Lib Dem betrayal - not just a Labour tune

Cameron is about to give a press conference in Leeds about growing the economy. Its brande PM Direct so I suppose that's one promise he's kept to. And he is very good at the Q & A sessions, always sounds reasonable.

He does the the easy bits and gets Nick Clegg to announce the winding up of regional development agencies in England today and Danny Alexander to renege on a loan to Sheffield Forgemasters in Clegg's back yard.

Everyone else is wondering about this out loud so I join the chorus of "what do the Lib Dems think they are doing?"

I spoke to a former Minister last week who said that officials he is still in touch with say the Tories can't believe their luck. When the door closes on Number 10 Downing St each night they do a little dance of joy.

The word from beyond the black door is that to begin with the Tories thought that setting up the Office for Budgetary Responsibility would give an impression of independence, and enough cover, to begin the cuts agenda. Then they couldn't believe their luck when the Lib Dems not only came into the coalition but presented themselves as willing executioners for the cuts agenda.

We know that Lib Dem MPs aren't happy about this, the 22 that don't have government posts that is. Recall Charles Kennedy's alleged outburst at Cameron and his eagerness to pair up with Labour MPs to avoid having to vote with the government, following his abstention on the actual coalition vote.

But it will take more than abstentions to save the Lib Dems. Two Welsh Lib Dems voted against the government's VAT proposals last night but the lid is being kept on things at Westminster until the party conference, or the battle of Liverpool, this September.

Meanwhile the Liberal soul searching goes on. There is an incredible piece by David Marquand online today about the betrayal of the Liberal tradition. You can read it on the click through but the essential passages are below.

Since well before Keynes, British liberals have sought to tame capitalism in the interests of social justice and a vigorous public domain, in other words to transcend the harsh choice between the free market and state socialism.

All the liberal greats – John Stuart Mill, Herbert Asquith, David Lloyd George and William Beveridge – have taken part in that endeavour, as well as lesser, later liberals like David Steel and Paddy Ashdown. If Clegg and Cable are right, they were wasting their time. Capitalism is capitalism: it has to be taken neat or not at all. We do have to choose between the free market and the overmighty state. The historic liberal project which is one of the glories of the British political tradition is for the birds.

The implications are stark. The most obvious is that, if liberal politics are impossible, the Liberal Democrat party is surplus to requirements. But there is a less obvious implication as well. For the second thing we know is that free-market capitalism – the untamed capitalism whose mantras Clegg and Cable regurgitate in speech after speech – is inherently unstable. It is dynamic, alright; but its dynamism comes with a heavy price tag. Crashes are to it what fleas are to dogs. So are inequality, injustice, resentment and alienation. It is a strange destination for the heirs of Mill and Lloyd George.

Of course having the Libs fire the bullets and take the incoming fire suits the Tories fine. Cameron loves it every time Labour attack the Lib Dem betrayal because it drives Nick Clegg and co further and further into the arms of the Tory party. These attacks don't benefit Labour that much either. If Labour aren't smart they will end up on the wrong side of the political re-alignment that Cameron wants to establish.

It's too early to worry about polling, which is bad for the Lib Dems. A year on, at the Scottish elections and the English local government elections, we'll get a better measure of where the parties stand.

We might then also have an AV referendum then, one of Clegg's key demands, but who is going to vote for that, when not even Lib Dems want to adopt the system?

In a rejection scenario Clegg could face ruin but it might not be the Lib Dems that break the coalition. Cameron, strengthened, Osborne, no longer scary, the cuts not really beginning to bite until 2013 - the Conservatives could cut and run for a majority leaving the Libs to take the whiplash of their "betrayed" support base.

But Labour's new leader, whoever that might be, needs to get an alternative narrative running in double quick time, and that can't be entirely based on Lib Dem betrayal. There are enough unhappy Lib Dems to keep that line running without Labour help.