Coalition on the right track

by Hugh Cortazzi

The British coalition government, formed after the last election between the Conservatives and the Liberal Democrats, has not only survived its first quarter in power but has launched some significant reforms that could change the way Britain is governed.

One immediate and welcome change has been the renewal of the importance of the Cabinet as the central organ of government and confirmation that the prime minister is not an executive president as Tony Blair and Margaret Thatcher attempted to become. All major decisions now have to be agreed by both parties in the coalition.

There are a number of issues that will test the ability and willingness of the parties to work together. Right-leaning members of the Conservative Party dislike some of the egalitarian measures on which their Liberal Democrat partners have insisted.

Left-leaning members of the Liberal Democrats are worried by the proposed Draconian cuts in government expenditure, which they fear could worsen the recession and hit poorer members of society more seriously than middle-income families. But both parties are committed to the coalition, and the electorate would not look favorably on the party that brought down the government.

The government is committed to a review of expenditures and will announce at the end of October the shape of the cuts that they think are necessary to ensure the health of the British economy. The call by the finance minister for government departments to produce proposals that would lead to 25 percent, or in a worst case scenario 40 percent, has aroused real anxiety among members of Parliament and civil servants. The coalition’s decision to exempt health and overseas aid from cuts has intensified pressure on other government departments.

There clearly will have to be reductions in the public service. This will increase unemployment unless there is a growth in private-sector employment. The civil service unions will oppose compulsory redundancy and the proposed cuts in civil service provisions for early retirement and pension entitlements. The Liberal Democrats will face some unpalatable options. If they oppose the cuts they could bring down the government. If they accept the cuts without putting up a fight more of their core supporters may switch to supporting the Labour Party. Some members of the Conservative Party will be unhappy at the inevitable cuts in defense expenditure, which will have to be particularly painful if the government remains committed to maintaining and updating Britain’s nuclear capability.

Significant cuts have to be made to satisfy the holders of British government bonds that Britain will not go the way of Greece. But the cuts also have to be made in a way that will increase private sector investment. It will be very difficult to get the right balance and there is no consensus among economists about where the balance lies. The temptation will be to cut capital expenditure on infrastructure, not least because this can lead to clear, relatively speedy and significant savings, but British industry needs modern and efficient infrastructure if it is to expand. Capital investment in transport has been cut too often. London transport needs significant investment if only to prepare the capital for the 2012 Olympic Games.

Too much reliance was placed by the last government on the contribution to GDP of the finance sector. London should be able to maintain its position as the main European financial center, but Britain needs to revive its manufacturing capacity. British education and research are vital to the health of the British economy and its ability to compete with the growing economies of India and China. But universities face serious cutbacks in funding. Their financial problems have been exacerbated by government attempts to cut immigration from outside the EU. This has made it more difficult for non-EU students to get study visas. The Liberal Democrats, who would like to see the abolition of fees for university students are unhappy about university cuts.

The Liberal Democrats have won a commitment from the Conservatives to a referendum next spring on a reform of the present “first past the post” voting system. The Liberal Democrats as a first step toward proportional representation want to introduce the “alternative vote” system under which if a candidate fails to win an overall majority, second preferences and even third preferences will be counted until there is an overall winner. This system is opposed by the Conservatives and some Labour supporters on the grounds that it increases the likelihood that no one party will win an outright majority in an election and therefore will lead to coalition governments that are unstable and weak.

The present government is, however, not a weak one and undermines this argument. If the referendum were to fail the Liberal Democrats might feel that they had lost one of their main objectives in entering into a coalition. These are some of the more important issues that could lead to the collapse of the coalition, but need not do so if determination to cooperate can be maintained. Agreements on a number of difficult issues have been reached and bold initiatives have been taken. Perhaps the greatest incentive to maintain cooperation is that both parties have achieved one of their main goals by returning to power.

The coalition has so far faced a Labour Party weakened by defeat in the last election and without an effective leader. Gordon Brown resigned as leader after the election and his successor has not yet been chosen. The contest seems to be primarily between the two Milliband brothers. David, the former foreign secretary, appeals to New Labour, which recognizes that to be elected the party needs to win center support. His younger brother, Ed, the former energy secretary, emphasizes the importance of traditional Labour supporters on the left. The new leader will be selected this month, but it will take time for him to develop the opposition’s strategy. Much will depend on the way in which the British economy responds to forthcoming cuts and to what the late Prime Minister Harold Macmillan termed “events.”

Hugh Cortazzi, a former British career diplomat, served as ambassador to Japan from 1980 to 1984.