Coalition survival sweepstake

I had a bet with someone yesterday about how long the coalition government will last. They were convinced that it would not go beyond the end of May 2011. I on the other hand expect it to go the full distance and to end on 7th May 2015 as the government has indicated.

It made me think however that it might be fun to have a sweepstake type thing (albeit you don't need to pay any money in). Just pop the date upon which you think the coalition government will end in the comments below, along with your reason(s) why it will not last beyond that date. The winner will be the one who gets closest to the actual date. They will be lauded as predicting King/Queen of the internets and I will also provide a prize.

Because the date the government has already stipulated is 7th May 2015, you are not allowed to pick it and if it does go the full distance then this sweepstake is off. It is only for dates that fall outside the official timetable.

You should also note that there does not need to be a general election for the government to end. It is possible that the Queen will not grant a dissolution in the event of government collapse. We are just looking for the date that this particular government in its current form (i.e. combination of Conservatives and Lib Dems) ceases to be. If the PM and/or Deputy PM change but remain from the current parties (Tory for PM, LD for DPM) then this will not be considered the end of the coalition.

I will close the comments after a week as I do not want "predictions" popping in there in a year or two's time perhaps when it has become obvious that things have changed quite radically!

Good luck.

Three reasons why Dave will not cut and run

There has been some speculation that given recent polls, David Cameron might consider ditching the coalition and going to the country again to try and get a mandate of his own. The Sun triggered more of this yesterday by explicitly asking in a tweet whether the highest poll ratings all year for the Tories (43%) with the Lib Dems languishing on 15% could persuade them to call a snap election to ditch the yellows.

Here are three reasons why this just will not happen in increasing order of importance:

1) It's not just the Tories who are up. Labour is also up to 34%, 5 or so percentage points above its election day level of 29%. Although on a uniform national swing this would give the Tories a majority of around 26, that is hardly resounding and it would only take the polls to deviate a little from these levels for even that slender majority to be at risk. In fact within the margin of error, if Labour went up to 37% and the Tories dropped to 40% Labour would be the largest single party. Prime Ministers just do not go to the country and risk it all so soon in a parliament in these sort of circumstances.

2) Cameron has gone very far out of his way to say time and again that he actively wants the coalition for the good of the country. Although it was a surprise to some straight after the election that he started talking like this he has gained many plaudits and is seen as a much more consensual and pragmatic politician. This has led to huge rises in his personal approval rating. How would he explain another sudden change, this time without the pragmatic necessity of dumping the coalition and going for electoral broke?

3) Most importantly, these polling figures would likely turn out to be will-o'-the-wisp. Yes the Tories are on 43% but that is with David Cameron as perceived through the filter of all the things I mentioned in point 2. If he was to ditch the coalition then suddenly, far from being a sensible leader putting the needs of the country first he would appear to be just another politician doing the dirty on his coalition partners for no apparent reason in order to capitalise on a poll bounce. I would fully expect the Tory ratings to fall in those circumstances, perhaps quite a long way. One corollary is that the Lib Dems may benefit from this and gain some percentage points out of sympathy as the "wronged" partner. Labour would almost certainly benefit though.

David Cameron is far too smart and canny a politician to fall into this trap. I fully expect the coalition to continue for a good while longer irrespective of where the polls go.

A cut a day...

Although (as I have blogged about before) I think that the broad thrust of the direction the government is moving in in terms of adjusting the public finances is the right one I have to say that they could be a bit smarter about how they release the information.

It continues to come out in dribs and drabs. There was Danny Alexander's statement about cuts a couple of weeks ago. Then the budget. Then another statement from Danny. And in between and since there have been other announcements about cuts.

It plays into this idea that the government keeps deciding to cut even more on an ongoing basis. I do not think this is what is happening, I think the strategy has been set from the start but the perception on the ground will just hear the continual announcements and it will feel like it is never ending.

Surely a better strategy would be to just release all the news about cuts in one go (or as few goes as possible, certainly fewer than we have seen)?

Of course all of the cuts will be debated, that is right and proper but they will not necessarily lead the headlines every other day and the government can then hopefully get some coverage for some of the other things it is doing.

Prison reform - we need to ride out inevitable press hysteria

I was listening to John Pienaar's weekly podcast last week. The guest was my old sparring partner Shane Greer and one of the things they discussed was Ken Clarke's plan to ensure that prison is not used as a punishment so often and to make more use of community sentences.

