The Lib Dems should not sign up to Osborne's austerity straitjacket

The party must fight the election on its own terms - not the Tories'

Share

Amongst the undignified shouting and guffawing, George Osborne slipped a political timebomb into his autumn statement, whose significance may well shape the next general election. In setting what he sees as an elephant trap for Labour, he’s waving what ought to be an enormous red flag for his Liberal Democrat coalition colleagues – and may well have tied his own hands should he return to No. 11 Downing Street in May 2015.

The Liberal Democrats cannot, or rather should not, sign up to the Chancellor’s plan to lock in austerity – deeper than planned at any stage since 2010 – up to and beyond 2018. For one, it is economically illiterate. For another, the ink is barely dry on a hard-fought deal struck by the party to fight the next election on our “own distinctive economic policies,” including fiscal plans to aid investment in “people, business and infrastructure,” not on the same terms as Tory austerians. Any deal to balance the budget in the next Parliament no matter the state of the economy – and more importantly, peoples’ living standards – flies in the face of that independent economic position.

Far away from the autumn statement’s crowing about upwards revisions to growth – however unsustainable – and headline giveaways, the Chancellor's proposal to legislate for new fiscal rules would stretch fiscal consolidation far beyond those in his original – and long-since abandoned – Plan A.

Details are as yet sketchy but the plan for a new “charter for budget responsibility” probably means legislating for a balanced budget – eliminating not just the structural but absolute deficit – by 2018/19, and a shorter period on which to judge government spending plans than the rolling five years we have now.

This seemingly technical revision to how government finances work could have utterly devastating consequences on already-stretched public spending. Many serious commentators are already questioning the credibility of aiming for a balanced budget by a set date, not least if there are to be no tax rises beyond the unreliable “anti-avoidance measure” that seems to pay for everything these days. A charter that set a three-year fiscal mandate instead of a five-year rolling rule would effectively remove the government’s ability to borrow to invest – anathema to Osborne but crucial in light of the Office of Budget Responsibility’s gloomy assessment of private investment, which has fallen not risen by their original optimistic estimate. If business isn’t investing, and the Government is determined to balance its books by a set date no matter what, there’s only one outcome – years if not decades more of underinvestment in crucial infrastructure and services, and get more demand sucked out of a fragile economy.

Worse, it will mean yet more spending cuts for their own sake, distorting spending decisions for years to come. The talk of limiting “annually managed expenditure” – welfare to most of us – is an example, as it risks great damage to the most vulnerable in society for no good reason.

All this would be fine if it were just the Tories’ chief election strategist plotting in his elaborate garden shed. But this vein of thinking risks inflicting real damage between now and 2015, and makes it even less likely that millions who have missed out on the recovery will feel any gain.

As for the Liberal Democrats, there are reports that Osborne and Nick Clegg have agreed that a budget surplus will be a feature of this new charter. Balanced budgets don’t necessarily signify a balanced economy – something Help to Buy and lower household savings are moving us further and further away from. They are only of value if the real economy is providing people with the capability to live fulfilling lives. Should Clegg sign up to Osborne’s plans, especially as at the Lib Dems’ Glasgow conference in September he conceded the need to tax the wealthy more, he’ll have to answer not only for what the charter commits the nation to, but for what his party stands for if not a distinctive vision on the economy.

Prateek Buch is director of the Social Liberal Forum

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
 

Errors & Omissions: A widow’s tale with an unexpected twist

John Rentoul
 

For all his faults, Russell Brand is utterly sincere, something politicians should emulate

Janet Street-Porter
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing
The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower