This morning’s news was full of the growing rift between Nick Clegg and Vince Cable over the economy. The two’s differences were to be exposed in all their glory at the leadership motion on “Strengthening the UK economy”, a motion to “welcome recent improvements in the UK economy” to be summed up by Nick Clegg, and which might be seen as a Lib Dem attempt to take some credit for the burgeoning recovery.
But Vince Cable has expressed concern about whether the recovery is truly sustainable and has always been more favourable towards greater economic stimulus. Initial speculation centred around whether Vince Cable would even turn up to today’s debate. In the end, he did, and the motion was carried.
So are we back in a Plan A vs Plan B argument? Does this augur significant splits in the Lib Dem leadership as they begin to think about what will be red lines and what will be on the wish list for the 2015 manifesto? You could be forgiven for thinking so. But much of the difference between Clegg and Cable is on what should have happened, not what should happen next.
The economy expanded by 0.7% in the second quarter of this year. Initial house price data suggests that the economy may be on its way to being well and truly stimulated. Decisions on cuts have already been taken. The cuts versus stimulus debate is not settled: we don’t know what would have happened had George Osborne taken a different path. But in terms of its relevance today, the debate is over.
By contrast, the question for the next election is about who shares in the future growth in the economy, and who takes the brunt of the remaining cuts. Here, Nick Clegg and Vince Cable are very much at one. Both want to ensure that low income workers are rewarded. Nick Clegg has set out his proposal for raising the personal tax allowance so that no one on minimum wage pays income tax. Vince Cable is arguing for an increase in the minimum wage and controls on zero-hour contracts. And both are keen on taxes on the wealthiest in society, such as wealthy homeowners.
The living standards debate is hotting up, and there is no shortage of policy ideas coming out the Lib Dem leadership. Today’s victory for Nick Clegg will help to draw a line under what was the defining question of the last election and focus on what will be a key dividing line at the next.