I already blogged last week about how I think Clarke's plan is potentially very good. On the podcast they were debating the merits of this but the point was made that irrespective of how well community sentences and other alternatives to prison may work out, all it will take is one or two high profile cases of criminals who would have previously been in prison and who commit an horrendous crime for the press to go ballistic about how the policy had failed.

Sadly I think they were both right. The media in this country has never been very good at calmly assessing the evidence. It is possible that a more non-custodial approach may reduce recidivism. It may be that a change in policy could be a huge step forward in reforming our criminal justice system for the better. The problem is we may never find out. It will only take a few high profile cases that the press/media are able to focus all attention on (probably with the help of the opposition judging by Jack Straw's initial reaction last week) for it to be politically very difficult for the government to continue with the policy.

We need to try and encourage more use of evidence. Whatever system we have in place there will always be problems but we need to assess the overall impact. Critically we need to judge if reoffending rates are reduced. In order to do that we need to give the policy time and for there to be enough evidence on which to base an assessment.

If it turns out that changing the policy is demonstrably a bad move (from the actual evidence, not the press coverage) then I will be the first to concede that we need a different approach. But please, let's make sure we take the decision for the right reasons, not because of screaming tabloid headlines.

One thing that the government should give way on

I have been fairly full throated in my support for the government regarding its changes to the electoral system recently.

However there is one area where I think they need to give ground. During the debate led by Nick Clegg today he was repeatedly asked why the government was not planning to reduce the size of itself in proportion to the size of the new House of Commons (reducing the number of MPs from 650 to 600). That's a reduction of around 8%.

The government should have around 8% fewer ministers to match this, otherwise the executive will be even more powerful following the reforms (by proportionally increasing the "payroll" vote), something that both coalition partners are supposedly against.

They should allow amendments to the legislation when it goes through the house to correct this anomaly.

May the 5th be with you

Having the AV referendum on May 5th to coincide with the local and Scottish Parliament/Welsh Assembly election next year (as has now been officially declared) makes perfect sense to me.

It will save millions of pounds as elections will already be taking place in lots of areas (including my own) and hence two electoral birds can be killed with one stone. It will also increase turnout for the referendum which surely is good for democracy whatever the result?

Whenever the date was called there would have been objections from some quarters. You can always find problems if you look hard enough. The objections I have seen raised so far really do not cut the mustard and the pros outweigh the cons.

The date should remain May 5th 2011.

Two months after the election - my thoughts on the coalition

The Hagley Road to Ladywood blog has been publishing a series of guest posts in the last few days from across the political spectrum to mark two months since the general election that has changed the face of our politics so radically.

They have published a guest post from me today to contribute to this. It was formed from a number of questions that I was asked and responded to. I recommend reading the other contributions and have reproduced mine here:

In the immediate aftermath of May 6, I was expecting the Lib Dems to have performed better. When the exit polls came out I was sure that they would be proved wrong, but in the end they were almost spot on. In fact they had been a bit generous to us.

I spent most of the night in the National Liberal Club amongst other Lib Dems. Generally the feeling seemed fairly flat as the bad results came in. However, as the night wore on and it started to become clear that the Lib Dems would hold the balance of power, I got more excited. I was hoping for it to end up a doubly hung parliament (where the Lib Dems could have formed a majority with either of the other two parties) which would have given us maximum bargaining power however it was not to be.

I knew though as I walked out into the street at around 7:30am with fellow party members that politics was about to change quite fundamentally and I was very excited.

Later on, the news that a deal was being struck between David Cameron and Nick Clegg took a bit of getting used to, but it was the only game in town in the end. I blogged on the Tuesday morning when it was still looking possible that the party could try to strike a deal with Labour that we should take the Tory deal.

I am certain that a wobbly rainbow alliance built on the foundations of a minority Labour/Lib Dem coalition would have been disatrous. In the end I am a political realist. The deal we struck was the only politically viable one and I think we actually got a good deal all things considered.

And here is why. The country and its finances were (and are) in a mess. We have to get them sorted. The way that the public voted has ensured that no single party can command a majority. So the Lib Dems went into coalition with the Conservatives I think primarily to ensure that there was stable government for the country.

However we have got more than that. We have been able to get a significant chunk of our programme into government. We have already seen in the budget an increase in the tax threshold for the lowest paid by £1,000 and I fully expect that to rise further in later budgets helping the lowest earners and increasing incentives for people to work too. We have seen capital gains tax increased from 18% to 28%. Neither of these things would have happened if the Tories were in power on their own.

