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UK Economy In Deep Trouble As Treasury Splits Over Green Policies

Danny Alexander, one of the Liberal Democrats’ most senior coalition linchpins, is poised to launch a stinging attack on Conservative colleagues at his party’s autumn conference in a sign of the increasing tensions between the governing partners. At next month’s gathering of his party Mr Alexander will make an outspoken criticism of the Tories for blocking green policies.

Mr Alexander, who as chief secretary to the Treasury is in effect deputy to George Osborne, has until now been seen as the most conciliatory Lib Dem minister.

Within Whitehall and Westminster he has always been seen as completely loyal to the chancellor and the Lib Dem minister least likely to rock the coalition boat.

Yet at next month’s gathering of his party Mr Alexander will make an outspoken criticism of the Tories for blocking green policies and trying to make changes to employment law “without clear, robust evidence”, according to a policy paper seen by the Financial Times.

The mutual trust between the two sides of the coalition has been tested sorely after David, the prime minister, abandoned the Lib Dems’ cherished plans for an elected House of Lords.

Nick Clegg, his Lib Dem deputy, retaliated this week by announcing that he would in turn scupper Mr Cameron’s plans to re-engineer constituency boundaries to the Tories’ advantage.

That move will see Lib Dem ministers voting against their government’s own policy, pitching the coalition into uncharted waters.

At the conference in Brighton Mr Alexander will say he is concerned by issues such as the lack of competition in the banking sector and the failure of “successive governments” to sort out the housing crisis.

The motion is likely to be seen as the latest attempt by the Lib Dems to “decouple” themselves from the Tories before the next general election.

Mr Alexander will also voice frustration about “the refusal of the Conservatives to acknowledge that investing in carbon-reducing technologies has the potential to make an important contribution to long-term growth.”

While the green agenda still has champions within the Tory hierarchy – such as William Hague, the foreign secretary, and Greg Barker, the climate change minister – Mr Osborne has increasingly tried to downgrade environmental issues.

Mr Alexander will reignite a row over a new decarbonisation goal for 2030, an idea that was blocked by Mr Osborne last month. He will voice his support for the target in a move that green groups will welcome for its impact on low-carbon businesses and climate change

His motion goes on to attack “irresponsible calls for policies with no clear evidence of effectiveness” such as no-fault dismissal, arguing that this policy would have weakened economic confidence.

The Tories and Lib Dems clashed over the issue, ultimately rejecting the so-called Beecroft proposals in favour of a compromise.

In another sign of Lib Dem thinking on the economy, the conference will also see a proposal for a restructuring of Royal Bank of Scotland, the majority state-owned bank, into “local and community banks”. That proposal has been put forward by Duncan Hames, who chairs the party’s policy working group.

Financial Times, 11 August 2012