So what did the Lib Dems actually stop the Tories doing?

Today's budget rather gives the lie to the Lib Dem 'Scooby Doo' message of 'look what the Tories would have done if it wasn't for the meddling Lib Dems'.

The budget contained  two major public policy changes. Firstly switching the focus from the government subsidising low pay to the government forcing employers to pay a living wage.  And secondly lengthening the period of fiscal consolidation to smooth the public spending cuts.  These two changes would almost certainly (rightly) have been supported by the Lib Dems if they had remained in government (and the latter was basically the party's economic position two months ago).

The fact that both leadership candidates slammed the budget on the basis that the Tories were returning to right wing form without the Lib Dems was as predictable as it is wrong.  And it is extremely worrying for the future of the party that both contenders simply basically rehashed the disasterous Coetzee/Clegg messaging - the messaging that was comprehensively rebuffed by the electorate a few weeks ago.

The Scooby Doo message was ineffective as it relied on people understanding a bunch of imponderables - it's impossible to judge the effects of things that didn't happen.  And it was part of a wider failure of the Clegg leadership of failing to define a distinctive Lib Dem agenda for government meaning people could not tell what part of the coalition policy was down to which party.

But now that Osborne and the Conservatives have comandeered a fairly major part of both the Lib Dem and Labour economic policy and are likely to dominate the economic centrist space for the foreseeable future some rethinking is needed - and fast.

I don't expect Labour to come up with any credible rethink, but the Lib Dems must.  If whoever wins the leadership can't find a new and better vision for the economy that understands the values being promoted by Osborne's budget today, then there is little hope for the party. 

Exclusive: leaked footage of George Osborne's budget speech rehearsal

Chancellor George Osborne made much of choices in his budget speech this afternoon.  In one short passge he used the phrase 'we choose' nine times.

But winging it's way to LOWA towers was this leaked footage of his private rehearsals.  As you can see some of his language was quite fruity then...

Danny Alexander's currency union u-turn

Lib Dem Voice (among others) reports Danny Alexander has ruled out a post Scottish independence currency union in the strongest possible terms.  He states: "a currency union would create unacceptable risks both for Scotland and the rest of the United Kingdom."

This surely can't be the same Danny Alexander as press spokesman for the pro european currency union campaign Britain in Europe who told the Guardian in 2002, "When the euro fell below dollar parity, anti-Europeans were rubbing their hands with glee. There's egg on faces now,"

Now I don't know whether Danny actually now believes currency unions 'create unacceptable risks' or has simply gone native and is just parroting the Osborne Treasury line.  But what I do know is that it is stupid politics both for the 'No' campaign and the Lib Dems.

It's stupid for the No campaign as there is nothing more certain to get the opposite reaction in Scotland than for Westminster politicians to tell the Scots what they can do.  And it is stupid for the Lib Dems as they have denied themselves the opportunity to point this out.

George Osborne joins the ranks of Keynsians

George Osborne's speech at the Tory conference today has been widely reported as a call for continued austerity.

But what struck was the key passage - his call for the public finances to be in the black when the economy was strong as insurance against a rainy day.

Isn't that what Keynes argued - run a budget surplus in the good times and a deficit in the bad to even out demand?

The problem with Osborne...

...is that he is just too concerned with political point scoring as this response to a perfectly reasonable question from David Miliband on the Autumn statement shows. (The full debate and exchanges can be downloaded from the Hansard website). 

David Miliband (South Shields) (Lab):

This time last year, the Chancellor told me not to worry about youth unemployment on the grounds that his Youth Contract would take care of it. Now we know that 450,000 young people have been unemployed for more than six months and that 179,000 have gone on to the Work programme but only 5,920 have got a job as a result. That is 3% of those going on the Work programme and less than 2% of the long-term youth unemployed. Will he now agree, without point scoring, to look at the level of the wage subsidy to incentivise take-up, at the structure of the Work programme, so that voluntary organisations are not squeezed out, and at the role of a part-time job guarantee to give hope to these young people?

Mr Osborne:

The right hon. Gentleman often has interesting and intelligent things to say about welfare to work programmes, and I am happy to consider the points he makes. I read some of his work earlier this year—it was quite a good job application for being shadow Chancellor.

Osborne's credibility as Chancellor is reduced by this undergraduate debating style and his use of political beartraps in his proposals.  He should take a leaf out of Vince Cable's book and play it straight and grown up.