There are lots more policies as well as these headlines when you drill down and this will continue to be the case for the lifetime of the government.

In addition to this, we have 5 cabinet ministers including the universally respected Vince Cable in charge at Business and Chris Huhne who has impeccably progressive green credentials as Environment Secretary. Huhne has already assured our party at conference that there will be no public subsidy for nuclear, for example. I am far from sure that would have been the case under a government with a solely blue hue.

To those that keep crying "betrayal!" at the LibDems, this is what I have to say.

Firstly, I am not really clear what my party is supposed to be betraying. We are not some adjunct of the Labour Party. We are our own political movement with our own traditions and political identity. We are fighting in government for as many of those to be put into practice as possible.

The other thing I would say is that, if you are in favour of electoral reform, then accusations of this sort are rather baffling. A more proportional system would inevitably lead to coalitions where parties from different traditions have to come together and compromise.

Of course the Lib Dems have to defend what the party is doing in government (and I do not agree personally with the whole programme by the way) and fully expect the opposition to hold us to account. But I think it should be on the policies themselves, not some notion that we have betrayed something or someone. That is singularly unhelpful and I think will eventually backfire on Labour.

As for the leadership race within the Labour Party, I think the major problem that Labour have is similar to that of the Conservatives in 1997. All the main contenders are very closely associated with the previous discredited government. There needs to be some fresh thinking.

One of the reasons I could never have considered joining Labour is their woeful record on civil liberties. It was visible again the other day when Ken Clarke made his comments about prisons questioning whether banging up more and more people was the right approach. Straight away Jack Straw wrote a piece for the Daily Mail painting the government as "soft on crime".

This is the sort of approach that people are sick of and the new leader whoever they are needs to get a grip of. Otherwise Labour are risking spending another decade or more in the political wilderness as the world moves on without them and they are still fighting the political battles of the Blair/Brown era.

What I would repeal

Nick Clegg has launched a website today called "Your Freedom" which seeks to get public input into the process of deciding which laws should be repealed.

Here is Mr Clegg outlining the idea behind the initiative:

The law that I would put at the top of my list for repeal is the Misuse of Drugs Act 1971. In my view this law has been shown to be hopeless in its aims of reducing drug use and actually perversely increases that harms caused to society. Many of the problems caused are actually due to this act rather than the drugs themselves.

It should be replaced with a system of regulation which seeks to educate and minimise the harms caused by drugs.

A reform of this nature also surely fits in with the main tenet of the initiative to improve people's freedom?

I am encouraged to see that within a few hours of its launch there are already 17 entries for drugs and the category has entered the tag cloud on the right hand side of the front page (along with one for Cannabis). This one seems to be very well worded and has the most votes so far in this category. One potential issue is that there does not seem to be any filtering so already we are seeing more than one suggestion that essentially say the same thing. I hope a good way to aggregate all the votes and suggestions for the same things is found.

I note with interest the specific words that Clegg uses, namely that the government will choose the "best" ones. I wonder what criteria they will use for this and whether if there are laws that get lots of suggestions and votes to be repealed the government will just ignore them if it does not fit in with what they want. They have certainly given themselves wriggle room for this.

I hope however that they use this exercise to seriously think about what the public are telling them and respond accordingly.

We have had enough sham public consultation from the previous government. Let's hope this time it is different.

Ken Clarke shows how Labour's Lib Dem "betrayal" narrative is nonsense

Every opportunity that Labour spokespeople get these days they attack the Lib Dems. Not usually for any specific Lib Dem policy but for the fact that they were willing to go into coalition with the Conservatives. It often seems like Labour MPs feel like jilted lovers whose rightful and "natural" partners the Lib Dems have inexplicably spurned them for an ill-suited lover and that they will surely soon live to regret this folly.

What this ridiculously simplistic narrative fails to take into account is that there are not just areas of commonality with Labour (of course there are some) but there are and always have been areas of commonality with the Conservatives. It is nowhere near clear cut that a partnership with Labour (irrespective of the fact that the parliamentary arithmetic made it unworkable) would have fitted like a glove and a partnership with the Conservatives is utterly doomed.

Yes there are some of the Conservative policies that I and many of my Lib Dem colleagues would rather not have seen enacted (not least in the budget last week) but we have been able to get plenty of our own policies as part of the deal and ameliorate what our party sees as the worst excesses of the Tories.

