Danny Alexander has just finished speaking; and it painted a very optimistic future, but bleak short term outlook. Whether party members like it or not, the deficit reduction plan will reduce the budgets of expensive spending areas – mainly welfare. As the conferenced vowed to oppose welfare cuts, Danny was direct and precise: it’s going to happen. Deal with it.
Senior Liberal Democrats have, reluctantly, adopted fiscal conservatism; that is, vowing to ensure public spending, the national debt and deficits are monitored and contentiously reduced – regardless of the economic circumstances. Even Tim Farron, party president and to the left of Alexander, took to the stage yesterday to oppose a motion calling on the party to abandon its fiscal mandate. Throughout the conference, senior figures are not shy to publicly silence the left on fiscal policy. More significantly, though, was the new attitude on taxation.
During the speeches of both Danny Alexander and Vince Cable, taxation on income and work were described as “too high”. I’ve read official conference policy debate literature, that discussed the potential adoption of abolishing National Insurance as future commitment. But what about income tax- would a future Liberal Democrat government lower the top rate even further, possibly below 40%? Introduction of wealth taxes *could* create a capital flight and any government would have to prevent this. Liberal Democrats are preparing themselves to be the first party to actually explain, and begin, the much needed reform of the British tax system – I hope.
But as I mentioned in the title, we are more or less a fiscal conservative party now. And we have to deal with it.