David Cameron and Nick Clegg address a press conference at 10 Downing Street on July 10, 2014. Photograph: Getty Images.
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How the Lib Dems' attacks on the Tories help Labour

The two-against-one dynamic harms the Tories while exposing Clegg's party to the charge of hypocrisy. 

In the early months of the coalition, Labour figures frequently lamented the two-against-one dynamic that allowed the Tories and the Lib Dems to pin the blame for the financial crisis on them. The argument that it was overspending by the last government that "got us into this mess" gained credibility by being made by both parties. 

In recent days, it has felt as if this dynamic has been reversed. Nick Clegg and Danny Alexander have sounded like opposition politicians as they have accused the Tories of planning to "inflict unnecessary pain" on the country (Alexander) and of "kidding" voters over the feasibility of their deficit reduction plan (Clegg). After the Autumn Statement, and just five months away from the election, the Lib Dems are seeking to differentiate themselves from the Conservatives in two respects: their willingness to impose tax rises on the wealthy to eliminate the remainder of the deficit, rather than cuts alone, and their preparedness to borrow for investment. Both of these stances are shared by Labour, which has also pledged to introduce a mansion tax on properties above £2m and has left room for deficit-funded capital spending. 

Although there are differences with Ed Miliband's party too - the Lib Dems would follow the Tories in eliminating the structural current deficit by 2017-18, rather than by "the end of the next parliament" - Clegg is focusing on distinguishing his party from the Conservatives. There is a specific psephological reason for this. Of the Lib Dems' 56 seats, the Conservatives are in second place in 37. To hold on to these constituencies, the party needs to focus on winning tactical votes from left-leaning Labour and Green supporters (as it has done in the past). By talking up the dangers of a future Tory government, it hopes to persuade progressive voters that the safest option is to vote Lib Dem.

There are two important ways in which this helps Labour. The first is that the party's positions gain greater credibility by being supported by the Lib Dems. It is harder for the Tories to dismiss Labour's economic stances as nonsense when they are endorsed by the people they have been in government with for more than four years. When the Conservatives refuse to introduce any further tax rises on the wealthy and reject calls to borrow to invest in housing, they look like the odd ones out. Moderate Tory MPs have long complained that the Lib Dems have "retoxified" their brand by taking credit for the "nice" things the government has done and blaming them for the "nasty" things. 

The second is that the Lib Dems' attacks on their coalition partners expose them to the charge of hypocrisy and inconsistency (one swiftly made by George Osborne yesterday). When Clegg's party complains about the "unncessary pain" planned by the Conservatives, Labour will remind voters that they supported the bedroom tax, the tripling of tuition fees and the top-down reorganisation of the NHS. If the Tories are as nasty as the Lib Dems suggest, why vote for the people who have sat in cabinet with them since 2010?

It is this argument that troubles Lib Dems such as Jeremy Browne, who argue that Clegg has made a dangerous error by distancing the Lib Dems from the government (for instance through his absence at last week's Autumn Statement). Rather than attacking the Tories, they argue that the party should devote more time to claiming credit for the coalition's achievements. Browne told the Huffington Post that the "biggest danger for the Lib Dems is having one foot in government, and one foot out" and warned against moving from "being a party of protest to a party of protest-in-government." It is notable that, far from recovering in the polls, the Lib Dems have lost further support since embarking on "aggressive differentiation" from the Tories. Based on the results so far, Labour should hope that it long continues. 

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.