One of the areas where the previous government were woeful was civil liberties and justice. Labour was authoritarian from the start of its tenure in office and these tendencies got worse and worse as time went on. The prison population shot up from around 50,000 in 1997 to well over 80,000 by the time they left office. Little time was given to the idea that alternative approaches may work. No, they were all dismissed as "soft on crime" as the numbers of people banged up were forced inexorably up.

A good liberal principle is to only imprison people when there is no alternative and to examine the ways in which such a drastic sanction (which is often the direct cause of further crime later) can be avoided. So I am delighted to see that Ken Clarke has started off in his post as Justice Secretary by making it clear that just continually banging people up is not always the right approach and that we need a more constructive way of approaching this issue. He is strongly signalling that there will be more use of community service and attempts to rehabilitate offenders.

Now I am not naive enough to think that this problem can be solved overnight (or indeed ever fully) but the fact that the government has laid down a marker that their approach will not be dictated by the "bang 'em up" brigade is very welcome and dare I say it, liberal. In fact it is probably no exaggeration to say that Clarke's speech today is the most liberal from the cabinet minister responsible for justice in a political generation at least.

And how has Clarke's predecessor Jack Straw responded to this? With a scaremongering article in The Daily Mail (the Mothership of the "bang 'em up" mob) which makes it clear that he is proud of the fact that the prison population is now pushing 85,000. He basically accuses the coalition government of being soft on crime and makes it clear that as far as he is concerned there is no alternative to an ever rising prison population even though it costs an absolute fortune, recidivism rates are through the roof, prisons are massively overcrowded and many times his government was forced to ensure some inmates were released early (which demonstrates that despite all the rhetoric by its own terms their policy was failing).

So we come back to my initial point. I have fairly strong liberal instincts and if I had not been a member of any political party I would have been very pleased with what Ken Clarke had to say today and the clear direction of travel upon which he intends to embark. I would also have been distinctly unimpressed with the behaviour of Straw and his colleagues trying to poo-poo the idea that a more constructive approach is "soft on crime". In other words what this government with its many Tory MPs is planning is very closely aligned with my own politics and almost diametrically opposite to that of the Labour Party.

As it happens I am a member of the Lib Dems but on this issue that is irrelevant. I would support the government on this anyway. And it is a stark example of why the narrative about the Lib Dems having done the dirty on them that Labour keeps pushing is nonsense. Our party is not the "natural" partner of Labour on lots of issues. Their reaction today is a stark reminder of that.

They should bear this in mind next time they hurl accusations of "betrayal" at us.

Why Cameron would be smart to follow Fink's advice on AV

Danny Finkelstein wrote a Times piece this morning where he suggested that David Cameron could use a change in the electoral system to AV to his advantage. Because of the paywall, there's little point in me linking to The Fink's piece directly but James Forsyth on the Spectator blog has summarised his idea:

So Danny Finkelstein’s blog this morning suggesting that ‘AV might provide the answer to the otherwise impossible question - if the parties stay together, how can they fight the election apart?’ has caused quite a stir.

The argument is that the Tories would urge their voters to put the Lib Dems as second choice and vice-versa. If this ploy worked — and the Australian evidence Danny cites suggests it would — then AV would hurt Labour not the Tories.

I wondered how the most recent election might have played out had this sort of game been in play. Obviously some serious academic analysis would be needed in order to do this properly but I thought I'd have a stab at a crude way of discerning what could have happened if all voters for each of the coalition partners had gone along with this under an AV system.

I took a spreadsheet that I received a few weeks ago which contains the voting figures for every party in every seat from the general election last month. I then went through it and created a new "Coalition" column which contained the total combined figures for Conservative and Lib Dem votes in every seat. I then made the assumption that whichever of the two coalition parties was in the lead out of the two of them in the seat would receive the other's votes to get a total hypothetical figure for the "leading" coalition partner after transfers.

Before I reveal the figures, some caveats. Firstly in reality all voters are not going to go along with this plan even if both parties in the coalition try really hard to persuade them to do so (which in itself is questionable). Secondly under different electoral systems people vote differently so if 2010 had been run under AV the numbers would have been different anyway. Also, my analysis does not take into account how other transfers from e.g. nationalists, Greens, UKIP etc. to other parties may have worked out. It simply focuses on the coalition partners.

Effectively what this method is doing is taking The Fink's idea to its extreme assuming a perfect set of transfers for the coalition partners from each other in 2010.

