Why the election for a new Liberal Democrat leader could be the key to voting Johnson out

I would normally have commented on what the Chancellor announced last Wednesday, but much of it was covered in my post last Tuesday where I talked about vouchers, VAT cuts on social consumption, green investment, and unemployment support. The only issue with what he did was that he should have done more of all those things. 

I did not, in that review of interesting policy options, talk about his cut to stamp duty or his £1000 bonus if firms re-employ a furloughed employee, because the former is tried and tested and the latter is not a good policy. The number of firms where that £1000 will make a difference is likely to be very small. The main beneficiaries are companies that do not need help to continue, rather than those who are in trouble because of the pandemic. Which is why the head of the HMRC does not think it is value for money.

Some criticised Keir Starmer for saying the country cannot afford such a costly measure with so little effect, because he implicitly dared to suggest that there was a constraint (beyond inflation) on what the country could afford. The implicit suggestion from some is that there are no limits to what government debt can be. When interest rates control inflation that suggestion is in my view incorrect. While a government that issues its own currency can never be forced to default, it can choose to default (or more likely force the central bank to raise inflation) because the tax burden required to service debt gets too great. While that is a remote possibility today, particularly while real rates are so low, it is prudent not to increase government debt for no good reason. One day real interest rates will rise and then it will be costly to adjust debt quickly. Don’t mention the deficit is a kind of overreaction to austerity. Which brings us to the contest to be next Liberal Democrat leader.

You can frame this contest in many ways (see first hustings here), and one is about the legacy of austerity. Ed Davey was a cabinet minister in the Coalition government that embarked on one of the biggest post-war macroeconomic policy errors since WWII. The other remaining candidate, Layla Moran, was first elected in 2017, and is on the left of the party. Austerity is no longer de rigueur in the Conservative party of Brexiters, but its legacy is still very much with us. Among voters on the left, those who were in positions of power during the austerity period will not be forgiven.

It is not just among the left where the realisation is growing that austerity was a massive error. As a result of the pandemic the government’s deficit is likely to rise well beyond levels seen during the recession that followed the Global Financial Crisis. Yet, if you believed the LibDem leader back in 2010 that we were on the verge of a funding crisis, it is odd that no one is talking about a funding crisis today. It looks increasingly likely that the only material difference between the two episodes is that back then Labour were in power when the deficit rose, and today it is the Conservatives. Either the LibDem leadership at the time shared the Tory desire for spending cuts, or they were duped.

Why does that matter? After all, in most of the contests where the LibDems have a realistic chance of winning or losing it is a Conservative who is the realistic alternative. Following the logic of triangulation, the LibDems just need to be a little to the left on economic policy compared to their Conservative opponent. Anyone further left is less likely to win over voters who would otherwise vote Tory. I have seen this logic used by many supporters of Davey, and I think it is best incomplete

The triangulation logic is based on there being two parties in the relevant contests. In reality there are at least three. As a great believer in tactical voting against the Conservatives, I am always struck at each election at how many Labour votes there are in many LibDem target seats. One of the problems I consistently found in trying to persuade Labour voters to vote LibDem in LibDem target seats in the last election was austerity. More than once I was told ‘I cannot vote for the LibDems when their leader was part of the Coalition austerity government’. Winning target seats is about winning over ex-Labour voters at least as much as it’s about winning over ex-Tory voters.

There is a further point to make. I really doubt that many of those who might switch from Tory to LibDem are going to be familiar with the details of the LibDem manifesto. As long as that manifesto is safe in not containing anything the Tory press can effectively use to frighten voters, whether the LibDem leader is to the left or right in LibDem terms probably matters little. What matters much more is their record. To quote Wera Hobhouse:

“Anyone who voted for coalition policies and, more importantly, anyone who directly served in the coalition government, has a record of supporting and steering a centre-right agenda. Andrew Neil and the wider media were all too quick to point this out when, as leader, Jo Swinson attempted to position herself as progressive.”

Whatever Ed Davey may call himself today, his voting record is not centre-left.

Historically the LibDems have done well when there is widespread dissatisfaction with the incumbent government, particularly Conservative governments. In 1964 their vote share almost doubled compared to the previous election. It more than doubled in 1974 compared to 1970. It rose from just under 14% to over 25% in 1983 relative to 1979. It rose from just under 17% in 1997 to 23% in 2010. Its share today is now well below those heights in part because it is still associated with the Coalition government. The new LibDem leader needs to offer a clean break from that past.

It might seem attractive to some to put aside all thoughts of influencing the government (even Davey has rule out another coalition with the Tories) and try to become the Conservative party that Johnson/Cummings either expelled in 2019 or sidelined in 2020. However there is no future for such a party. As we saw with UKIP, the Conservatives are very good at absorbing any opposition to their hegemony on the right. For the Conservative party Johnson/Cummings are an aberration caused by a referendum gamble that didn’t pay off, and as long as our pluralist democracy survives that aberration is unlikely to last long, and certainly will not survive an election defeat.

The big picture is that the priority for any LibDem or Labour party member, or indeed anyone in the centre of UK politics, should be to preserve our pluralistic democracy and get rid of the Johnson government at the next election. The LibDems need to be part of helping speed the demise of this government. If the Tory lead before the next election is as solid as it is now, then some form of cooperation between opposition parties will be vital in defeating the Conservatives. Whatever form that cooperation takes, it will be made much easier if a minister from the austerity government is not leading the Liberal Democrats. Tribalism prevented cooperation happening in 2019, and leaving the EU plus tens of thousands of unnecessary deaths have already been the consequence. Repeating the same mistake again would be unforgivable.