Trapped together, in the National interest?

Was the Queen's speech supposed to be Coalition mark 2? Was the visit to the Tractor factory supposed to be a second trip to the rose garden? Was there intended to be, somewhere in the thickets of the the government's legislative programme, a shared political agenda for us to unpick?

If these were the intentions, the address from the throne revealed a government running on empty.

A Green Investment Bank has been coming for two years. The Social care bill will be a draft, primarily because the cost implications will be huge, and will have to be part of the 2013 Spending review, which is showing all the signs of becoming a blood bath.  Lords reform will be a long parliamentary nightmare to enact. There's no sign of the HE bill. What you are left with are some fairly minor regulatory changes to the utilities industries, some fiddle-faddle about Supermarkets, and several bills in areas like defamation, voter registration, banking regulation and family leave, all of which are important, but not issues of obvious susceptibility to party division.

It is not be hard to imagine an alternative government pursuing a subtly different take on such issues, and it will be easy for the Labour party to take the primrose path of dalliance to demonstrate mature, responsible opposition (while all the time leaving little traps for backbenchers of the fractious coalition).

Perhaps a real Coalition Agreement 2 is in the works somewhere. It is possible that the minions of Osborne and Clegg are locked in a Cabinet Office basement and have been told they cannot emerge blinking onto Whitehall until they have produced a series of policies that are acceptable to both parties, popular, deliver economic growth, and have minimal spending commitments. 

I suppose they have until Conference season. Poor Souls.

It's the last bit that matters, of course. The government have no spending room, so what can they do?

This represents the consequence of the original sin of the Coalition Agreement.

It didn't have to be like this. They chose to go down this route, and now they are trapped together, with no tools to find a way out, just hoping for the up-turn.

Imagine if Vince Cable had won the argument in 2010, and we had been governed by a Conservative-Liberal Coalition that enacted a version of the Francois Hollande plan for France – We commit to austerity, but only after growth returns*. The Bond markets would have been quiescent, there would have been room to placate angry public sector workers while shifting resources towards encouraging Business investment.

Growth would probably be a touch higher, with unemployment and hence the deficit, beginning to track more rapidly downwards. There would be hints of Tax cuts to come, warnings that Labour could not be trusted with the restraint needed for the future. there would be room for both Industrial policy and a back bench friendly attack on over-regulation.  The government would be sitting pretty, no matter how many court dates they missed or emails to News International they sent.

Instead, Clegg and Laws ditched the one thing the Liberal Democrats could have given to this coalition – a sensible, well timed, deficit reduction policy.

In return for abandoning that, the Lib Dems received a series of empty commitments.

Some, like AV and Lords reform, were always destined to be difficult to enact.  Cameron had to sacrifice nothing of consequence to offer them. Lords reform was in the Tory manifesto but everyone and their dog knew it was virtually unwhippable. An AV referendum, without a commitment to support, was always likely to get defeated. (This is why the Prime Minister was able to offer them with a smile, which would turn rapidly into a smirk when explaining the deal to the '22)**

Others, like Libel reform, are worthy, but will fire the hearts of few beyond Newspaper offices and barristers chambers.

Now, the only thing binding the Liberal Democrats and Tories together is the consequence of immediate spending restraint in 2010. Reducing the deficit is what they are for. It is, increasingly, the only thing they are for. (Who today, outside the happy re-assurances of LibDem activist meetings worries, about achievements like ID cards?)

The cuts have to deliver growth to vindicate the coalition decision to join together on the terms they did. Only then can the two parties look to the future, whether it lies together or separately.

Yet ministers have no fiscal room to do much to ensure this happens. They can't go for tax cuts, or for spending, or they would be repudiating the only purpose for the Coalition.  Perhaps I underestimate the cynicism of the ambitious politician. I hope so. Part of me would like to see a dash for growth, whether tax cut or spending based, partly because it would help people live a little better, partly because it would be amusing to see the contortions that followed. I don't expect it though. The coalition is nothing without a commitment to keep the fiscal tap turned off.

So, Messrs Clegg, Cameron, Osborne, Alexander and the rest find themselves down in a hole, a deep dark hole, waiting for a return of global economic confidence to rescue them from their plight. It may yet do so, but they have little to offer the nation in the meantime but distraction and displacement.

Nor can either bolt until the sun shines on both once more. The Liberal Democrats know destruction would follow. The Tories are not confident of victory. As a result, they are helplessly trapped together, and we are stuck with them.

 

 

*some other very intelligent people have been suggesting a more socially progressive version of this. Can't think what they're called, for the life of me.

** A witty friend suggests this was the Tories problem at the 2012 Local elections. The 2011 AV referendum inflated the Tory vote by a couple of points last time, he suggests, as the angry brigade hauled off their haunches to oppose change. The Tories should have one every year, he argues.

(disclosure, I work for a member of the House of Lords)