Nick Clegg speaks at the Liberal Democrat conference in Glasgow last year. Photograph: Getty Images.
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Beneath the surface, tensions are growing in the Lib Dems

Everything right now is analysed through the prism of "what it means about the leadership".

The daffodils are blooming, the sun is shining and the floods are receding – which can only mean one thing. It’s Lib Dem Spring Conference. This may come to a surprise to many, as unlike in previous years, where the rows have been heavily trailed and keenly anticipated, this time all seems sweetness and light. Sure, there’ll be debates and differences of opinion – but no one’s going to be resigning over motions on the best way to fight food poverty. And with the party set to take positive positions supporting immigration and Europe, why, it feels just like old times.

After some difficult conference moments for the leadership in recent times – for example, it’s exactly a year ago since Jo Shaw quit the party on stage over the Secret Courts debacle - the party looks to be at peace with itself.

Sadly, I fear this is not the case. Scratch the surface, and you find a party that’s tense, nervous about the future, especially worried about the European elections, and constantly looking out for trouble. Witness the reaction to Thomas Byrne's article last week (which named Alistair Carmichael as a potential leader) and especially a quote from someone in the party attacking the left. Over on Lib Dem Voice, that got the hairdryer treatment.

"Apparently, a member of party staff has been mean about Tim and referred to those many party activists who have a lot of time for him as 'sandal wearers.' I can’t honestly think of anyone actually working on proper election campaigns who would ever say such an insulting or dismissive thing. They know that they need every activist motivated and out there, telling the Liberal Democrat story, if we are going to have a hope in hell of achieving our goals this year and next. They would never insult members of the party who, by and large, have kept on working patiently on the ground"

Indeed, almost everything right now is analysed through the prism of "what it means about the leadership". Witness the announcement of the negotiating team for potential future coalition talks. Immediately it has been examined for every conceivable signal. It’s a sign of strength that Nick has appointed a team without reference to the wider party. Or else it’s a sign of weakness that Nick has not been brave enough to submit his choices for debate amongst the party at large. And why is the chosen line-up dominated by the left? Or indeed the right? And why now? Is it a distraction technique – get everyone in the party thinking about the general election to stop them thinking about the European elections? The debate seems endless.

The party is going to look confident, assured, positive and passionate on stage this week. But increasingly the debate behind the scenes that will dominate the bar conversation is around one question: after this May’s elections - what happens next?

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

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