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Why the Lib Dems cannot end the Coalition. And what we should do to try and rescue it.

July 16, 2012 10:59 AM
By Stephen Tall in Liberal Democrat Voice
Originally published by East Midlands Liberal Democrats

After all, didn't enough of our MPs walk the plank on the Coalition's behalf on tuition fees, a policy directly counter to the Lib Dem manifesto? Meanwhile David Cameron cannot even persuade his party to back a reform that's featured in the last three Tory manifestos. So what's the purpose of the Coalition any more?

I get the emotional pull of the argument… but it doesn't persuade me.

Coalition matters more to the Lib Dems than the Tories

The simple truth is that it's more important for the Lib Dems to try and make this coalition work than it is for the Tories. If we pull the plug, we'll be free of them, that's true. Yet do we honestly expect the voters to show gratitude to us for saying 'Sorry, we made a horrible mistake. Our bad. But we've learned our lesson. Please lend us your vote, and rest assured we'll never make the mistake of being a junior party in government again'?

With the prospect of electoral reform at Westminster likely to remain dormant for a generation, the reality is that the Lib Dems are reliant now on being able to show coalition government can work, that it can be an effective way to run the country.

At the moment, electoral arithmetic allows only a stable coalition with the Tories. After the next election, it may be that only a stable coalition with Labour will fly.

The point now is to prove that pluralist politics delivering energetic, centrist reform is possible even within a first-past-the-vote system.

If the Lib Dems cannot show that, or at least try our level best to show that, then voters will either switch back to Labour/Tories in the hope of a more united, less sclerotic government, or they will just switch instead to minority parties (or abstention) to show their disdain for us all. There would be no quick bounce-back if we walked away from governing now.

You want out of the Coalition? Tough luck

Fine, you may say. But - and I hope I'm not paraphrasing you too much - we've tried all that 'making the Coalition work' stuff, and look at what's happened. Have you seen the polls? The reality is the Lib Dems are heading for self-immolation in 2015, if not sooner. How the hell are we going to get ourselves out of this fix without walking away?

Well, you've asked a legitimate question. But I'm going to give you an answer you won't like: tough. Tough because that's just the way it is. Tough because the only option is to stick it out and make it work. And tough because even if it doesn't work the alternatives are at least as bad.

Let me be clear what I mean by 'at least as bad': whatever kudos Lib Dems would gain (at least among ourselves) for chucking the coalition we would lose in spades as voters glanced at us and concluded, quite rationally, that Lib Dems may be a nice enough bunch who work hard in our local patches, but we're just not serious about getting our hands dirty in national government.

Nor do I buy the idea that moving to 'supply-and-confidence' - propping up the Tories outside of government - is the easy get-out-of-jail card some like to style it. Responsibility without power seems to me to be the worst possible option for any political party to choose, a guaranteed way of continuing to annoy those people who dislike any deal with the Tories while repudiating those still sympathetic to the Coalition. The inevitable result would be scrappy, piecemeal never-ending negotiations. The Lib Dems would be reduced to the status of insignificant pawns on a chess-board existing only to keep the two main armies apart, and cheaply sacrificed when we get in the way.

We sealed the deal in May 2010: for better or worse. Whatever regrets we may have now, however much some might wish we could turn the clock back, we made our choice.

Let me put it at its bluntest: there is still no alternative to the Coalition. Not great words of comfort, I agree. But it's the reality, and acceptance is supposed to be the first step to recovery.

So what's next? Is there any way back for the Coalition?

However gloomy the party's current position seems now, the fact still remains that the Lib Dems have a further three years in government to make a difference.

We can, I guess, spend that entire period cavilling at the 'evil Tories' if it makes us feel better. But it might be a little more productive instead to push for some real liberal reforms to revitalise the Coalition. Reforms which wouldn't be pushed simply to differentiate us from the Conservatives in the vain hope the public will notice We're Not Like Them At All, but reforms where we may actually be able to reach agreement with enough Tories so that they do happen.

I've argued for months now that the Coalition needs a reboot (in April here and in May here). A Coalition Agreement written in a fortnight two years ago was never going to stick for a full-term parliament.

What reforms could unite the Coalition? I thought about devising a list of individual policies such as Tim Montgomerie proposed on ConservativeHome this week. But I just cannot see such a transactional arrangement enthusing activists in either party. Indeed, 'loss aversion' would probably bring us back full-bad-tempered-circle to the beginning, leaving us with nothing other than a crossed-out list of random pet projects after months of bitter wrangling. As for the wider public, I think they would regard such horse-trading as self-indulgent.

No, if the Coalition is going to reboot it has to get behind an attention-grabbing big idea which unites enough of both sides to generate real momentum. So here's my pitch…

Reform capitalism and make it work for the majority of the people

The Coalition's focus should be on the economy, both because it is the number one issue for the public, and because it is somewhat ironically the issue on which there has been least serious disagreement between the Lib Dems and Conservatives. Compared to tuition fees or the NHS or Lords reform, deficit reduction has been a relatively smooth Coalition ride.

The LIBOR rate-rigging scandal should be the cue for the Coalition to go further on banking reform, as Vince Cable has long pushed and as Conservative MP Andrea Leadsom (the star turn of the Treasury Select Committee) has also urged, calling on George Osborne 'to move further and faster'. As I noted here, when making her my CentreForum 'Liberal Hero of the Week', she proposes 'parcelling up and selling on the currently state-owned banks into a number of smaller ones to create greater plurality in the system, introducing instantly portable bank accounts to help consumers change banks as quickly and easily as we do with our mobile phone providers, and a complete separation of retail and investment banking.' Music to most Lib Dems' ears.

But there is a wider reform agenda here which the Coalition could assert. Though Ed Miliband's autumn 2011 Labour conference speech contrasting 'responsible capitalism' with 'predatory capitalism' was pretty vacuous in content, he had a point. Let me repeat that: Ed Miliband had a point. And it doesn't make you a crypto-socialist to admit it.

Indeed a year ago, arch-Tory Charles Moore caused a bit of a stir in the Telegraph by confessing to asking himself "if what the Right calls 'the free market' is actually a set-up". Another Conservative voice, Tim Morgan, writing in the Spectator last month, argued the Government should:

… [reform] our capitalist system so that it serves everyone, not just a privileged minority. Capitalism should reward success, not failure. It should benefit shareholders (which means most people), not just executives. Contracts should be entered into freely by parties bargaining from roughly equal positions. This does not describe the current system, which is a bastardised version of capitalism. The aim of reform should be to bring 'capitalism-in-practice' back into line with 'capitalism-in-principle'. Rewards for failure need to be stamped out. Executives must not prosper when shareholders suffer. Bonuses should be held in rolling accounts so that deductions can be made if performance deteriorates.

No, those aren't the words of Vince Cable or Lord (Matthew) Oakeshott, but they could very easily have been. This should be the kind of radical and popular agenda around which a truly reforming Coalition Government of Lib Dems and Conservatives could unite: liberal reforms to create a more competitive and much, much fairer economy. Is it realistic? Maybe, just maybe. Though there are many in the Conservative party - for instance, George Osborne and Boris Johnson - who appear to identify perfectly functioning capitalism with What The City Does, there are others prepared to think more critically about the current crisis. My urgent hope is the Lib Dems can find common cause with such Conservatives and press for the big reforms our economy needs, and which have the potential both to rescue this Coalition's record, and also to offer the Lib Dems a chance to achieve positive change within Government.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, a Research Associate for the liberal CentreForum think-tank, and also writes at his own site, The Collected Stephen Tall.

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