Leader: Lib Dems have a wealth of ideas but dearth of credibility

Commentators need not be so cynical were this pattern not repeated yet again this year, and by a leader whose credibility is, to put it no stronger, at a low ebb. It is not because a wealth tax is of itself a bad idea so much that in practical terms, it is fraught with difficulties, ranging from which assets would be eligible to questions over valuation and enforceability.

Where the Liberal Democrats can prove themselves and where in the past they have excelled is in coming up with credible if challenging ideas for change. Many a Liberal idea has found itself adopted by one or other of the main parties and has made it into legislation. It is never, of course, nearly as quick as activists would wish. But good law takes time. And little is to be gained – and much lost – by rushing a poorly researched proposal into legislation only for it to fail at the first exposure to reality.

Here the Lib Dem proposal for a means to encourage the use of retiring parents’ pension fund lump sums to guarantee or underwrite their children’s mortgages is, in theory at least, a promising idea and one well worth exploring. It addresses the current shortage of funds available to lend for house purchase which is acting as he biggest drag on the house-building industry.

And it may also be seen as an attempt to address the issue of generational inequality. While the retiring parent may lose discretion over a large swathe of the pension – the long awaited lifetime cruise perhaps – the proposal does have the potential attraction of a saving in inheritance tax.

It would be absurd were parents to find that the proportion of pension given to their children’s mortgage should still count as part of their wealth and thus subject to a wealth tax, particularly if the threshold were to be lowered to £1 million: parents would thus be powerfully incentivised to blow it all on a cruise, preferably to one of Mr Cable’s much-denounced tax havens. And there is a further potential pitfall. Interesting though this idea may be, the Lib Dems say only that they are in talks with insurance companies on the detail, a worrying admission in an immensely complicated area of financial provision.

As their conference gets properly under way, Liberal Democrats can, therefore, claim to be promoting interesting policies, but they have a significant difficulty in this. Having to admit, as Treasury chief secretary Danny Alexander did yesterday, that they went into the last election with a pledge not to introduce university tuition fees knowing the country could not afford the policy, the Lib Dems have a serious credibility problem. They may be coming up with the best policies British politics has ever seen, but after their tuition fee U-turn, will anyone believe  anything they say ever again?