The dream ticket: a Lib-Lab coalition

Not long ago it was just a fantasy, a parlour game for policy types. But in the weeks before the election, it started to look like it could actually happen: that an undecided electorate, a distorted voting system, and Nick Clegg’s moderately impressive performance in the television debates could conjure an unexpectedly delightful result—a full-blooded Lib-Lab coalition.

The idea had kept my spirits up even in the dreary phase before the first television contest: a Lib-Lab coda to 13 years of new Labour, a chance to clean up unfinished business from that period and give our politics a less tribal, more reasonable, frame.

Labour does not deserve a fourth term, the Tories have not done enough to win their first one since 1997, and the Lib Dems have rising support and need governing experience. The Lib Dems and Labour are political bedfellows in a way that neither party is with the Tories—and a Lib-Lab coalition could swiftly draw up a plan for economic reform (including unhurried but rigorous deficit reduction) and political change (a new voting system, Lords and party funding reform and more “localism”).

And I mean a proper coalition (the 20th century saw three of these, during the two world wars and in 1931)—not just a minority government supported by a smaller party (there have been five of these, most recently the unsatisfactory Lib-Lab pact of 1976-78). A proper coalition would require an agreement on the big issues—as in the two Lib-Lab coalitions in Scotland since devolution and the current Plaid Cymru-Labour coalition in Wales—and five or six seats for the Lib Dems in the cabinet, with Clegg as deputy prime minister. That would be something brand new—not a fourth term of Labour with bells and whistles attached.

It would take a while to agree; in the meantime the markets and the media would go haywire. But if both parties can keep their nerve, a Lib-Lab coalition could prove surprisingly popular. It would have more legitimacy in terms of votes cast than any government for decades, and it would answer the electorate’s restless desire for novelty, while sticking to the mildly social democratic policy content that reflects majority British opinion.

This is a good time for coalition government. Despite all the election posturing, there is a high degree of political consensus in Britain at present, but we also have short-term difficulties that no single party is capable of sorting out. When a country has big problems and an electorate starkly divided about how to resolve them—as Britain did in the 1970s—the first past the post system allows for strong government and a victory for one section of opinion over the other. But when much of the argument is over smaller things—whether, for example, to do localism through elected police chiefs, elected mayors or local taxes—then coalition government with its checks and balances, its attention to detail and its greater representativeness, is more appropriate.

It is a good time for a centre-left coalition government, too. The economic crisis may not have created a “progressive” moment, but it has certainly produced a Keynesian one. The economics of the individual household, thriftily balancing its books—which, astonishingly, David Cameron likes to invoke—is precisely what is not called for when the private sector is so weak. A Darling-Cable team to manage deficit reduction and draw up an effective programme of financial reform is surely one of the dream tickets of modern politics.

After the expenses revelations there has been much nonsense talked about Britain’s political “crisis.” But the system could do with an overhaul to combat the anti-political mood, and Labour and the Lib Dems would find it far easier to deliver a reform package than either could with the Tories.

Also, as the “special relationship” becomes less special, and as fiscal constraints make global commitments harder to bear, the EU will become more important to Britain, especially in foreign and security affairs. A Lib-Lab coalition will have another chance to show how the national interest can be served by playing the European game in a committed way.

If many of new Labour’s wrong notes have come from too close an embrace of the American way—Iraq and financial de-regulation, for example—a Lib-Lab coalition would represent a healthier step towards Europe, where all but three countries are run by coalition governments. Labour has actually been quietly steering Britain in a more European direction over the past decade—consider public spending as a share of GDP, the vast increase in health spending, more job security, political devolution and the Human Rights Act. And most of this has been popular. Euroscepticism (aversion to being ruled by the EU) can, and does, happily coexist with support for Britain becoming more like the average social democratic European state.

Support for a Lib-Lab coalition does not require a romantic yearning to overcome the split in Britain’s “progressive” forces. This matters less now than it did at the start of the 20th century, when the Tory party was a far more reactionary force. In any case, what it is to be progressive has become less clear: the Lib Dems, for example, are now to the left of Labour on most policy issues, but how long will they stay there?

There are, of course, many big obstacles to this outcome. Nick Clegg has said that he will try to do a deal with the party with the “strongest mandate” and that is unlikely to be Labour. If Labour in general, and Gordon Brown in particular, is seen to be the main loser, how can the Lib Dems keep them, and him, in power? Moreover, there are real policy differences over civil liberties, localism, defence and fairer voting systems, and there will be powerful factions in both parties strongly resistant to a deal.

As the Scottish experience has shown, for a coalition to work well, even to exist, the personalities must be compatible—and that is not obviously the case here. The Lib Dems will also be aware that small parties in coalitions usually do badly at subsequent elections, so tolerating a minority Tory or Labour government is a safer option.

Yet the temptation for the Lib Dem leaders to end all those years of just talking and to actually do some governing must be a big one. What if… the Tories are the biggest party in votes and seats but fall well short of an overall majority, while Labour and the Lib Dems have an overall majority in seats of 25 and more than 50 per cent (together) of the popular vote. What if… Clegg tries hard and fails to do a deal with the Tories but succeeds in getting most of what he wants from a Labour team dominated by young pro-coalition voices like the Milibands (a deal that includes cabinet seats for himself, at the home office, Menzies Campbell at defence, Vince Cable at business, Chris Huhne at justice and David Laws at local government). What if… Gordon Brown acknowledges that he has not only lost the election but is an obstacle to a successful coalition—and rides off into the sunset having at least secured Labour’s continuation in office. (Or, failing that, is pushed out.)

And why not a time-limited coalition of, say, two years—long enough to start sorting out the public finances and to pass a big political reform act, with a second election (under the new voting rules, if they are agreed in a referendum) at the end of 2012. That may go some way to deflect the raging of the popular press about undemocratic “dirty deals,” Labour cynicism and the disenfranchisement of England (which will almost certainly have a Tory majority). Another election might then produce what is now the second best option for the country—a Cameron-Clegg coalition—but by 2012 might be a more appealing, natural fit.

New Labour is destined to end, as it began, in a flurry of talk about political realignment. This time it may be desperate enough to embrace it.