The Lib Dems are already preparing to do battle at conference

While Clegg remains determined to drag the Lib Dems to the centre ground, the left of the party wants a divorce from Osbornomics.

It being summer, when the world’s thoughts turn to the key questions of the day, such as why does the unseasonably hot weather make the trains late and when will the royal baby turn up, in Lib Dem land we’re all mentally skipping July and August and embracing the advent of conference season. Yeah, really. Trust me, it will be Christmas before you know it.

While its unlikely that we’ll achieve the chart topping heights of last year's conference (don’t tell me you’ve forgotten already), Glasgow 2013 looks like being a classic and everyone seems determined to get their retaliation in early. On the one hand, we have the party establishment, determined to make us look like a party of government, owning the last three years' agenda and decrying the politics of protest. On the other, we have left of the party, equally determined to divorce ourselves from Osbornomics and make big eyes at Labour (Lib Dem members currently favour a 2015 coalition with Labour over one with the Tories by a majority of 2:1). Of course, there is the odd policy – like Trident – where we’ll be shouting 'a plague on both your houses'….

Meanwhile, we read Nick is preparing to frog march us kicking and screaming into the centre ground of politics, which is a bit rum, really, seeing as he was doing the same last December, and in September 2012, and indeed September 2011. If he spends much more time marching us into the centre we’ll be through the other side before you know it…let’s not give him any ideas.

So, dust ups left, right, and centre (figuratively at least) loom large and some of the joy looks set to return to conference. Votes at Lib Dem conference really mean something – party policy and manifesto content still does get debated and agreed and people really do hold the leadership to account. And that’s all going to kick off in just a few weeks' time.

So as MPs go off on their summer holidays, Lib Dem members are polishing their weapons of choice and dreaming of the leaves turning brown. Glasgow 2013 promises to be a bit of cracker.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

He's behind you, Nick. Photograph: Getty Images.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR