THE Liberal Democrats’ U-turn on university tuition fees continued to haunt the party last night, after one of Nick Clegg’s closest allies admitted he knew the pre-election pledge not to raise fees was “difficult to afford”.
Danny Alexander, Chief Secretary to the Treasury, who was chief of staff to party leader Mr Clegg, was forced to admit having had serious reservations over the flagship policy in the run-up to the 2010 election.
Mr Clegg, now the Deputy Prime Minister, continued to be face criticism from political opponents and some delegates to the Liberal Democrat party conference yesterday, after his dramatic apology late last week over the pre-election pledge.
Yesterday, Mr Alexander confirmed that he had had fears over the affordability of the pledge. The reservations, which were shared by Mr Clegg and Vince Cable, now Business Secretary, though all three signed a commitment not to introduce tuition fees.
In a BBC interview, Mr Alexander said: “I don’t remember the details of the conversations that took place two years ago, but what I am saying is it was clear that this was a very expensive policy and given the financial circumstances facing the country, it was difficult to afford.”
His admission came as the Lib Dems launched a concerted attempt to regain the political initiative lost by the continuing row over tuition fees and begin to rebuild their battered reputation with the electorate.
At the conference in Brighton today, senior figures will make two major policy announcements designed to show how the party in government is trying to boost growth and demonstrate it is winning ministerial battles with its Conservative coalition partners. This morning, Mr Cable, the man favoured by most Lib Dems and voters to lead the party, will unveil plans for a new £10 billion business investment bank that he has pushed through despite opposition from Chancellor George Osborne.
Mr Cable, who has refused to rule out becoming leader as a survey by the Lib Dem Voice website put Mr Clegg’s personal rating among party members at minus two points, will also call for a new industrial strategy.
Pensions minister Steve Webb will meanwhile reveal plans to allow people to access a lump sum of their private pensions to use as a guarantee for deposits for their children to buy their first homes.
The Lib Dems believe that 250,000 people will be eligible, but just 12,500 would take it up. Sources said discussions were taking place with the pensions industry and mortgage lenders.
Unveiling his proposal for a Business Bank, Mr Cable will say: “We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high growth companies that power our economy.”
He will add: “I am working with the Chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private sector contribution.”
The new bank, he will explain, will apply further leverage through guarantees to support up to £10bn of finance to small and medium-sized business – a significant portion of all the lending available. But with the UK economy still in a double-dip recession he will call for more action.
He will say: “We are so good at so many things in this country – but for too long the mirage of growth based on property speculation and financial gambling has hidden the harder virtues of making things productively.
“We must get behind British-based firms in vehicles, aerospace, life sciences and creative industries and our world-class scientists and universities.”
In an interview yesterday, Mr Cable also insisted his party would block attempts by the Tories to introduce regional pay, which had led to concerns that wages would be reduced in Scotland, the north of England and Wales. But he did not completely rule out all aspects of the policy, suggesting some areas could offer more to attract the right people in.
He added: “What we have not opposed is the principle of having more flexibility in local bargaining. This is not actually rocket science and it is not ideologically a massive problem. The last Labour government brought in this kind of arrangement.”
Labour has welcomed the creation of a Business Bank and accused Mr Cable of simply taking one of its ideas.
Shadow business secretary Chuka Umunna last night said: “It is crucial that this business bank is more than merely a re-badging of existing schemes, but that it gets credit to profitable firms that can’t access it. It is far from clear whether ministers want to create the kind of institution which is needed.”
However, Mr Umunna was dismissive of Mr Cable’s call for an industrial strategy.
He said: “The Business Secretary has been talking about the need for an industrial strategy since he took office two and a half years ago, but has failed to deliver and has refused to adopt an effective plan for growth.”
Meanwhile, there were concerns that Mr Alexander’s announcement on a new wealth tax and targeting millionaires would drive money abroad.
Scotland has an estimated 40,000 millionaires, second only to the south-east of England in the regions and nations of the United Kingdom.
Nigel Green, the chief executive of the deVere Group, has slammed such proposals. He said: “The better-off people in the UK already face a range of taxes, including stamp duties on shares and properties, capital gains, inheritance taxes and high income tax rates.
“Extra taxes on wealth are likely to encourage high net worth individuals to move their assets and funds out of the country to jurisdictions with lower tax rates.”
Asked if he had the conversation with Mr Clegg about tuition fees, before personally signing the promise during the run-up to the election, Mr Alexander said the pledge was signed during the campaign, but that the discussions took place “way before the election campaign”.
The policy, though not applicable to Scottish students studying here, has been widely blamed for the Lib Dems’ disastrous performance at the Holyrood election. Tavish Scott, a former leader of the party in Scotland, wrote in The Scotsman that the U-turn had dragged his party into the “political gutter”.
Mr Clegg’s attempt to draw a line under the issue has also led to mockery. A remixed version of his apology, with the words set to an autotune, entered the charts last night at No 143.