In the actual election the figures were:

Conservative: 306

Labour: 258

Lib Dem: 57

In my reworked extreme AV scenario the figures would be:

Conservative: 394

Labour: 141

Lib Dem: 91

So the Conservatives would have a thumping majority. The Lib Dems would have done much better but ironically ended up with much less influence. Labour would be the big losers with just over half of the number of seats they actually got.

Despite all the problems with this analysis I think it was worth doing because it demonstrates that it would be possible for the Conservatives to benefit from AV. In an actual AV election I would not expect it to end up anything like what we see above but I think a good case can be made that a fair number of voters would be willing to put the partner of the coalition party that they put in first place in second assuming that the coalition is reasonably popular in 5 years time. It is certainly true to say that all those certainties that so many on all sides once thought about how the Lib Dems and Labour would be likely to be the automatic beneficiaries of an AV system are not necessarily true any more in the new political reality.

If Cameron could get even just a slice of the sort of action we see in play above then it could make a change to the electoral system a much easier sell for his party. Who knows, out of self interest some of them may even feel able to campaign for it, or at the very least not campaign against it!

This is another example of how everything changed on May 6th.

What is the point of holding cabinet meetings outside of London?

The cabinet have decamped today to Bradford to hold the cabinet meeting. This is the sort of thing that started to happen under the previous government. I thought it was a gimmicky waste of time and money then and I think the same now. Indeed many Tory MPs used to think so too (as does Iain Dale today). Apparently once the cost of security etc. is added in, previous trips like this have cost up to £200,000 a time. This won't even factor in the loss of productivity in having ministers unneccessarily travelling for several hours (apparently most of them arrived by coach).

I suspect the counter arguments will be that they get the chance to see what is happening in other parts of the country but ministers already travel all over the place as part of their duties. Having them all descend on one particular place like this is surely not necessary for this purpose? Indeed this particular trip seems to be in response to a difficult question Cameron was asked during the election campaign in Bradford and to get out of it he promised to bring the cabinet up to the city. This is surely overkill.

I am sympathetic to the idea of moving government departments out of London and perhaps even parliament, e.g. to Birmingham or Manchester. Moves like this would help reduce the London-centric focus we so often see and could actually save money given how expensive London is. But the fact is our parliament is in London and sending the entire cabinet on awaydays like this seems pretty hard to justify, particularly in our current financial circumstances.

David Cameron should make this the last day trip like this for him and his colleagues.

Lib Dem polls - keep calm and carry on

There have been a number of polls out recently that have shown Lib Dem support starting to slide. We were on 18% with ComRes yesterday and ICM and YouGov have both had us as low as 16% in recent days. This on the surface looks like a drop of between a quarter and a third of the support we had on election day (24%).

I suppose the first thing to say is that these polls always have a margin of error so it is possible that the real figures are not quite as bad as indicated. But more importantly this is exactly what I expected to see happen. We are only a few weeks into the coalition government and this is the point at which the difficult decisions are being announced. The party has had to compromise in order to get what it wanted in the agreement and a number of the measures announced recently will of course not be to the liking of some Lib Dem supporters and voters. This is one of the reasons why it was vital for the coalition agreement to include fixing the length of the parliament to a reasonable length in order to make sure there is enough time for the Lib Dem measures to be implemented properly and for the electorate to see how we have influenced things for the good.

It is also worth bearing in mind that this is often what happens to the Lib Dems after elections. After the 2005 election we were down as low as 12%.

I do not think there is anything to panic about. I of course would prefer us to be higher in the polls but I would expect the early weeks and months of this government to be the time when we are at our lowest. There is plenty of time to increase our support levels once we are in a position to show people how we have positively affected their lives.

Labour is increasingly resembling the Tories in the late 1990s

The polling reaction to the new government and the budget has been fairly positive (link opens PDF) with the previous government being blamed by half of all people surveyed for the difficult measures in the budget and a majority saying that they think the cuts are good for the economy.

At the same time Labour is vigorously attacking the government for what it is doing and also repeatedly accusing the Lib Dems of "betrayal". It feels slightly odd for the opposition to be so strongly railing against the measures being taken when the public appear to be largely behind them. The public do not like being told that they have made a huge mistake just a few weeks after they have voted.

I know that some will argue that they never voted for the coalition but they certainly did not vote for Labour to remain in power and again, look at the polling. The public is broadly in favour of the coalition.

