All Aboard the Coalition Express

(Written on 11th May)

In a dramatic evening, Gordon Brown resigned as British Prime Minister and, with immediate effect, as Leader of the Labour Party. He is returning to private life after a lifetime of service to the Labour Party. Harriet Harman will succeed him as Acting Leader of the Labour Party.

David Cameron became the youngest Prime Minister since Lord Liverpool in 1812. He is to lead a full coalition Government with the Liberal Democrats whose leader, Nick Clegg, becomes Deputy Prime Minister. The two parties have agreed to a set of policy initiatives and to a five year term. Four other cabinet positions will also go to the Liberal Democrats. George Osborne (Conservative) becomes Chancellor – he will introduce an emergency budget within one month. William Hague (Conservative) becomes Foreign Secretary and Vince Cable (Liberal) becomes Business Secretary, replacing Lord Mandelson.

The transfer of power took less than an hour and a half, including the time taken for Gordon Brown and David Cameron to visit with the Queen and kiss hands.

These are radical developments for Britain, which has not had a coalition government of substance since the second world war. Both Cameron and Clegg are positioning this as a new form of government, part of the change they wish to see in British politics. Reform of the voting system may make such arrangements more permanent.

The new Government has a lot to do. Britain has a structural deficit of £119 billion and an actual deficit of £163 billion – 11% of GDP. The famous Brown formulae targeted deficits at no more than 4% of GDP. The agreed policy program sees no significant tax changes or increases, but substantial cuts in public service. It also sees tougher bank regulation, with more power to the Bank of England, and a bank windfall charge.

We will see how long this coalition actually lasts. On paper, there is an agreement to deal with immediate issues and core policy issues, but five years is a long time. All appear committed to making this work, but there is no experience or history of peacetime coalitions between opposing parties working in Britain. The two leaders, who have very similar backgrounds, may get on well together, but the draconian policies they will have to pursue to rebalance Britain’s economy and roll back the nanny state are so substantial that tensions within and between the parties will emerge quickly. It will be a real test of leadership to hold the coalition together and sustain the support of the political parties who have enjoined.

Last Thursday the people spoke and the politicians have now answered. Let us hope the answer is the response the people expected.