Clegg Rules Out Joining SNP in Supporting Labour Government

British deputy prime minister Nick Clegg campaigns for his Liberal Democrat Party in Abingdon, England, March 29
British deputy prime minister Nick Clegg campaigns for his Liberal Democrat Party in Abingdon, England, March 29 (Liberal Democrats/James Gourley)

Britain’s deputy prime minister, Nick Clegg, on Friday ruled out supporting a Labour government that also relies on Scottish nationalists for a majority in Parliament.

The Liberal Democrat leader told the Financial Times he would not “help establish a government which is basically on a life support system, where Alex Salmond could pull the plug any time he wants.”

Salmond, the former Scottish first minister, will lead the Scottish National Party in Westminster where it is projected to take as many as 54 out of 59 Scottish seats — an increase of 48 for the party that advocates independence. Given that many of the nationalists’ gains would come at Labour’s expense, the socialist party could probably only form a government with their support.

If Labour does worse in next month’s election than the polls now predict, however, it could need the support of a third party to take power.

Clegg said he wouldn’t be that third party and lamented that Labour had been consumed by “frothing bile” toward the liberals for the past five years.

After the 2010 election, Clegg could have supported Labour but chose to go into coalition with David Cameron’s Conservatives instead.

On Friday, he argued that any coalition with the party that finishes second in the election would lack “legitimacy.”

You cannot provide stability, you can’t take difficult decisions, if people are constantly questioning the birthright of a government.

Cameron is likely to fall short of an outright majority but could emerge with the most seats like last time.

Clegg claims the Liberal Democrats are the only party that can rein in the Conservatives’ worst instincts. He criticized the bigger party’s “socially regressive” plans for spending cuts as well as its “obsession” with Europe which he said undermined British influence in the world.

But the liberals have already accepted that a referendum on European Union membership will take place under another Conservative-led government and the two parties broadly agree on what fiscal policy should look like the next five years.

Both are in favor of raising the income tax threshold to take low-wage workers out of tax. Both want to keep spending down in order to reach a balanced budget within the next few years. Both agree the National Health Service should be exempt from austerity. They even agree “benefit tourism” from other European Union countries must be stopped.

Politically, another coalition also makes sense for leaders in both parties.

Cameron doesn’t want to be beholden to the most reactionary lawmakers in his party who would take Britain out of the European Union and cut back the state to such an extent that it would certainly alienate centrist voters.

Clegg has already lost many of his left-leaning voters to either Labour or the Greens. Joining the SNP in supporting a Labour government would appal his remaining moderate voters in especially the south of England.

Europe Referendum “Red Line” for Britain’s Liberals

Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012
Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012 (Cabinet Office)

British deputy prime minister Nick Clegg would rule out another coalition between his Liberal Democrats and the Conservative Party if the latter insist on calling a referendum on European Union membership.

Prime Minister David Cameron, the Conservative Party leader, has promised to call such a vote by 2017 if he wins the election in May. Read more

Clegg, Osborne Criticize Each Other’s Budget Plans

British deputy prime minister Nick Clegg is interviewed in Paris, France, October 30
British deputy prime minister Nick Clegg is interviewed in Paris, France, October 30 (UK in France)

British deputy prime minister Nick Clegg sharply criticized his Conservative coalition partners on Sunday, saying they were “kidding themselves” if they thought they could simultaneously balance the budget and reduce taxes.

The Liberal Democrat leader’s criticism came after the Conservative chancellor of the exchequer, George Osborne, had accused the smaller party in The Sunday Times of having no credible tax plan.

“While they sign up to deficit reduction, they want more tax rises rather than spending cuts,” he wrote.

But they shouldn’t pretend to people that the sums required can be achieved by their homes tax alone. If you want higher taxes to do the heavy lifting, you’d also need to increase taxes such as income tax or national insurance.

Clegg said on the BBC’s The Andrew Marr Show later in the day his party would like to raise taxes on expensive homes. His proposal seemed awfully similar to the one Osborne announced in his budget statement this week: for homes to be taxed more progressively.

Osborne said buyers of homes under £250,000 would pay a 2 percent tax while the rate for homes over £1.5 million would be 12 percent.

