So far the two main opposition leaders respond in markedly different ways to the recession. Claiming the mantle of responsibility, David Cameron opposes a fiscal stimulus. In contrast, Nick Clegg supports a temporary boost to the economy but opposes the cut in VAT, arguing that the money could be better spent. Cameron and Clegg both oppose the Government, but they line up against each other too.
Clegg has put his case in a series of speeches to coincide with his first anniversary as leader of his party. The speeches are revealing because they confirm his distance from both parties, Labour as much as from the Conservatives. Perhaps at some distant future date Clegg will join hands with another party and become part of a coalition, but for now he chooses to dance determinedly alone.
In a speech to the think-tank Demos, Clegg defines liberalism as "optimism in people" accompanied by ardent support for the dispersal of power. As he puts it, a liberal believes in the "raucous, unpredictable capacity of people to take decisions about their own lives". In the current crisis he argues that "we have to get the rules right to allow the dynamism of a liberal economy to serve society's wider needs ... it does not mean the state should seek to micromanage the economy or run vast swaths of it directly".
I await the details to see how this vision would work in practice. For all its epic flaws, government is sometimes a necessary counter to the inefficiencies and inequities that arise from raucous unpredictability. But Cameron would agree wholeheartedly with this section of Clegg's speech. Indeed Clegg's speech, with a deep wariness of the state at its heart, is one that Cameron should be able to make. Yet, as matters stand, he could not deliver anything like it. In the same speech, without any contrived contortion, Clegg was also able to place clear water (clear orange water, I suppose) between himself and the Conservative leader.
Clegg argues that the Conservative tradition oscillates wildly between a paternalistic view of the state to an "aggressive consumerism" and a "brittle, slightly neurotic nationalism abroad". He suggests that modern conservatism takes a paternalistic attitude towards social issues and a "sink-or-swim attitude" to those hit by the economic crisis and a "hatred" of the European Union.
In spite of Cameron's claims to be a "Conservative liberal", Clegg remains genuinely equidistant between the two bigger parties. It is not surprising that Clegg fumes against a government that has been in power for more than a decade and has an erratic faith of sorts in state activity. The distance of a genuine liberal from the Conservatives is more revealing. The gap between the two explains why Cameron ends the year in something of an ambiguous position. The Conservatives are still ahead in the polls and talk of a "Brown bounce" is much exaggerated, but the economic crisis has exposed the limits of Cameron's reforming zeal.
In the early phase of his leadership Cameron displayed original and astute strategic judgement as he presented Conservatism in a new light. He did so without changing many policies or greatly challenging internal orthodoxies. But, cunningly, he argued that Conservatives could bring about progressive ends. To adapt an old soundbite, he placed traditional Conservative values in a modern setting.
Cameron also understood the weakness of New Labour better than anyone else in his party and beyond, recognising that the ultra-Blairite wing of the Labour Party was there for the taking, closer to his instincts on some matters than to Gordon Brown's. His decision early in his leadership to back Blair's reforms of secondary schools was the most vivid and potent example of what might have proved a spectacular realignment in British politics.
The realignment did not happen. The economic crisis has unified, albeit precariously, the previously feuding Blairites and Brownites against the Tories. Instead of some Blairites keeping their fingers crossed that Cameron wins, the likes of Mandelson and co are working around the clock to make sure that he does not.
Cameron has got himself in an awkward position in relation to the recession. I can understand why he opposes the fiscal stimulus. It is not easy to highlight the recklessness of the Government's borrowing and then call for some more spending. There is also something to be said for opposing loudly anything associated with the Government's economic policies. I also appreciate that the decision to oppose was made following extensive consultations with the party's former chancellors. The trio of chancellors – Ken Clarke, Norman Lamont and Geoffrey Howe – have many qualities. Their attachment to the Conservative government's 1981 budget, where stringent measures were applied in the midst of another deep recession, is not one of them. In following their advice and opposing a stimulus now Cameron has left himself little wriggle room when, in the new year, I predict the overwhelming question will be whether the stimulus is big enough. Usually it is governments that become trapped by policies while oppositions have a degree of flexibility as they respond to events. The opposite is the case on this.
Cameron would have been on more fruitful terrain if he had attacked the Government for getting us in the economic mess while accepting the need for a stimulus, opposing the Government's VAT cut as a waste of money and putting forward other options.
Which is where Clegg is placed, supporting a stimulus but not the Government's version. In another anniversary speech he outlined some of the ways the £12bn wasted on the cut in VAT could have been spent. His proposals included funding for insulation and energy efficiency and reopening old railway lines. That sounds to me like a better use of fiscal stimulus on the eve of an era where public spending is going to get eyewateringly tight.
Not so long ago senior Liberal Democrats feared being wiped out by the Tories. Now they are more confident. Probably this is because Clegg is placed where Cameron ought to be if he had modernised his party – pragmatically pro-European, anti-state, putting the case for progressive taxes and some public spending savings.
Clegg has not done his sums. It is not clear yet how he would pay for some of his tax cuts. But in theory at least he outlines a liberal case that could be supported by most Conservatives if they were not obsessed by euro-scepticism and even bigger cuts in public spending, the details of which they have yet to specify.
The problem for Clegg is that he does not get noticed when he puts forward what is a distinctive and authentic voice. That will change if polls suggest that a hung parliament is likely. In the meantime it is Cameron, the potential prime minister, who will command more scrutiny than ever in the coming year. He would have had a greater chance of flourishing from the intense attention if he had moved his party closer to where the largely unnoticed Clegg stands now.
s.richards@independent.co.uk
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