Labour's approach reminds of the position the Tories were in after the 1997 election. They still stood up at the dispatch box and argued against what Labour were doing in government but they had been in for 18 years and had been clearly rejected by the electorate at the election. Nobody (outside of the Westminster bubble) was really listening to what they were saying and they were making the same mistakes as Labour are now, attacking a broadly popular government that the public were behind. It did them few favours in the following election where they made almost no headway.

I hope that whoever wins the Labour leadership finds a more moderate and humble tone. I get the sense that the public are starting to feel a bit exasperated with the way that the party that was in government for 13 years is attacking the new government who are clearing up the mess left behind by them. Some recognition by Labour that they did contribute to the problems rather than continuing to pretend that it was solely down to international factors beyond their control would help them and I think that then the public would be more willing to give them a fair hearing.

It took the Tories many years to accept their failings from the 1980s and 1990s and properly draw a line under them. It was only when Cameron became leader that they properly addressed them with the "detoxification" strategy. Now to be fair I do not think that Labour's brand now is as damaged as the Tory one was in 1997 but it is certainly damaged and they need to repair it.

Screeching from the opposition benches about "betrayal" is not the way to achieve that.

The pension age has to rise

There are reports this morning that the government is looking to move the age at which state pensions are paid to 70. There were previously plans in place that would have made the age at which this happens 68 by 2046 but the government wants to go further sooner than this.

It is about time. When the state pension in its current form was introduced in 1946 (with its 65 age threshold for men and 60 age threshold for women) life expectancy rates for men were 64 and for women they were 69. Also, many fewer women worked in those days and hence qualified through NI payments for the pension anyway. It meant that on average men did not actually end up claiming the pension and women only for a few years. Now life expectancy rates are around 77 for men and 81 for women. There are also many more women in employment nowadays and also changes in the NI rules mean many more qualify (and rightly so). So on average we are now looking at around 12 years on pension payments for men and 21 for women. The life expectancy rates are also going to keep rising. The pensions system was never designed to cope with these sort of lengths of average retirement.

So I welcome the reforms announced and I just hope that this government has the political will to carry them through. It is politically very difficult because the demographics that the changes affect most are those who are most likely to vote. However I would hope that they will recognise that we cannot carry on the way we have been going.

One thing I would say though is that we do need to be careful about which jobs we expect people to carry on doing. It's all very well to ask someone who works in an office or other sedentary vocation to continue for a few years. But it would not be fair to expect for example a coal-miner or people who work in other extremely physically intensive labour to do the same thing, and indeed other professions where there are other reasons why it typically is not practical to continue into your late sixties. It is sometimes possible for people who have worked in professions like these to switch to other careers but that is not easy and I will be interested to see what provision is made for these sort of situations.

I also wonder if the retirement age needs to be linked somehow to life expectancy in the future so that we do not find ourselves having these sort of reforms every few years. This might also be a difficult political sell because people like to know where they stand. However they don't really know where they stand at the moment because it has been increasingly obvious in the last few years that the system will have to change fairly fundamentally, it's just that politicians have tried to sugar-coat it.

I was born in 1974 so any change to the retirement age for men to 70 assuming it kicks in before 2044 (and looking at the outline of the proposals it almost certainly will) will affect me. I am fine with not receiving a state pension until I am 70 though. To be honest having been familiar with the figures for a number of years I was expecting this to happen. If anything the age may be even higher than 70 by the time we get to 2044 after all 34 years is a long time in terms of medical advancements.

One final point. I am very pleased to see Steve Webb as one of the ministers involved in this policy area and the announcements. He is an expert in this and if anyone can negotiate their way through the minefield of pensions policy it is him!

Campaign in majoritarian, govern in coalition

Something keeps happening regarding the political discourse in this country since the election. Both the Conservatives and the Lib Dems keep being accused of having "broken" their pledges.

We saw it again yesterday. The compromises that were reached by both sides regarding the budget in the coalition government are described as "U-turns" or abandonment of pre-election pledges etc.

I saw Bob Russell, the Lib Dem MP being interviewed talking about how he had been elected on a platform that was in some ways quite different from what had been announced yesterday. I also heard a Tory MP on the radio bemoaning the fact that he had campaigned promising not to raise Capital Gains Tax.

