William Wallace: Lib Dems can win back voters as we fight to restore economy

After 10 months in government, in the teeth of an economic recession compounded by a fiscal crisis, Liberal Democrats understand very well what he meant.

The party’s Spring conference in Sheffield will be a sober affair, with Ministers having to justify hard choices in public spending and policy to members who have been more used to campaigning against government than working within it.

The crisis in public spending, and the cuts in services and public sector jobs that follow from getting spending under control, are the most immediate issues in British politics. Opinion polls showed widespread public support for cuts in principle, and strong resistance to further increases in taxation.

But once details emerged which explained that cuts would unavoidably affect local services that voters valued, support turned into resistance. There’s a structural problem at the heart of British politics behind this: what many voters believe – and what some newspapers encourage them to believe – is that we can have Scandinavian levels of public services with American levels of taxation.

The Labour government, always reluctant to challenge the Press, ducked the challenge of explaining to the public that rising standards of health and welfare had to be paid for.

So increases in spending pushed government finances into deficit in 2002 – and the deficit grew throughout the boom that followed, contradicting everything that Gordon Brown had said about his financial “golden mean”. If taxes had been higher or spending lower, between 2002 and 2008, the squeeze we are now facing would be much less severe.

Liberal Democrats in government are trying to close the loopholes of tax avoidance through which revenue slips, and to look for economies within the public sector. But there aren’t any magic solutions to the underlying issue.

We have an ageing society, with rising expectations for healthcare, and a younger generation that needs to learn higher skills – and those and other demands have to be paid for, either out of taxation or out of private pockets.

When Labour protests that raising taxes will hit “the squeezed middle”, they are joining the deficit deniers. No government can now provide the levels of benefits and services the British public wants without squeezing the middle, as well as the rich.

So Liberal Democrats have buckled up for the long haul. We went into government with the Conservatives because that combination was the only one that would provide Britain with stable economic management over a full five-year term, to cope with the impact of the cumulative deficit, the domestic banking crisis, and the global recession.

We would much rather increase than cut spending on education, local government and health, most of all in the hard-hit north of England. But we recognise that some reduction in spending was a necessary part of any strategy to turn the economy round.

The British public are very mistrustful of all political parties at present. Memories of the Westminster expenses scandal have not faded. Journalists entrap politicians – including leading Liberal Democrats – with the intention of undermining public confidence in the government further.

We recognise that we have no alternative but to rebuild public trust by delivering economic recovery, long-term investment, rising tax revenue feeding into improving public services, over the next four years: to earn support from voters who will recognise that we have governed in the long-term national interest.

There’s a populist alternative to rational politics. We can see it in the USA today, with right-wing Republicans wanting to slash taxes regardless of its impact on government.

We see it in the UK in those who say that the European Union is bleeding British taxpayers dry, that immigrants are a massive drain on public services, that the prison population should be increased rather than reduced – or that this Government is conspiring to destroy the Welfare State.

There are populists within both the Labour and Conservative Parties, who share a common hatred for the coalition. They prefer the simple certainties of political conflict to the negotiated compromises which are what democratic politics has to be about.

Britain suffers from a culture in which too many people shuffle off the responsibilities we all share, finding it easier to blame others. Bankers criticise politicians for failing to defend them against popular wrath, refusing to acknowledge their central responsibility for the current crisis.

The newspapers that attack governments for weakening British sovereignty are owned by people who use every loophole they can to avoid paying tax within the UK. Voters demand public services without wanting to pay enough for them, or to volunteer to help provide them.

Outside public spending, the Liberal Democrat influence on coalition government is beginning to be clear – as rising discontent from right-wing Conservatives shows.

Strengthening of civil liberties, initiatives to shift to sustainable energy use, commitment to international and European cooperation, all differentiate this coalition from its predecessor as well as from a single-party Conservative government. But we know that the economy, and public spending, remain the key to rebuilding the confidence of a sceptical public.

Our task, at the Sheffield conference and through the next four years, is to persuade voters that we are building a firmer base for a sustainable economy and for public services – and that in the end, you can only have what you are prepared to pay for.

Lord Wallace of Saltaire is a Lib Dem peer and government whip in the House of Lords.