DISCLAIMER:
With an official Government now in place, although not quite fully fledged Currently we are all in shock and the office furniture is being rearranged into a more coalition style of working to make sure that we all get along swimmingly and talk with one voice. As a result of this upheaval I may not always be 100% focused on that old political neutrality thing again so please do excuse any potential bias . Not to mention that, even if we know who’s in Cabinet, in reality, no one actually has an idea of what is going on and what might happen when so, to revert to the old faithful Rumsfledism – there are known unknowns and there are unknown unknowns…
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So, where does this leave us then? Well, unless you’ve been in a bubble since 5:30pm, you will be aware that we now have a Conservative government – well, that’s not quite accurate, we are actually under a ConDem Government. This is the first coalition government since the war however, unlike that government, there seems to be an expectation (at least in terms of the public front) that this coalition government will last for the lifetime of a parliament. At the same time, Gordon Brown has stepped down both as PM and as Leader of the Labour Party with immediate effect. Harriet Harman is now acting leader until a leadership election can be held – it is anticipated that she will not run for the leadership, which will be a relief to those who would see her as Labour leader as being a sure way of keeping the party out of power for decades to come…
The new coalition government is now in place and is expected to have its first full Cabinet meeting later today. The first meeting is likely to be largely a case of bedding down, although they will be keen to ensure that they can come out with some sort of positive announcement or news to demonstrate the capabilities and consensual nature of the coalition. With so many people now in Government who have never seen the inside of a Government department and so many new MPs in Parliament, it may feel a little like the sixth formers have taken over the running of the school for a few days. However, there are serious decisions to be taken and some details of the nature of the agreement between the parties have started to emerge.
The markets have opened down on waking up the new Government but with no indication of panic and reflecting falls across global markets over night based on continuing fears over the Eurozone. To an extent, the market had already anticipated and adjusted to the likelihood of this outcome, however, it remains fragile.
The Lib Dems have managed to negotiate away the Tory plans to abandon cuts in inheritance tax whilst they will be abandoning plans for a Mansion Tax. However, the Conservatives have seemingly won the day on introducing the £6bn of cuts immediately – this is a brave move and will make the new government incredibly unpopular , however, it will be hoped that the influence of the Lib Dems will temper any of the more extreme measures. It may be that the theory is to get the pain out of the way quickly in order to be able to deliver on the promises of reform with the hopes of reaping the benefits in electoral terms further down the line. However, this will depend on the government surviving long enough to prove abilities which is clearly the firm intention but is by no means guaranteed. As expected there will be an emergency budget within 50 days which is expected to set out the severe cuts which the new coalition government anticipate will put the country into a position of recovery.
The new Government will scrap most of the planned increase in National Insurance contributions for employers and a “substantial increase” in personal tax allowances will be introduced to help middle and lower income workers, a measure the Lib Dems had been calling for. There has also been a concession with the pledge to stop people earning under £10,000 paying income tax being made something to work toward, with no deadline for completion (whether or not it is complete before this Parliament is dissolved is a different question and depends very much on whether the coalition survives beyond the next 12 months).
A Referendum will take place on Democratic Reform but based on a new Alternative Vote system and not on fully-fledged PR. The Lib Dems have also negotiated measures to introduce a fixed term parliament of five years (although there is some discrepancy between the BBC and Sky News this morning as to whether it is a four year fixed term or a five year fixed term). This is a canny move as it means that the Conservatives couldn’t simply dissolve parliament and call another election in advance of any referendum on democratic reform and changes to the voting system thereby securing their position. The five year fixed-term parliament seems rather ambitious – few parliaments go the full five years and it would be truly surprising if this current coalition lasts the distance; it obviously does not preclude a Government collapsing on the back of a no-confidence vote. Four years may have been a more realistic target – however, it can’t have escaped the attention of both the Conservatives and the Lib Dems that, a four year term would result in the General Election being held on the same day as the London elections from this point forward, something that did not prove to work in either party’s favour last week. In addition, the Lib Dems have won the concession of a wholly or largely elected House of Lords with details to be confirmed.
The Cabinet so far…
- William Hague - Foreign Secretary
- George Osborne - Chancellor of the Exchequer
- Liam Fox - Defence Secretary (dashing the hopes of many – well, several – who had hoped to see Paddy Ashdown in the post)
- Andrew Lansley - Health
In addition, we now know that there are five Lib Dem Cabinet Ministers:
- Nick Clegg - Deputy Prime Minister
- Vince Cable - Responsibility for Business and Banks (not clear at this stage if this means First Secretary to the Treasury or a new, separate post, more likely to be the latter)
- David Laws - Education Secretary (place of Conservative MP Michael Gove, who stated that he would be prepared to give up his Cabinet seat if it meant forming a successful coalition)
- Danny Alexander - Scottish Secretary (well, it would have been incredibly difficult for a Conservative Minister to try to intervene in Scotland)
- Chris Huhne - Portfolio tbc but expected to be in Cabinet
No indication yet of who will be in DCLG, Transport, DEFRA, DECC or BIS – or whether or not these departments will continue to exist in their present form. The number of Junior Minister is unclear and this will emerge over the next few days, however, it has been confirmed that there will be Lib Dem representation in every department with around 20 jobs in total. This could have a fundamental impact on some central government policies in arras such as planning, transport, energy and waste. In terms of transport, many people will be watching expectantly to see what indications are given in terms of funding for Crossrail. If for any reason funding is not confirmed, this will certainly make the industry wobble. Depending on who is part in charge of the relevant departments we will get an indication of the level of importance and immediacy placed on making changes or progressing manifesto commitments in that department therefore it will be important to watch the changes over the next few days.
It has been confirmed that they will get rid of ID cards – something that both the Lib Dem and Tories opposed together. There is a debate over how much this is really signifying a change given that the previous Government was already looking at scrapping key parts of this. The Lib Dems have also agreed to a cap on immigration and a commitment not to join the euro for the lifetime of this parliament.
The Government will maintain Trident and the renewal will go-ahead, however, the Lib Dems are being given the option to look at alternatives to Trident (this seems a very woolly commitment – looking at alternatives is hardly an indication of any intention to amend policy - and may have been a concession that Clegg needed to pacify aspects of his party but realistically does not see serious change coming).
It is worth considering the price that has been paid both parties to establish a Government as this will potentially have a huge impact on the future stability of the ConDem government – and potentially on the prospects for democratic reform. The first 100 days will be fascinating to watch. It is likely that we will see quite radical change happening quite quickly.
As ever, we will keep you updated as the saga unfolds and we begin to understand more about the structure of the new government. At least David Dimbleby will now be able to get up from the chair which he has appeared to be in without a break since last Thursday, we were all beginning to worry for his well-being…
Written by Stephen Byfield