Why Nick Clegg is wrong, wrong and wrong

Stung by accusations of targeting the poor in the Comprehensive Spending Review, not to mention misleading voters by reneging on central electoral promises in exchange for power, deputy Prime Minister Nick Clegg has decided to pick a fight with the respected think-tank the Institute for Fiscal Studies (IFS). There can only be one winner in this fact spat, and it will not be Mr Clegg.

In the the run up to the 6 May 2010 General Election, many voters turned PM Gordon Brown's television debate remark "I agree with Nick" into a slogan to indicate that, whether Liberal Democrat or not, they backed major political and constitutional change as well as progressive social policies. They now feel badly let down, deceived even - particularly on the latter front.

But far from looking sheepish, Nick Clegg has come out fighting. When the Institute for Fiscal Studies concluded, on the basis of detailed analysis, that the CSR was "regressive" - that is, that its tax and spending measures hit the bottom fifth of the population, relative to income, much more than the top fifth - the deputy PM lashed out.

He said the Institute's conclusions were "distorted and a complete nonsense" and accused them of "airbrushing" facts. No more Mr Nice Guy, eh Nick? The truth, however, is that Mr Clegg is wrong, both factually and morally.

One of his main arguments is that concentrating on the impact of massive benefit cuts is "unfair" (sic!), because "[p]eople do not live only on the basis of the benefits they receive... [t]hey also depend on public services, such as childcare and social care." Indeed, Nick, and these are about to be hit by huge local authority cuts under pressure from deflated budgets, including childcare cuts of up to £30 a week. Councils will face overall reductions of 7.1 per cent every year for the next four years; a 28 per cent cut overall. In fact, nearly half the reduction in structural borrowing by 2014-15 will come through cuts in public services.

These services, let it be said, are most important to the more vulnerable members of society, who will also be heavily impacted by half a million direct job cuts - and possibly an equivalent job loss in the private sector through knock-on effects, if PricewaterhouseCoopers, the world's largest accounting and services firm, is to be believed. That's a million jobs, on top of a current unemployment figure of 2.47 million.

Yesterday Mr Clegg was pleading with councils not to start axing jobs too soon. But before he tries to wiggle out of his local authority hole by arguing that they have at last been given powers to switch money between budgets, it should be pointed out that this gain will be mightily offset or lost as a result of the overall squeeze. In other words, money to pay for nursing homes and other social care services will now have to be taken from other portions of local authority expenditure. Or not, in some cases. The more you look at it, the worse it gets.

Then there's the much trumpeted 'pupil premium' for poorer children. This will be swamped by cuts in the classroom (for schools that do not win the lottery they are now being asked to enter) and the impact of local authority reductions on poorer families, analysts point out. Student leaders say that the 'tertiary premium' is also "wholly inadequate" and "a sticking plaster" in the face of massive incoming increases in student fees and living costs. The initial sums bear these claims out. The full impact is yet to be seen.

Mr Clegg then makes two further arguments, equally flawed. He says in the CSR that the top two per cent of earners will pay the most as a share of their income. True, but simply a way of avoiding the main point. The cuts are still regressive across the vast majority of the income scale. The overall hit to the top fifth is the equivalent of one per cent of income. For the bottom fifth it is three times that size, proportionately.

If you take a family's public services away from them, do you need to know how rich they are to judge whether the cut is fair? Astonishingly, Mr Clegg and Mr Osborne, both Oxbridge educated millionaires, say you don't. This just shows how little they know about the real world faced by the most vulnerable. It is relevant because a rich family has the resources to get their services another way. If they lose their right to free child care they can afford to pay for it. The poor family almost certainly can't. The state plays much less of a role in the life of households in the top fifth of the income distribution. Not to take that into account is either ignorance or dissembling.

So it turns out that the "nonsense" and "airbrushing" in this little (but rather important) argument over the likely impact of the CSR is not being deployed by the Institute for Fiscal Studies, but by Nick Clegg. Don't let him fool you otherwise.

Back in March 2008, I interviewed (http://www.ekklesia.co.uk/node/11866) the then new Liberal Democrat leader for the Christian culture and social comment magazine Third Way. He struck me as a decent man, but with inherently conservative instincts, despite his attempts to sound like a wave-maker. Tellingly, he failed to mention societal justice as a component of his core political beliefs, and he feigned not even to understand why many people see a tension between economic and social liberalism.

With his enthusiastic back-slapping of Conservative chancellor George Osborne on 20 October, we now understand why.

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(c) Simon Barrow is co-director of Ekklesia, and writes the regular 'Westminster Watch' column for Third Way magazine.

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