Liberal Democrats

Tom Burgis

George Osborne

Welcome to our rolling coverage of the Autumn Statement.

George Osborne has missed his fiscal targets and cut corporation tax.

We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.

15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com

15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.

15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.

15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.

15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.

15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.

15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.

14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.

She says:

The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.

John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:

“Businesses need to see the Chancellor’s words translated into building sites on the ground.”

But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”

14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.

The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.

14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?

[blackbirdpie url="https://twitter.com/Peston/statuses/276330461142327296"]

Others are more chipper:

[blackbirdpie url="https://twitter.com/MJJHunter/statuses/276330252601524225"]

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Kiran Stacey

Parliament isn’t even in recess yet but already party conference season has begun.

Today, the Green party gathers in Sheffield for its annual get together. Why Sheffield? Possibly because it’s the (adopted) home city of Nick Clegg, whom Green leader Caroline Lucas intends to mock in her speech this afternoon, branding him “The minister for meeting angry people and getting shouted at”.

This is part of a concerted effort, it seems, to win over disaffected Lib Dem voters. She says to Lib Dem voters:

I have a special message for those of them who despair about the path their leadership has taken them down. If you became involved in politics to serve your local community, or to challenge the rich and powerful, or build a better future for the country, then join us.

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Jim Pickard

Allegra Stratton at the Guardian set the ball rolling yesterday on whether the Lib Dems are planning a new type of mansion tax – albeit under a different name.
The proposal is being kicked around by senior Lib Dem figures (such as Richard Reeves, policy wonk to Nick Clegg) but is meeting resistance from Tories. It is also unpopular with other Lib Dems such as David Laws (who is playing a key role in co-writing their “Tax 2020″ document). That’s right: Laws does not want it.
Wealthy FT readers in big houses may rest easy for a while longer.
Here’s our news take on it:
Owners of £1m-plus homes would have to pay capital gains tax when they sell up under attempts by senior Liberal Democrats to revive their “mansion tax” proposals.
At present CGT is paid at 28 per cent when a second home is sold but main residences are exempt from the levy.
But Lib Dems are considering whether sellers could be forced to pay the duty on any profits beyond a £1m tax-free threshold – a policy which could bring in billions for the exchequer.
Treasury officials have had discussions with experts in the property industry to find out how many people live in multi-million pound homes and where they are located.
However, the proposals are likely to meet fierce resistance from Tory ministers given that many Conservative voters live in homes worth more than £1m.
Vince Cable, as opposition Treasury spokesman, was forced to revise his original “mansion tax” proposal – an annual levy on big homes – after the Lib Dems realised that it would harm many of their suburban voters in south-west London.
The business secretary’s attempts to revive the mansion tax as a device to

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Jim Pickard

We were speculating only yesterday afternoon just how irritating George Osborne must find it to have a so-called “Lib Dem Treasury spokesman” criticising the Treasury and the banks week in, week out. By the evening the answer was spelled out as Lord Oakeshott parted company with the government by apparently mutual consent.

I last spoke to the peer last Friday, when he obligingly furnished a quote for our front page criticising the bonus paid to Bob Diamond, chief executive of Barclays. Read more

Jim Pickard

It seems as if the tension may be getting to some Liberal Democrats. I just called Lady Sharp, who is – it transpires – the party’s higher education spokeswoman in the House of Lords. Sharp is quoted in this morning’s Guardian prevaricating over tonight’s tuition fees vote. (“She pointed out that, even on official calculations, £2.7bn of the £10bn due to be lent annually to students will not be repaid.”)

With only a few hours to go before the peers’ voting, the peer still claims to be undecided: “I’m going to make up my mind during the debate,” she told me before hanging up the phone.

The prospect of all Lib Dem MPs — including Clegg and Cable — abstaining on the tuition fee rise never did seem likely.

Well, Vince Cable has consigned the idea to the dustbin, saying he’ll vote for a rise in fees. He broke the news to the Twickenham TimesRead more

If you asked a Lib Dem MP whether they would abstain on tuition fees given a free vote, the answer would almost certainly be no. Most of them have very strong views on the matter. Vince Cable just spelled out the obvious: his “personal instinct” is to vote for the policy he developed.

Yet when 57 Lib Dem MPs gather in one room, strange things begin to happen to their judgement.

Even Nick Clegg is now seriously considering the mass abstention option — bravely leading his party to sit on the fence.

To be fair, there are no good options. They will be punished for breaking their pledge to vote against a rise. But it seems that after countless hours of excruciating debate, they’ve decided the best way to minimise the pain is to not vote at all. Read more

Here’s another example of the OBR shrugging its shoulders at coalition policy.

The Office of Budget Responsibility reviews the Lib Dem-backed crackdown on tax avoidance and concludes that it will have no impact on compliance ratesRead more

There were two important “read my lips” moments in the election campaign. One was Clegg’s pledge to oppose a rise in tuition fees. The other was Cameron’s “contract” with the electorate on pensioner perks. Each pledge cost the Treasury a comparable amount (about £7bn and £4bn respectively). Only one politician had to eat his words.

This may be one of the most important trade-offs of the coalition. Tim Montgomerie has done a brilliant job of collating all the Con-Lib compromises so far. But a lot of them are obscure policy disputes, matters for the Westminster village. Most will hardly register with the electorate. Read more

One big test for any reform to higher education funding is whether students should be allowed to pay fees upfront. It exposes the political divide over how progressive the system should be. Here are the pros and cons:

Reasons for a ban: Allowing students to pay fees upfront is a rich kids charter. Those from wealthy families will be able to sidestep the burden of repayments placed on those from poor or middle income households. It will give the lucky a leg-up while giving the middle classes a sack of debt to carry. It will give a free pass to those without credit constraints while placing a tax on those who do. For all these reasons, it does not pass the political fairness test. Those who pay upfront will pay less in total than those who are forced to repay over 30 years. A duke will pay less than his university contemporary who turns to teaching in a primary school. Read more

1. Conference resolves to ban goldfish prizes at fairs

The purest expression of Lib Dem eccentricity. The 1992 conference had a serious downer on fairground animals. Some still claim it is a myth stemming from a mischievous reading of an animal rights resolution. But the story is too good to question.

2. Surprise Jeremy Thorpe appearance while facing conspiracy to murder charges

Imagine the look on David Steel’s face when Thorpe ignored an imposed ban and turned-up to the 1978 Southport conference. The legend goes that the conspiracy to murder charges were so serious that Thorpe only received a three-quarter standing ovation. A dramatic closed-door debate also considered a motion “regretting the actions of party officers” in asking him not to come.

3. Steel tells activists to “go home and prepare for government”

Pure conference gold. A classic of British politics. Even better than Jo Grimond saying “we’ve got our teeth into the red meat of government”. Unlikely to be bettered in any leader’s speech. Surely a perfect gag line for Clegg this year? Read more

Jim Pickard

It is hard to know sometimes whether Simon Hughes is playing a fiendishly complex strategic game in order to leverage anti-Tory forces within his own Liberal Democrat party and thus enhance his own reputation. Or whether he just can’t resist saying controversial things.

So it was with the VAT rise. Tuition fees. And with council housing. And now Mr Hughes (deputy leader the Lib Dems) is insisting that there will be no electoral pact between his party and the Tories come the next general election. (This is in contrast to Tories such as backbencher Mark Field, who has proposed a non-aggression agreement). Read more