Clegg’s confused narrative offers no remedy to Britain’s problems

DIFFERENTIATION is increasingly the centrepiece of the Liberal Democrats’ political strategy. Back in the halcyon days of May 2010, as Nick Clegg and David Cameron flirted together in the Rose Garden, the over-arching message was about how much the LibDems and the Conservatives had in common.

But as the coalition has struggled towards the halfway point of its parliament and thoughts turn to the next election, the governing parties have a habit of highlighting their differences, not their similarities. This isn’t really about future government policy, it is about drawing electoral battle lines.

The LibDems are beginning to reach the conclusion that “holding your nerve” and “getting on with the business of government” is not yielding dividends among the wider electorate. The party’s prevailing poll ratings are somewhere between poor and utterly dismal, often showing them vying with Nigel Farage’s United Kingdom Independence Party in the distant battle for third and fourth place. Local election results have seen a serious erosion of the party’s council base and it is hard to imagine the circumstances in which the LibDems could pull off one of their famous mid-term parliamentary by-election triumphs, so often the source of both an upswing in national publicity and a morale boost for long-suffering activists in the past.

But if Clegg’s recent musings about the need to hit the wealthiest harder are anything to go by, it seems the LibDems have lost sight of who they need to be talking to. The confused narrative seems to be that if you like the coalition but don’t much like the rich, then you will feel comfortable voting for the LibDems. A message of this nature surely only has niche appeal, to put it mildly. Indeed, in many ways it is something of a marvel that the LibDems still tend to be polling into double digits.

The deputy prime minister has retreated into the comfort zone of calling for greater “fairness”. This is one of those cherished LibDem buzz words which is essentially impossible to either oppose or to define. Everyone agrees that the rich should pay more in taxes than the poor. And even the most cursory of glances at the statistics shows they do so. In spades. The top 1 per cent of earners, so reviled by many Occupy campaigners, pay over 25 per cent of all income tax and the top 10 per cent account for more than half of all income tax receipts. Those with the broadest shoulders are already carrying a very heavy burden; precious little gratitude they seem to get for it. But Clegg feels sure that those of considerable wealth need to contribute even more to the state so that “they feel they are making a contribution to the national effort”. If you are a high earner, and pay your taxes, you are already making a substantial contribution to the national effort. The country needs more millionaires, not fewer. That requires a taxation system which unambiguously rewards effort and excellence – as well as a prevailing culture which celebrates achievement rather than envies it. In modern Britain, we risk ending up with neither. If Clegg is concerned about some of the more bizarre exploitation of loopholes by the affluent, such as Jimmy’s Carr’s notorious K2 scheme, he should set about simplifying our tax code. Given our tax rules run to several times the length of War and Peace, it’s hardly surprising that only the well-heeled and well-advised find cracks in the system.

Similarly, if the LibDem leader is concerned about taxes which hit the relatively poor, it would be consistent for him to push for a lowering of tobacco and alcohol duties. Instead, he seems keen on placing a minimum price on booze, which will have zero effect on affluent types who quaff their claret, but will hit those on very tight budgets who hope to afford a can or two of Special Brew.

There is a compelling and distinctive narrative available to Clegg and the LibDems. It would be to champion the interests of small businesses and make it easier for them to thrive. The deputy prime minister should have seized this territory and drawn a contrast with the Conservatives who are often seen – whether fairly or not – as allies of big business and vested corporate interests. Instead, he has chosen an approach which might just shore up his flagging popularity among LibDem activists at their party conference, but which offers no serious prescription for the serious problems facing Britain.

Mark Littlewood is director-general of the Institute of Economic Affairs.

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