Coalition should call Balls's bluff over economy

On C4 news tonight Shadow Chancellor, Ed Balls, called for a grand coalition to deal with the economic crisis.  You can watch it here.


Obviously, given it's Balls he is unlikely to be serious about the offer - he's only interested in the short term tactical embarrassment ot the government.  But it carries risks for Labour - if they were brought into the key economic decisions, then they become just as culpable for this stage of the recession as the Lib Dems and Tories.  And that can only be a benefit to the coalition parties.

Which is why they should take him up on his offer.  But given the personal animosity between Balls and Osborne, the offer will be rejected and Balls's tactics will have (again) won the day over the supposedly superior strategist, Osborne.  But that shouldn't stop Vince Cable entering the fray.

The one budget U-turn we won't see...

'... today George Osbourne admitted cutting the 50p top rate of tax was a mistake and agreed to continue with it until economic conditions were suitable for tax cuts.'

If he did however, he might start to restore some of his recently (deservedly) shredded reputation for economic competence.  It might also help the Conservatives deal with the issue that they are perceived as a bunch of out of touch rich boys.

Time to end the CGT loophole

Capital Gains Tax (CGT) was the focus of the first disagreement between the coalition in the run up to George Osborne's first budget in 2010. Lib Dems were committed to increasing its rate to that of the individual's income tax and Conservatives wanted it kept at the 18% it was reduced to by Gordon Brown.

In the end a compromise was reached. A new top rate of 28% was introduced following Treasury advice that this would maximise tax take.

But the marginal rate of CGT isn't really the issue. For those people investing in property there is something called 'Principle Residence Relief' which allows them to disregard the three years capital gain before a sale - provided the property has been their principle residence at some point during their ownership.

It seems perfectly reasonable to discount the tax liability based on the time a person has actually spent in their property - but to give them an extra three years bonus is just a hidden bung for property investors.

It means you can buy a property - live in it for a few months while renovating it - let it out for three years, sell it and not pay a penny CGT despite the property increasing in value by tens of thousands of pounds.

Given the state of the country's finances and the general under taxation of property, ending this tax relief would seem a good way to raise revenue from people who can afford it and rebalance taxes a little bit further away from those on low incomes and onto property speculation.

Oh and you may have guessed I have been doing my tax return! (Hence the lack of posting)...

Time for Moore to stop digging

Despite Michael Moore's (no doubt) best intentions the Lib Dem response to the Scots referendum question just digs a deeper hole for the party whose very existence north of the border is hanging on a shoogly peg.

The table on this report from the Beeb shows how the party has allowed itself to be painted into a unionist hole into which Alex Salmond is shovelling JCB loads of seperatist rubble. The Liberal Democrats as a party that has always backed home rule should not be seen to be impeding the properly expressed wish of a democratically mandated Scots government.

A period of silence from Moore, Cameron and Osborne on the constitutional question would be welcome - and might buy the Scottish party some breathing space to remove itself from the unionist hook it has impaled itself on.

Time for Lib Dems to stop playing into the SNP's hands

There's an old saying in American politics - run against things that are unpopular. And it's a lesson the Lib Dems need to learn urgently in Scotland.

As the SNP leave their annual conference to campaign for Scottish independence in a referendum at a time of their choosing and with questions of their own making - the odds are stacked in their favour.

In Alex Salmond the SNP have the most popular politician north of the border - by several furlongs. His administration governs with a sensitive and populist ear to Scots vaguely corporatist, leftist and self pitying desires. And he has the ability to turn any attack on the SNP into an attack on the Scottish nation itself.

So attacking the Salmond government seems to be about as likely to succeed as attacking the first Blair government. So why then are nine out of ten news items on the Scottish party's website attacks on this popular administration? All it does is reinforce the SNP's message that it is them against the unionist parties.

The Scottish Liberal Democrats have never been a unionist party - they have always supported the self determination of the Scottish people and if that means separation so be it. It is crass stupidity to be caught on the wrong side of the independence debate when there is no benefit from it and it is not where the party has historically been.

This analysis from the wonderful named (and astute) Scottish BBC political correspondent - Glen Campbell - shows that Lib Dem ministers are actively colluding with George Osborne - one of the least attractive Tories from a Scottish perspective - to examine whether to force the SNP's hand through pre-empting Salmond's referendum. This would be a foolish move - both for the Liberal Democrats and for defenders of the union who would simply bolster Salmond and the SNP by doing so.