Why Clegg could still face a leadership challenge next year

Lib Dem activists suggest that Clegg's position could still come under threat if the party finishes fourth or fifth in next year's European elections.

By any measure, Nick Clegg is having a good conference. He has won major votes on the economy, tuition fees, nuclear power, the 50p tax rate and Trident, confirming the Lib Dems' new status as a party of the "radical centre". These triumphs both reflect and reinforce Clegg's improved standing as leader. The Eastleigh by-election, which convinced the Lib Dems that they aren't facing wipeout in 2015, and the return of economic growth, which the party hopes to earn some credit for, means that talk of a leadership challenge by Vince Cable or anyone else has largely disappeared.

But speak to Lib Dems and you get the impression that Clegg's position isn't completely secure yet. One senior party activist told me that he could still face a challenge if the party performs particularly badly in next year's local and European elections, warning that "we could come fifth behind the Greens". Such a result would mean the loss of most or all of the party's nine MEPs. With a year to go until the general election, there would still be just enough time for the Lib Dems to contemplate a change of leader.

As Lord Oakeshott, one of those who would lead the revolt, noted in his pre-conference interview: "This will be much the biggest test we’ve had on a nationwide basis of our support and our appeal since the general election, so that’s why it will be crunch time. There will be no excuse when everyone has been voting, particularly in important areas like London. I think that’s when everyone will focus on things and I hope we will have a good hard look at our prospects for the election. There will still be time, but next May/June will be the last chance."

One group that hopes the Lib Dems might yet oust Clegg is the Tories. If it they are to win the next election, the Conservatives needs a Lib Dem leader who can win over Labour voters in Tory-Labour marginals. At present, after the defection of around a quarter of 2010 Lib Dem voters to Labour, the Tories stand to lose dozens of seats at the next election (Corby was an early warning) -  there are 37 Conservative-Labour marginals where the third place Lib Dem vote is more than twice the margin of victory.

The belief among the Tories is that a more centre-left figure such as Cable or Tim Farron, both of whom have signalled their availability, could prompt the party's former supporters to return home from Labour. Tim Montgomerie told me last year that "a left-wing replacement" of Clegg in 2014 was "vital to Tory hopes". Fortunately for Ed Miliband, the chances of him facing a new Lib Dem leader in 2015 have fallen further after Clegg's victories this week.

Nick Clegg on stage at the Liberal Democrat conference in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.