Category Archives: hung Parliament

A house divided can stand

Abraham Lincoln quoted scripture when he said of the young United States, as it faced threats of seccession by southern slave-owning states, that a divided house cannot stand. He went on to defeat these threats in the bloodiest war the United States has ever endured.

The British government doesn’t face quite the same existential threat, thankfully. But the steady occurrence of divisive political issues keeps raising the spectre of the Coalition’s collapse.

Yesterday in Parliament we were treated to the bizarre spectacle of the Prime Minister, David Cameron’s, statement opposing much of the Leveson report on the press, being starkly contradicted by his Deputy, Nick Clegg, who supports it. Also in Parliament yesterday, we saw the Lib Dem energy secretary, Ed Davey, present his battle-scarred Energy Bill, with his wind-sceptic Tory junior, John Hayes, sitting behind him, glowering supportively.

We’ve also had, recently, the unceremonious ditching by the Conservatives of Lords reform advocated by the Lib Dems. As an eye for an eye, the Lib Dems have said that they will oppose the re-drawing of Parliamentary boundary changes that would have benefited their coalition partners.

Opposition MPs’ criticism that Lib Dem ministers who can’t abide by collective responsibility should resign is an obvious debating point. This ignores the fact that it is in the nature of governments to set precedents. And with the first peacetime coalition formed purely as a result of Parliament being hung, the nature of the government itself is unprecedented.

The rules of collective responsibility have been re-written. There will no doubt be more intra-Coalition spats in the months to come, but none of them will bring down the Coalition until one, or both, parties decides that it’s time to pull down the temple.

The Coalition may eventually reach the point where it falls apart, but my hunch is that this won’t happen until well into 2014 at the earliest. The reason is that both parties are wedded to austerity and need to be able to demonstrate that it has worked. The economy will need to have returned clearly to growth, or be showing credible signs that it will do so. Only then can they face the electorate and be able to tell them that the pain has been worth it.

We will then face the delicious irony that as soon as the Conservatives and Liberal Democrats can demonstrate that the Coalition has been successful, they might then decide to terminate it. Quite what the electorate will make of that, we will have to wait and see.

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Autumn statement gives Lib Dems seven-year itch

George Osborne’s autumn statement generated a lot of discussion about its economic implications, with much gloom and foreboding. But it will also have significant implications for the politics of the coalition, particularly for the Liberal Democrats.

The coalition was founded on the basis of a fixed five-year term. It was coupled with a five-year economic strategy that would see the elimination of the UK’s structural deficit in time for an election in 2015. This all seemed like neat political and economic symmetry.

The Conservative Party took a deep breath and gave up the notion of governing on its own. The Liberal Democrats, grateful for their first experience of power in 90 years, clutched their garlic and joined forces with a political party whom many regarded as bitter enemies.

It would be a rough ride at times, as the Liberal Democrats found out over tuition fees, but it would be a five-year project at the end of which the two parties would go their separate ways and face the electorate.

But now the structural deficit will be with us until 2017. Thus, we now have a five-year coalition pursuing a seven-year economic strategy. The coalition parties cannot now plan to go to the country separately in 2015 claiming to have balanced the books. Treasury Chief Secretary and Lib Dem strategist, Danny Alexander, clearly grasps this, but his acknowledgement of the changed political dynamic is bringing out other Lib Dems in a rash.

Alexander appeared on BBC 2’s Newsnight following the autumn statement and said that the Liberal Democrats would fight the next election committed to the additional £15 billion of cuts in 2016 and 2017 that they had agreed with their Conservative coalition partners.

He said: “As a government we originally set out plans that would meet our targets a year early in 2014/15. But because of the way that economic circumstances have deteriorated we need to make this commitment for future years, so yes Liberal Democrats and Conservatives will work together in government to set out plans for those following two years and, of course, we will both be committed to delivering them.”

This caused consternation among some of his Lib Dem colleagues who are wary of being too closely allied to the Conservative Party. They are anxious to preserve their party’s independence and to go into the next election on a manifesto that is distinct and separate from the Conservatives.

We are all adjusting to coalition politics. All that Danny Alexander’s comments show is that he has adjusted better than some of his Lib Dem colleagues. It will be extremely difficult, not to say, implausible, for the Lib Dems to support an economic strategy that runs into the next Parliament, but cease to support it on the day that the next election is called.

As they enter the next election, both coalition parties will have to claim that their partnership has been a success. Having trumpeted the success of the coalition and tied it to an economic policy that will still have another two years to run, it will require fairly tortuous logic to tell the electorate that it must come to an end.

I wouldn’t bet against the next election producing another hung Parliament and another coalition. So Danny Alexander may well have put down a useful hedge that he can cash when negotiations for the next coalition open.

Of course both parties will stand on separate manifestos and fight their own election campaigns. We are some way from a repeat of Lloyd George’s and Bonar Law’s “coupon” election of 1918, when candidates who had the official support of the coalition were issued with letters of endorsement. But if we have entered a period of hung parliaments and coalitions, Danny Alexander will appear more astute than some of his Lib Dem colleagues are giving him credit for. The prospect of another five years in power could provide the balm to cure their itches.

X Factor politics, Hammer Horror policies

I attended a Conservative Party business event this morning, addressed by David Cameron. It was billed as Supporting Small Business and Building the Big Society. Unfortunately, the clamour from the media throng for his answer to the X Factor-like surge from the Liberal Democrats, meant that there was precious little space for him to say much about business.

But beyond the brouhaha surrounding National Insurance Contributions, you will learn little from the media on what each of the parties are offering business. The curse of reality TV politics, is that there is now even less space for policy debate in any area, let alone on business issues.

True, David Cameron did mention cutting Corporation Tax and exempting new businesses from paying National Insurance on the first 10 new jobs. But it was hard to get away from hung parliaments and attitudes to Nick Clegg.

Each of the parties has dedicated sections in their manifestos and websites on policies for business. The Conservatives will reduce red tape and form filling, simplify business taxes and make rates relief automatic for small business. Labour’s proposals include cutting regulatory costs, doubling the capital gains allowable under Entrepreneur’s Relief and temporarily increasing small business rate relief. Like the two main parties, the Liberal Democrats say that they will remove unnecessary regulations. They will also establish local enterprise funds, stimulate bank lending to business and part-privatise the Royal Mail.

As with manifestos as a whole, the wording can often be couched in such general terms that the promises can, sometimes, mean anything to anyone. People running businesses will make their own judgements on which party they would prefer in power. But regardless of which party wins, scrutinising manifestos will not be enough for business to ensure that the new Government implements policies that enable them to flourish. Businesses, whether individually or through trade associations, will need to engage with policy makers as soon as possible after the election. The purpose is not just to anticipate policy but to try and shape it before it is finalised.

Forecasting the election result has now got a lot more complicated. We may even be facing the prospect of a hung Parliament, with either a minority Government or a coalition. In these circumstances, and especially in the latter, manifestos go out the window to be replaced by policy programmes based on political horse-trading.

Businesses, as well as the financial markets, don’t like uncertainty. But post-election uncertainty is also an opportunity for business to exert its influence on future policy. But they must engage proactively with policy makers, be they ministers, advisers or officials if they want to see a policy mix that enables British business to thrive and expand. Failure to do so could result in the X Factor politics being generated by the leaders’ television debates, producing a Hammer Horror for business.