Editorial: Another tricky balance for Mr Clegg to strike

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With just two weeks to go, Coalition horse-trading over the Chancellor's Autumn Statement is intensifying. And if the stakes are high for George Osborne, they are hardly less so for Nick Clegg.

Although the economy is at least now growing again, the combination of recent recession and doubtful future leaves early December's "mini-Budget" a far from cheery affair. Even with the extra £35bn snatched back from the quantitative easing scheme, the Chancellor is almost certain to have to admit that the public finances are in too poor a shape to start paying off Britain's debts in 2015 as planned.

There is a political cost to the admission: opponents of the Government's deficit-reduction plan will claim it as evidence that the strategy is proving counterproductive. But the alternative – yet more swingeing cuts to public spending – would be costlier still. Why? In part, because austerity is already hurting so many. In part, because Mr Osborne has not yet set out how he will meet his other, altogether more important, fiscal target – to rein in routine Government overspending.

He has already acknowledged that the pain will continue into the next Parliament, thanks to the unexpectedly moribund economy. What he must do now, as well as explaining how he will boost growth, is spell out where another £10bn worth of savings will come from.

It is here that Mr Clegg comes in. Where the Chancellor has his cost-cutting eye on the Government's vast welfare bill, the Deputy Prime Minister wants to ensure that austerity is spread more fairly. Mr Osborne's original plan for a two-year freeze on all benefits was, therefore, immediately vetoed. But a revival of Liberal Democrat proposals for a mansion tax on homes worth more than £2m received similarly short shrift from the Conservatives.

The two sides are now inching closer to a deal: Mr Clegg has indicated he might accept a partial freeze (on Jobseeker's Allowance and Income Support, perhaps) provided it is balanced by a greater contribution from the wealthy as well. Extra council tax bands for expensive houses are one option under consideration, although Prime Ministerial opposition to property taxes makes a hike in top-end stamp duty more likely.

The trade-off is a reasonable one. But reaching a deal with the Chancellor is just the first of Mr Clegg's challenges; his own supporters may prove harder to persuade. While the Deputy Prime Minister has no option but to back a crimp on benefits – welfare is too sizeable a chunk of Government spending for it to be affordably left untouched – recent comments from a Liberal Democrat former minister branding the Coalition's benefits cap "immoral" hint at the strength of grassroots feeling on the subject. With Mr Clegg already fighting to retain the support of his party, signing off more cuts will only add to his travails.

Nor is it simply a matter of internal dissent. After the catastrophes of tuition fees and House of Lords reform, to name but two, the Liberal Democrats face electoral meltdown, accused of selling their soul for a snatch at power.

The only hope is to persuade supporters and voters alike that the party has been a real restraint on the Tories, that a higher income tax threshold, say, is a prize worth the compromises elsewhere. In fact, the unpopular Mr Clegg deserves a break. Coalition has hurt his party, but it was still the right decision for the country. Ditto tuition fees. Ditto – in this instance – a partial, temporary freeze on welfare payments, provided he can, indeed, secure a meaningful wealth tax in return.

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