Vince Cable hailed the Autumn Statement as "excellent" in Cabinet before heavily criticising the Chancellor in public, infuriating Conservatives who despair that aggressive Liberal Democrat rhetoric is badly damaging the coalition in its final months.
George Osborne was angry when it emerged in the wake of Wednesday's statement – and Mr Cable's praise – that the Business Secretary had argued that Conservative-led cuts to public expenditure were not achievable. News broke that Mr Cable had asked the Office for Budget Responsibility to make clear in its projections that there are differences between Conservative and Liberal Democrat policies, even though they are supposed to be partners in a united government.
Mr Cable's highly unusual intervention came as Deputy Prime Minister Nick Clegg boycotted the Autumn Statement in an apparent attempt to distance himself from the Tories before May's general election. Mr Osborne said that the Liberal Democrats had proved that "in private they sign up to all these decisions then in public they slag them off".
A senior Lib Dem source confirmed that Mr Cable had said in Cabinet that the Autumn Statement was excellent, arguing that policies such as the £15.2bn road improvements plan and reform of stamp duty had "Lib Dem fingerprints all over them". But the source added that the cuts proposed by Mr Osborne, who wants to achieve a fiscal surplus within five years, was a "separate issue" and were "not credible".
"If the Tory plans are followed through they will be deeply damaging, not just in terms of overall public services, but essential public services," said the source. "Vince thinks important decisions are being made without much public debate. The cuts being proposed by the Treasury, like Whitehall cuts and reforms worth £10bn a year, he doesn't believe are achievable."
However, the source dismissed suggestions that Mr Cable is warming to the idea of raising the standard rate of VAT from 20 per cent, should the Lib Dems form part of the next government. The coalition increased the rate from 17.5 per cent in the emergency budget that took place after the 2010 election.
The Business Secretary has argued that the next government, no matter its political composition, would have to raise taxes and Mr Cable recently said that "we're not ruling anything out". He has previously, though, admitted that VAT rises are "more contentious than most", as they are considered to disproportionately hit people on lower incomes.
Mr Cable's thoughts add weight to the argument that he would rather be in a Labour than a Tory-led coalition. Writing for The Independent on Sunday, Labour leader Ed Miliband argues that "any lingering pretence" that Mr Osborne and David Cameron were wedded to "compassionate Conservatism" had been "extinguished" by the Autumn Statement.
Damaged by being in the coalition and trailing badly in the opinion polls, the Lib Dems have been heavily critical of their Conservative partners since the autumn party conference season. This attempt to distinguish themselves has not worked, as they remain stuck on 7 per cent in the polls, leading many senior MPs to question the strategy.
At a recent party away-day, one MP, not considered to be friendly towards the Conservatives, is understood to have argued that the party should not keep attacking its coalition partners.
A number of other MPs agreed, though a party source argued that strategists are "very happy" that Mr Cable and other ministers criticise the Tories. "There is no suggestion that attacking the Tories is not a good idea," the source added.
Next month, the Lib Dems will continue to distance themselves from the Tories, effectively creating their own shadow cabinet. Election spokespeople will be selected for departments where the Lib Dems do not have ministers.
It is expected that Sir Nick Harvey will be handed, and accept, the defence brief, despite having been badly bruised when he was sacked by Mr Clegg as armed forces minister in 2012. The long-serving MP for North Devon is widely respected and was considered a strong minister.
There are suggestions Mr Clegg has offered outgoing party president Tim Farron the chance to shadow the Foreign Office. Although inexperienced in foreign policy, it would be a suitably high-profile brief for a man considered one of the party's biggest hitters; the Lake District MP is increasingly the favourite to succeed Mr Clegg should the Lib Dems suffer heavy seat losses next year.
But any move to install Mr Farron in the role would anger Martin Horwood, who currently speaks for the party on international affairs. Should Mr Horwood be given the job for the election, Mr Farron could be asked to represent the Lib Dems on issues related to culture, media and sport.
Yesterday the Lib Dems were selecting their candidate for Taunton Deane. The seat is currently held by Jeremy Browne, the darling of the Lib Dem right who shocked the party in October with his decision to stand down next year.
Even at the party conference the week before his announcement, Mr Browne was entertaining suggestions that he might stand in a future leadership election as a standard-bearer for Liberal views. But, having been sacked as a home office minister last year, Mr Browne is understood to have concluded that if he was unable to flourish under Mr Clegg's relatively right-of-centre leadership, his views would certainly be ignored under the more left-wing approach of Mr Farron.
Clegg vs Cameron
Fearing he has been tarnished by a perception he is a closet Tory, the Deputy PM is desperately trying to avoid being pictured next to David Cameron. As well as the Autumn Statement, when Nick Clegg was in the Lib Dem heartland of Cornwall, he has missed the last three Prime Minister's Questions. Mr Clegg started strengthening his attacks at the Lib Dem conference in October, when he said Mr Cameron could "copy our ideas" but could not "imitate our values" and criticised the "dated snobbery" of Tory right-wingers.
Cable vs Osborne
George Osborne's cordial relationship with the Lib Dem actually in the Treasury, Danny Alexander, has been a coalition success. But the Chancellor has not clicked with a Business Secretary who was once a member of the Labour Party. As well as the attacks on Mr Osborne's ambitions to clear the deficit within five years, last year Mr Cable warned of the dangers of "complacency" shortly after the Chancellor claimed the economy was "turning the corner". Mr Cable argued there was a risk of the housing market "getting out of control".
Hughes vs Grayling
The civil liberties minister, who was Lib Dem deputy leader until last year, was considered loyal to Justice Secretary Chris Grayling until November, when he told The Independent that the Tories had "failing, knee-jerk" policies on crime. Disputing Mr Grayling's claim that there was "no crisis" in Britain's overcrowded prisons, Simon Hughes argued that the Tories had introduced "sticking plaster solutions" that had seen a "revolving door" of criminals soon returning to jails. "This way lies madness," he argued. "It is a complete dead end."Reuse content