Why a Tory-LibDem coalition is doomed

May 11th, 2010

So the Labour-LibDem negotiations never really got off the ground, probably for two main reasons.   Its dependence on the Scottish and Irish nationalists made it too unstable since their demands were likely to be excessive and they could sink the deal at any time.   There was also probably a lingering apprehension that a deal with Labour which had many less seats and a much smaller vote that the largest party was somehow not really legitimate.   But Clegg still pursued the negotiations probably to get a better deal (from his point of view) from Labour in order to force the Tories to up their offer further.   To that extent he succeeded.   But the small print of that improved offer may well torpedo this emerging Tory-LibDem coalition.

The Tories agreed as part of the deal the Vince Cable proposal that nobody with an income below £10,000 should be subject to income tax.   The problem with this act of social justice is that it will cost £17bn, which will mean a hefty increase in public spending cuts elsewhere.   The LibDems for their part conceded that the deficit should start to be cut this year – Cable was always a deficit hawk.   Not only is this a reversal of the previous LibDem position, it will greatly increase the risk of turning a highly fragile recovery into a double-dip recession.   And it will of course inflame the tens of thousands of public sector workers who will lose their jobs or have to take a pay freeze or a pay cut to fund this tax concession.

Labour has probably come out of all this best.   Clegg has not secured PR, the deal runs the risk of seriously splitting the LibDem party, and they will seen in time to be propping up an unpopular coalition.   The Tory government will be weak and unstable, and if it implements the size of public spending cuts this year and next which it has threatened, it is difficult to see how it could win an early election.   Labour on the other hand will have a new leader and a chance to renew itself by reassembling a wide-ranging anti-Tory coalition which would embrace not only so-called Middle England but also our core vote which we have neglected for far too long and without which we cannot build a sustainable foundation for long-term government.

2 Responses to “Why a Tory-LibDem coalition is doomed”

  1. rob quick Says:
    May 11th, 2010 at 10:12 pm

    RT @michaelmeacher: There are strong reasons why a Tory-LibDem coalition will not survive long and will not win the next election http://wp.me/pPvte-eg

  2. Dave Gould Says:
    May 12th, 2010 at 1:12 pm

    Re: double dip recession, any corporation which borrowed money and then counted those borrowings as part of their growth would be laughed off before being sold off.

    But this has been exactly the state of the British economy since 2001. Although it undoubtedly trickles (or gushes) through to high street splurging, it isn’t economic growth.

    Perhaps we need an extra growth measure:
    GDP minus PSBR minus illusory bank profits = growth

    Part of the funding for the £10,000 personal allowance will come from the new 50p tax rate. Most of us will likely be relieved that inheritance tax threshold won’t be raised yet again.
    Maybe we can sell off the banks at a profit? And then split them up and tax them. :)

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