Liberal Reform welcomes many of the individual measures outlined in the Autumn Statement. The faster-than-expected increase in the income tax personal allowance and the freeze in fuel duty are particularly welcome, and reflect the Liberal Democrat priority of reducing the tax burden on those on low and middle incomes.
We also welcome the increase in capital expenditure, paid for by shifting current spending. This moves resources to the area with the most positive effect on economic growth, and will begin to undo some of the damages caused by Labour’s swingeing cuts to capital investment in their last months in government.
Liberal Reform is also pleased that many benefits will rise in cash terms next year, although there will be a small real terms cut in a number of benefits. However, we would much rather have seen the welfare bill reduced by stopping the numerous unnecessary payments made to those on high incomes. At a time of austerity it is indefensible to be protecting benefits for the well-off while cutting those for the poorest.
Liberal Reform’s nonetheless has concerns over the strategy adopted by the Liberal Democrats in the run up to the Autumn Statement. We supported Nick Clegg’s call for wealth taxes to contribute at least equally to any additional deficit reduction relative to welfare cuts. But the party seems to have set out its stall before walking away and forgetting about it.
Any negotiator knows that to threaten an action only to not follow through with it drastically weakens one’s position. In the face of Tory intransigence in refusing to introduce higher taxation on wealth, the Liberal Democrats should have followed through with our promise not to support further savings from the welfare bill. What incentive is there in future negotiations for the Tories to heed our demands if we don’t stick to what appear to be very clear red lines?