The key difference between Osborne’s plan and the “mansion tax” Labour and the Liberal Democrats support is that the first tax is only paid when homes are sold whereas the other parties would tax houses every year.

Clegg also left the door open to further income tax increases for the rich after insisting his priority was reducing the tax burden for lower incomes.

He would not admit that such a policy makes it very hard to balance the budget but did say the government should take advantage of low interest rates to finance investments in the economy, suggesting he would be in less of a hurry than Osborne is to close the fiscal gap.

Clegg’s criticism — that Conservatives are “kidding themselves” and British voters “if they are claiming that it is possible to balance the books, deliver unfunded tax cuts, shrink the state and support public services in the way that everybody wants” — is not unfair either. Beyond further reductions in welfare, Osborne has yet to make clear what cuts he would make to reduce the deficit from £91 billion next year to zero by the end of the next parliament. With the National Health Service exempt, it is difficult to see how other departments, such as defense, education and police, wouldn’t be seriously affected.

But there’s more to this than numbers that don’t add up, Isabel Hardman writes at The Spectator.

Beyond the obvious — “there’s an election on the way and no party wants to appear to be an annex of another one” — the electoral strategies of the two ruling parties are at play.

The Liberal Democrats, polling at just 6 percent in the latest YouGov survey, down from 23 percent in the 2010 election, seek to persuade voters they’re still relevant because they are the only ones who can temper the Conservatives.

The Conservatives, on the other hand, polling at 32 percent — not enough for a majority — make the case that only a majority Conservative government can deliver fiscal discipline and tax relief.

So Osborne argues in his piece that the LibDems have the wrong attitude toward the economy while Clegg wants to argue that he’ll bring a new level of honesty to the debate by claiming the Tories are kidding themselves.

Clegg “Not Going to Change Course” On Budget Policy

Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012
Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012 (Cabinet Office)

British deputy prime minister Nick Clegg said on Sunday that the government was “absolutely not going to change course” on fiscal policy. At the same time, he argued that it had been much more “pragmatic” than critics of its austerity program would allow.

“When we saw that the economic situation was tougher than many people anticipated, that growth was going to take longer to recover in full,” he said in a BBC interview, “we didn’t dogmatically cut further,” rather extended the deadline for reducing Britain’s debt until after the next election.

Earlier in the week, the Liberal Democrat appeared to question the wisdom of fiscal consolidation when he told The House, a weekly political magazine, “If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government.”

We have all realized that you actually need, in order to foster a recovery, to try and mobilize as much public and private capital into infrastructure as possible.

On the BBC’s The Andrew Marr Show, the leader of Britain’s junior ruling party argued that the government was mobilizing such capital investment in infrastructure and housing construction to foster job growth.

First, you can encourage the private sector to do it. You can give them incentives to do it. Secondly, you can make savings elsewhere in government and divert that money to capital investment. And thirdly, you can borrow pots of money and do it that way. We’re doing two of the three. We’re doing the first two.

The latter, he added, “The idea that we can simply return to the bad old days of borrowing our way out of the crisis,” as the Labour Party attempted when it was in government, “is clearly not possible when we still have one of the largest deficits in the developed world.”

Because if you just shrug your shoulders and say, “I’m sorry, it’s too complicated,” we end up asking our children and our grandchildren to pay off this generation’s debts.

Even if, as Cregg pointed out, the coalition had reduced the deficit by a quarter, public-sector spending in terms terms hasn’t declined since it came to power after the 2010 election. Indeed, it was almost 4 percent higher in 2011 than in 2009, Labour’s final full year in power. Borrowing last year was higher than in the year before. By the time of the next election, scheduled for 2015, the Treasury expects to spend £756 billion compared with £683 billion in 2012.

Critics, among them Labour opposition members, nevertheless allege that spending cuts can force the British economy into another recession. Growth figures published on Friday revealed that gross domestic product had declined .3 percent in the fourth and final quarter of last year, more than the .1 percent contraction that had been forecast by analysts. Despite job growth, Britain’s economy is still 3.3 percent smaller than during the first quarter of 2008.

