Post-election chaos? More likely it’ll be business as usual

Sometimes the prospects for post-election talks between the political parties sound like a logic puzzle.

Leo has ruled out a coalition with Brad, on the terms insinuated by Johnny. Meanwhile, Brad and Ryan have refused to comment on those same terms, though Ryan has used the opportunity of being asked the question to suggest that Leo will have no option but to strike a deal on a vote by vote basis with Johnny. Leo likes yellow whereas Brad does not dislike green. In 3 years, Johnny will be the twice the age that Ryan was 15 years ago. Who has the most apples?

But it doesn’t have to be like this. All of the parties have published detailed manifestos and we can use these to work out the parameters of any potential deals. Plus the smaller parties – especially the Liberal Democrats and SNP – have been much more open about their approach to post-election negotiations. At the Social Market Foundation we’ve written a ‘cheat sheet’ on what the sticking points for those discussions might be, and how a deal might be done despite them. We find that the prospects for deal-making, despite the fervent attempts at differentiation by the parties, are good. So, why is it, that after decades of single-party government, we’re suddenly well-prepared for a messy general election outcome?

SMF - Summary of post election deals and sticking points

The first reason is that the main political parties have more or less the same prognosis for the British economy. They are anxious about the unbalanced nature of the recovery – for example, Conservatives as much as Labour and the Liberal Democrats write about taking steps to diversify the industrial base, every party is concerned about low pay at the base of the labour market. But this anxiety does not translate into many bold measures to reshape the economy; instead the parties propose some relatively minor adjustments while the priority is to cut the deficit before economic conditions deteriorate again. In other words, none of the parties believe that the UK is about to have a long boom; if they had that confidence, then they would be content to allow rising tax revenues to take care of any deficit. Nor do they believe that disaster is just around the corner; or there would be far more urgency in their proposals for economic reform.

The consequence of this broad economic consensus is that, while the parties have different plans for deficit reduction, compromising on those plans is relatively straightforward and, given how little detail the parties have provided as to how they would make further spending cuts, compromise will be a relief – it means they can restart the clock on coming up with detailed plans.

The second reason why the prospects for deal-making are so good is that politicians are going to have plenty of help in formulating and implementing policy. I was a civil servant at the start of the 2010 Coalition Government and helped, for example, to mediate between Conservative and Liberal Democrat positions on tuition fees. This wasn’t straightforward but, over the course of several months, an agreement was reached. But I’m not merely making a self-serving remark about the quality of the civil service that will help a new coalition. The support for politicians goes much further than this.

For example, one of the difficult issues to resolve between Labour and Liberal Democrats will be reform of the energy market. Labour not only advocates a price freeze but significant changes to how the market is run. This is though a regulated market and the Competition and Markets Authority (CMA) is currently working through the issues within it. Our briefing suggests that Liberal Democrats could accept the energy price freeze in exchange for persuading Labour to wait until the CMA has reported back before starting on any reforms. It is perfectly respectable for Labour politicians to say that they are waiting for this independent and expert process to finish; in fact they would face far more criticism if they didn’t.

What this means in practice is that a potentially irreconcilable difference between two potential coalition partners can both be dealt with later, i.e. not in the white heat of immediate coalition negotiations, and in a way that doesn’t require either side to make an embarrassing about turn. The presence of independent regulators creates limits to the scope of political action, certainly; but, as the example illustrates, it also provides confidence and stability.

In the end, clearly, there will be some sharp disagreements between potential partners. However, then the necessary votes to pass policy favoured by the larger partner may come from elsewhere in the House of Commons. If Labour and Liberal Democrats go into coalition, for example, it is unlikely that Liberal Democrats could go back on the changes to tuition fees they have helped to make in the 2010-15 Coalition and back Ed Miliband’s pledge to cut them again. So Labour will be relying on SNP votes instead. Conversely, Labour, if it in government insists on renewing Trident, then SNP MPs will not vote with them on this and many Liberal Democrats may take a different view too; hence they will rely on Conservative MPs instead.

All this will make for interesting and exciting debates but the fundamentals of government itself will remain surprisingly stable.



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