The problem is that the way all the parties campaigned before the election was under the assumption that they would have an overall majority after the election. Yes, even the Lib Dems. The political dynamics that have evolved around the First Past the Post system essentially require each party to talk as if they will have all the power. In the last few decades that has actually not been an unreasonable position for either of the two main parties to take. However this year has of course now proved them wrong.

Perhaps we will see a change in the dynamics of the way the next general election campaign is fought. Perhaps the parties will talk more about what they will fight for and their specific priorities on these fronts than talking as if they will be able to decide everything without having to compromise. Then again maybe we won't. Old campaigning will likely die hard.

I have always been in favour of a more proportional system and therefore I actively welcome the sort of politics where compromise needs to be reached on issues as we are seeing now. Yesterday's budget would not have been the same if the Conservatives had had an overall majority. I do not think the income tax starting point would have been raised by anything like £1,000 nor do I think that Capital Gains Tax would have increased to 28% for higher earners. There are other areas too which have a distinctly Lib Dem flavour. However there is no denying that there are things in the budget that we would not have had were there a Lib Dem majority. That is not a "betrayal". It is a simple reflection of the fact that we did not get enough votes/seats to form that majority.

Also, those opposition politicians screaming "betrayal" at the Lib Dems should reflect on how unwilling their leadership was to engage in meaningful coalition talks and also how the electorate had dealt a hand that made such a route fragile at best.

There will have to be more compromise over the coming years. That's how coalition government works. Everyone needs to recognise this new reality.

Budget 2010 - painful but necessary

So we now know following George Osborne's first budget today what measures are going to be taken over the next few years to get the deficit under control.

I have picked out some of the main points along with my thoughts below:

• VAT up to 20%. As I have repeatedly stated on here I would have preferred income tax to go up rather than VAT as at least that is clear and based on ability to pay. VAT is a stealth tax and by some measures is regressive. But governments hate putting up income tax (because the public hates it whatever they might say to pollsters, punishes politicians that do it and we do live in a democracy). The £13 billion it raises is necessary unless the cuts were to go even deeper which would surely have been politically impossible and caused even greater howls from the opposition.
• Income tax allowance threshold to increase by £1,000. I am very much in favour of this and it moves us towards the Lib Dem policy of having everyone who earns under £10,000 taken out of income tax altogether. I have had arguments with numerous left wingers on Twitter about this who keep saying that it does nothing to help the poorest in society. I know. It's not designed to. It's an income tax measure and the poorest in society do not pay income tax. What it does do it allow the lowest earners to keep more of their own money which I see as a very good thing.
• Capital Gains tax threshold up to 28% for higher rate tax payers, kept at 18% for lower rate tax payers. I would have preferred to see this go closer to 40% to completely close the gap with the higher rate of tax but I understand that this is a compromise.
• Corporation tax for large companies to come down from 28% to 24% in 1% decrements over the next 4 years. Corporation tax for small companies to come down from 21% to 20% next year with no further reductions scheduled. First, declaration of interest, I own and run a small business. Whilst I am pleased to see corporation tax coming down (this will encourage growth which will help us get out of the fiscal problems faster) I think the balance should have been reversed with the small companies rate coming down more quickly. This is not from a self-motivated perspective but because small companies are the engine of the economy and the less tax they pay, the more likely they are to grow and ultimately also become the large companies that pay the higher tax ultimately anyway.
• Levy of £2 billion on banks. I would have liked this to be higher.
• Accelerating the change in retirement age to 66. A necessary move. The sooner politicians are honest about this the better. We cannot continue to subsidise retirements of 20 or more years as the norm. Pensions were never intended to do this and the next generation cannot afford to do it.
• Child benefit frozen for 3 years. I would much rather have seen it means tested although some say it would have been expensive to administer this. I am not convinced this would make it unworkable though. I expect Labour to go for the government's throat on this and it is harder to justify than means testing.
• Tax credits reduced for families earning over £40K per year. I have no problem with this. The money needs to come from somewhere and this is one example of where those earning a bit more have to contribute.

There are lots of other measures but I think these are the main ones. Overall it is not a nice budget and there is lots of pain. However I totally agree with Osborne's comments that the government has been forced into this position. I think Harriet Harman actually made a good impassioned contribution from the dispatch box in response in terms of performance but there is no narrative from Labour about what they would have cut differently. They just seem to oppose everything and as a result lack credibility. They should also display more humility about why we are in this situation in the first place.

At the end of his statement, Osborne claimed that the Treasury has analysed the changes and calculated that the poorest are least affected and the richest most affected. I expect to see lots of alternative analysis from left wing blogs in the next few days telling us why they think this is wrong.