The coalition government, in which Prime Minister David Cameron’s Conservative Party is the senior partner, made reducing Britain’s budget shortfall, which hit a record 11.2 percent of GDP before the 2010 election, its priority. Disappointing economic output has forced it to set back its fiscal targets by two years. The national debt as a percentage of GDP is not expected to fall before the next election, rather by the 2016-2017 financial year.

Reductions in spending growth as well as education and health-care reforms have hit the popularity of Clegg’s centrist Liberal Democrat party especially hit. Opinion polls suggest that it is now smaller than the right-wing United Kingdom Independence Party, which advocates a British exit from the European Union, as leftist voters defected to Labour.

Cameron’s Conservatives, by contrast, appear on the rebound since the premier promised a referendum on Britain’s European Union membership on Wednesday. A Survation poll published in The Mail on Sunday had his party at 31 percent, up two points at UKIP’s expense. A ComRas poll, published in The Independent, had the Conservatives at 33 percent. Both surveys still showed Labour in the lead.

The Conservatives’ Euroskepticism could further test the coalition as Clegg’s Liberal Democrats favor deeper economic and political integration with the countries on the continent.

“I’ve no fear at all of a referendum,” said Clegg. “Where I do differ from David Cameron is the idea that it’s good for our economy, good for growth and good for jobs […] to then spend years and years flying around from one European capital to the next fiddling around with the terms of Britain’s membership of the European Union.” The job of reviving Britain’s economy is “made more difficult,” he argued, while the country is “having arcane debates about the precise terms of the membership.”

Given their poor performance in the polls, the Liberal Democrats are nevertheless unlikely to leave the coalition prematurely.

Clegg Criticizes Cuts as Britain Slides Into Recession

Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012
Deputy Prime Minister Nick Clegg of the United Kingdom delivers a press conference in Whitehall, London, January 16, 2012 (Cabinet Office)

Britain’s deputy prime minister, Nick Clegg, questioned the government’s austerity program as the country teetered on the brink of a third recession.

“If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government,” Clegg, who leads the minority Liberal Democrats, said in an interview with The House on Thursday, a weekly political magazine.

We have all realized that you actually need, in order to foster a recovery, to try and mobilize as much public and private capital into infrastructure as possible.

Growth figures published on Friday revealed that British gross domestic product had declined .3 percent in the fourth and final quarter of last year, more than the .1 percent contraction that had been forecast by analysts.

Britain’s economy is still 3.3 percent smaller than during the first quarter of 2008, before the financial crisis plunged the country into recession with much of the developed world with it. Its recovery has been far more lackluster than most other industrialized nations’. It slipped back into recession in the last three months of 2011 and could very well again in the first quarter of the new year.

The coalition government, in which Prime Minister David Cameron’s Conservative Party is the senior partner, made reducing Britain’s budget shortfall, which hit a record 11.2 percent of GDP before the 2010 election, its priority. Disappointing economic output has forced it to set back its fiscal targets by two years. The national debt as a percentage of GDP is not expected to fall before the next election, rather by the 2016-2017 financial year.

Declining approval ratings, which have hit the Liberal Democrats especially hard as centrist and left-wing voters defected to Labour, put further pressure on the coalition. Chancellor of the Exchequer George Osborne insists that the government must stay the course. “To turn back now would be a complete disaster,” he told the BBC last month.

Infrastructure investments to stimulate economic activity, as championed by Labour and mentioned by Clegg on Thursday “would take us back to the problems that [Labour] created in the first place,” he argued.

Despite the opposition’s and Clegg’s criticism of budget cuts, spending in real terms hasn’t actually been reduced. Total public-sector spending was almost 4 percent higher in 2011 than in 2009, Labour’s final full year in power. Borrowing last year was higher than in the year before. By the time of the next election, scheduled for 2015, the Treasury expects to spend £756 billion compared with £683 billion last year.

The liberal-conservative coalition is further tested by Cameron’s plan to call a referendum on Britain’s membership of the European Union after the next election, announced on Wednesday. The Conservatives, coping with Euroskeptics within their own ranks and opposition from the right-wing United Kingdom Independence Party, seek renegotiated terms of membership while the Liberal Democrats favor deeper economic and political integration with the countries on the continent. The liberals previously suffered defeat in a referendum on electoral reform in 2011 that would have given their party a better chance of winning more seats in Parliament.

