The Liberal Democrats bore the brunt of Labour’s attacks on the coalition on Tuesday as the opposition party sought less than subtly to create cracks within the government.
“No one will ever believe what the Lib Dems say ever again,” said Liam Byrne, shadow chief secretary to the Treasury. “They have got a very poor deal.”
Mr Byrne admitted that it was no secret that some Lib Dem MPs and supporters were uncomfortable about being in the coalition – a situation that could be exploited.
The Liberal Democrats entered the general election warning that the Tories were set to impose a “VAT tax bombshell”. “Little did we know that Liberal Democrats had their own secret bombshell to spring on us – that they would vote for it,” said Harriet Harman, acting party leader.
Ms Harman pinned her attack on revised forecasts suggesting unemployment would rise by 100,000 as a result of the Budget.
Accusing the Lib Dems of being sell-outs – having previously argued against early cuts - she said they had exchanged “22 ministerial jobs bought out at the cost of 10s of thousands of other jobs”. She also warned that growth forecasts had been revised downwards for this year and next.
In a jibe at Vince Cable, the Lib Dem business secretary, she suggested that he had been transformed “from national treasure to Treasury poodle”.
Senior Labour figures including Ms Harman have sought to dismiss any comparison between the UK and troubled European economies such as Greece or Spain. “Greece is no alibi for these cuts,” she told the Commons.
Mr Byrne later told journalists that Greece was an inappropriate template for British cuts because its national debt was vastly higher in relation to GDP.
Identifying examples of where people would be hurt by the Budget, Mr Byrne said that a family on £30,000 a year would lose £545 a year of family tax credit entitlement from 2012.
He also pointed out that pensioners would lose out because they would not gain from the rise in income tax thresholds but would be hit by the increase in VAT. As for the uplift in pensions in line with earnings, this – he said – was less than the Labour promise to raise pensions by whichever was higher of earnings or inflation.
During her Commons performance Ms Harman was met with roars from the government benches as she agreed that “borrowing must be brought down” while criticising the coalition on almost every measure. “Whatever they do we will vote against it,” she said at the end of her speech.
The only element of the Budget that Labour appeared to accept was the rise in capital gains tax to prevent tax avoidance. “We will pick our fights in the months ahead,” said Mr Byrne.
Ed Balls once again took a less nuanced view: “This is the Budget from hell,” thundered the most pugilistic of the Labour leadership candidates.
Lib Dem leaders downplay ‘bombshell’ effect
The Liberal Democrat leadership played down the threat of mass abstentions by their MPs on the Budget vote, as they sought to reconcile their pre-election opposition to a value added tax rise and spending cuts this year with the Con-Lib coalition’s announcements, write Jean Eaglesham and George Parker.
Nick Clegg’s team insisted the Budget was very much a “coalition effort” and said the party could be proud of its progressive elements, even if some MPs were “nervous” about its consequences.
Norman Lamb, Mr Clegg’s chief parliamentary adviser, told the FT the mood of a post-Budget meeting of Lib Dem MPs had been “pretty positive” with “rounds of applause” for the leadership.
But not all MPs were applauding on Tuesday night, as the reality of the VAT rise – attacked as a Tory “bombshell” by Mr Clegg before the election – and benefit cuts sank in.
Bob Russell, a Lib Dem backbencher, told the BBC he was “not at all happy” with the VAT increase and “can’t see myself at the moment voting for the Budget”.
Simon Hughes, the party’s deputy leader, did not retract his pre-Budget warning that Lib Dems were instinctively opposed to increasing VAT because it was a regressive tax. But he said that while it was “a less preferred option”, the Budget overall would deliver a “fairer Britain”. “The country can clearly see the Liberal Democrats have a major influence on UK economic policy,” he said.
Vince Cable, the Lib Dem business secretary, said he had not got everything he wanted – “it’s a coalition, it’s about compromise”. But he said the VAT rise “had to happen” and was less regressive than council tax increases.
The Lib Dems mocked Labour attempts to portray them as the big political losers from the Budget. “I’m amazed at Labour’s strategy. They seem to think that if they shout enough at us, that 20 of us will vote against the Budget,” Sir Alan Beith, the veteran Lib Dem MP, said. “It’s absurd.”