she is,” he said. “She no longer controls the institutions. Martin McGuinness effectively wrote her resignation letter for her. And it’s very difficult to see a way forward. The idea that she could stand down as first minister candidate and stay on as party leader is one option. But she could’ve done that for a few weeks before Christmas and we wouldn’t be here! She’s basically taken unionism from the top to the bottom – in less than a year”.

Though Foster has expressed regret over the tone of the DUP’s much-criticised election campaign and has been widely praised for her decision to attend Martin McGuinness’ funeral yesterday, she remains unlikely to step down, despite coded invitations for her to do so from several members of her own party.

The historically poor result for unionism she oversaw has led to calls from leading loyalists for the DUP and UUP – who lost 10 and eight seats respectively – to pursue a merger or electoral alliance, which Empey dismissed outright.

“The idea that you can weld all unionists together into a solid mass under a single leadership – I would struggle to see how that would actually work in practice. Can you cooperate at a certain level? I don’t doubt that that’s possible, especially with seats here. Trying to amalgamate everybody? I remain to be convinced that that should be the case.”

Accusing the DUP of having “led unionism into a valley”, and of “lashing out”, he added: “They’ll never absorb all of our votes. They can try as hard as they like, but they’d end up with fewer than they have now.”

Patrick Maguire writes about politics and is the 2016 winner of the Anthony Howard Award.