Did David Cameron Do “Bad Deal” on Europe?

Britain’s deputy prime minister Nick Clegg said that he was “bitterly disappointed” about David Cameron’s veto to European treaty changes last week.

The Liberal Democrat leader told the BBC that any further withdrawal from Europe risks making Britain “a pygmy in the world.” He blamed the “intransigence” of France and Germany for Britain’s isolation. Both countries pushed for a fiscal compact of European nations. Britain was the only member state to oppose fiscal union.

Clegg also criticized Euroskeptics within the ruling Conservative Party who, he alleged, had pressed the prime minister to show “bulldog spirit” in negotiations.

There’s nothing bulldog about Britain hovering somewhere in the mid-Atlantic, not standing tall in Europe and not being taken seriously in Washington.

The liberals, who are far more enthusiastic about European integration than their conservative coalition partners usually are, have reason to be concerned. As Cameron pointed out on Friday, more than half of British trade is conducted with others countries in the European single market. Being a member of the European Union is very much in Britain’s interest.

His wariness of surrendering sovereignty to Brussels stems from those very interests however. Britain stood little to gain from becoming part of a European fiscal union and much to lose — the fortunes of London’s financial district for one thing but also, eventually, the freedom of maintaining a competitive tax regime. France and Germany favor harmonization of tax rates across Europe, something Britain and Ireland have objected to.

The other Europeans should not be blamed for blocking a British exemption from regulatory and tax harmonization. Smaller countries like Estonia, the Czech Republic and the Netherlands also stand to lose business if they have to rein in their financial sectors and raise corporate tax rates so why should they tolerate a special status for Britain?

Indeed, none of these countries should have to undermine their competitiveness in the name of boosting competitiveness across the continent and Britain should be leading the fight for a two tier Europe with a eurozone core that embraces fiscal integration and a periphery that’s economically too divergent to belong to a monetary union but quite prepared to be part of the common market.

Cameron’s “bulldog” backbenchers and their call for a referendum about British membership of the EU are an asset in this regard. The threat of a British exit should compel eurozone leaders to reconsider their insistence that the entire Union adopt their plans for fiscal consolidation and financial reform.

As for Clegg, his party is mired in single digits in opinion polls. He won’t split the coalition and risk a snap election now.

British Liberals Decimated in Local Elections

Britain’s Liberal Democrats lost almost half of their councilors in local elections on Thursday. According to party leader Nick Clegg, the liberals were being “blamed” for coalition budget cuts.

A simultaneous referendum to change Britain’s voting system was also expected to bring defeat for the country’s largest minority party. Both the Conservatives and Labour campaigned to maintain the “first past the vote” system which makes it difficult to third parties to compete.

Many liberal votes went to Labour. The socialists fall one seat short of a majority in the Welsh Assembly but the Scottish National Party won an absolutely majority in their local parliament, making it the first party ever to do so.

The Democratic Unionists and Sinn Féin were expected to remain the largest parties in the Northern Ireland Assembly. Throughout the United Kingdom, the Conservative vote was holding up.

Clegg, who is also deputy prime minister in a coalition government with the Conservatives, told the BBC last night that his party was bearing “the brunt of the blame” for unpopular spending cuts which were bringing back “memories of things under Thatcher,” the conservative prime minister during the 1980s. While some party members urged him to resign, the Liberal Democrat leader promised to “redouble our efforts” and “get up and dust ourselves down.”

Prime Minister David Cameron said that the coalition government would “work for the full five years” of this parliament to rein in public spending and restore economic growth.

The liberals have lost popularity in government, particularly among students and young urban professionals. Voters punished them for agreeing to raise the value-added tax from 17.5 to 20 percent and their support for an education reform measure which they claimed to oppose ahead of last year’s parliamentary elections.

The Liberal Democrats’ plight is comparable to the struggle of liberals in Germany who have performed poorly in local elections this year. Both parties have their base divided. Leftists were disillusioned by their support for deep spending cuts while moderate voters are drawn further to the right where they find conservatives who share their concerns about immigration and crime and don’t appear that hostile to welfare provisions anymore. There isn’t much room left for social liberalism in the center.