I think however that particular argument goes, the pain is necessary to get our finances back on track. Hopefully as the economy grows in the next few years some of the pain can be mitgated.

Budget day Live Chat

From 12:00 noon today I am participating in a Budget Live Chat coordinated by Left Foot Forward across a number of other blogs.

You can join us from 12:00 noon below, budget itself starts at 12:30pm:

Raising the income tax threshold - great news!

According to reports, George Osborne is likely to raise the threshold at which people start to pay income by £1000 to £7,475. This is apparently to be paid for by clawing it back from top-rate taxpayers. I am am not clear on exactly how this second part will work but if this is correct then I think it is excellent news.

Firstly it is the beginning of an implementation of the Lib Dem policy to take everyone earning less than £10,000 per year out of income tax. It gets us over a quarter of the way to realising this aim. It is also something I think we can genuinely point at at say that it is unlikely to have happened had we not been in the government.

Secondly it will offset the likely rise in VAT to 20% for the poorest earning families. If a 2.5% hike in VAT is going to cost the average family £389 ((c) 2010 Lib Dem election campaign) then surely it will cost the average lower earning families proportionally less. I do not have the exact figures but I would expect it will be a net gain to those earning the lowest amounts.

Don't get me wrong, I still don't think raising VAT is the right move but at least its effect will be mitigated for some of the most vulnerable.

Of course we hit the problem of what happens to those who do not earn anything at all but I await to see what is in the budget overall before passing comment on that.

Labour lack credibility on public spending cuts

One of the things that I keep coming back to when I hear Labour politicians talking about cuts is the fact that Labour very deliberately did not have a public spending review earlier this year. This meant that they did not have to spell out exactly what spending cuts they would implement over the next few years.

Whilst this may have been good for short term political reasons it is surely bad in the longer term. It means that a party that until 6 weeks ago was in government now already looks like an opportunistic opposition howling about the cuts being implemented by the government whilst simultaneously not offering a credible alternative to what they would have done. They can claim that they would not have cut at all at first but that only applies for the next few months. Beyond that time-frame they need to have a coherent message and I am not seeing it at the moment. Meanwhile the government is making all the running.

Of course they are hobbled by the fact that they are in the middle of an increasingly bitter (but absolutely necessary) leadership contest and hence there is not one clear line that they should be pursuing. But if they had had the public spending review that they should have had earlier this year then at least they would be able to say with some authority what they would (and wouldn't) have done. Even some of the leadership candidates are now saying they should have had the review. Too late now I'm afraid.

As it is it is starting to look like the coalition is taking the necessary decisions to get things back on track whilst Labour politicians carp from the sidelines.

Yet again, short term political tactics from Gordon Brown have had longer term consequences that are very damaging for his party.

Testing Means Testing

There has been much discussion about various state benefits recently in the context of what could be cut in order to save the government money and the question of means testing has raised its head again.

Every time I hear this subject discussed there is always someone from a body who opposes the idea of means testing whatever specific benefit they are talking about involved. The argument often revolves around for example the fact that if a benefit is universal then take up by those who need it most is higher and also that the admin costs per capita are lower. There are other arguments in favour of universality too such as the one that Frank Field advanced recently for child benefit which is along the lines of it being unfair to take away benefits from higher earners who have "played by the rules".

The problem I have with universality (especially in the current economic context) though is that it is providing benefits to people who do not really need them. Does a multi-millionaire's family really need child benefit? Does a wealthy 60 year old really need free bus travel around the country? Do rich pensioners need the Winter fuel payment? All of these benefits are currently universal.

We are having to look long and hard at cutting spending and increasing taxes. One of the taxes that is likely to go up in the emergency budget the week after next is VAT, perhaps to 20% or even higher. VAT is a regressive and to an extent stealthy tax (as an aside, I would actually prefer income tax to rise if any tax has to go up instead but that aint likely to happen at the moment). Think about what we are saying when we are preserving for example universal benefits for the children of richer families and better off older people. We are effectively asking the poor (who will be disproportionately hit by a VAT rise as a percentage of their income) to subsidise the rich.

Even though changing to means testing would not be enough to completely stop tax rises it would be enough to mitigate them. And at least we would be focusing benefits on those who need them.

Perhaps then the government would have a better claim to be doing things in a way that is consistent with the principle of us all being in this together.