The Liberal Democrats have made their boldest step yet to distance themselves from Conservative economic policy when David Laws, a former deputy to George Osborne described the chancellor’s public spending plans to 2020 as a political suicide note and so severe that it makes Thatcherism look like a policy devised by Tony Benn.
The language deployed by Laws is startling since he is seen as being on the right of the Liberal Democrats and for a short period was Treasury chief secretary when the 2010 spending review was prepared.
At one point when not in the government Laws called for public spending to be cut back to 35% of national income.
But in an intervention on Sunday he claimed the Conservatives have made a politically catastrophic error in trying to draw up rightwing economic dividing lines that will require cuts in some Whitehall departments of a quarter.
Conservative voters who value the armed forces, police and prisons will be worried by the “mind-boggling” consequences of the cuts, Laws said.
He also predicted “panic” in the Tory ranks and more jockeying for position among senior ministers who want to replace David Cameron if opinion polls do not show support picking up.
Laws accused Osborne of a “huge policy and strategic blunder” on a par with Michael Foot’s 1983 manifesto – a byword for electoral disaster which was dubbed “the longest suicide note in history”.
Laws predicted that the Tory plans will “unravel” under the scrutiny of an election campaign or will prove to be a “rightwing version of Michael Foot’s manifesto”.
Laws will face charges of hypocrisy since he was a key architect of the original austerity package in 2010, but with the Liberal Democrats now primarily in a battle to hold on to its seats where its chief challenger is the Tories, its strategic goal must be to depict the Tories as extreme. That way they hope to win over centrist Tories and secure anti tory tactical votes of Labour supporters.
Laws said: “This will be seen to be a very extreme and very rightwing suicide note because all those people who care about the education service, about the police, about the armed forces … will see that the plans they have put forward are hugely damaging and dangerous.”
He added: “In order to deliver this scale of savings you are talking about having to find cuts in the unprotected budget of around a quarter in the next parliament.”
Even then the Conservatives will only achieve their goals if they find welfare cuts on a scale that “would hugely increase the levels of poverty in the country”.
The Liberal Democrats have – like the Tories – signed up to clearing the deficit in day-to-day spending in 2017-18, but say this must be achieved by some tax rises, and not, as the Tories plan, only though spending cuts. Nick Clegg’s party also does not support the £12bn of welfare cuts proposed by Osborne in the first two years of the parliament.
The Liberal Democrats, like Labour, would allow extra borrowing for capital investment, and unlike the Tories would not seek to achieve a surplus on the current and capital account surplus by the end of the next parliament.
The Office of Budget Responsibility has forecast there will be an overall surplus of £23bn by the end of the parliament on the basis of the spending projections sent to the OBR by the Treasury ahead of the autumn statement.
The surplus would be achieved because the Treasury sent the OBR an assumption that total spending after 2017-18 would be flat in real terms and not rise with economic growth.
The assumption leads to public spending as a total reaching its lowest level per head for decades. So far most polling has shown the plan for this level of cuts is unpopular with voters. Labour has claimed it represents a return to a state the size of the 1930s.
Osborne’s and Cameron’s plan “has been cobbled together on the back of a fag packet” to try to draw dividing lines with the other parties including Ukip, Laws said. Conservative MPs may be shocked by his words “but they need to sit down and look very carefully at the figures”.
“It is easy to talk about balancing the books by cutting spending and not raising people’s taxes and of course that sounds popular,” he said.
“But when you look at what the consequences are for the armed forces, police and education you realise it is a very extreme, rightwing strategy”.
With the Liberal Democrats now primarily in a battle to hold on to its seats where its chief challenger is the Tories, its strategic goal must be to depict the Tories as extreme, so winning over centrist Tories and securing anti-Tory tactical votes of Labour supporters.
