Monday, 12 August 2013

The New Cabinet: Coalition Constraints and Compromises (originally published on Respublica's Disraeli Room on 7 September 2012)

Reshuffles may be about the Prime Minister setting the direction, but when policy has to be agreed by two parties the aims of government become all the more opaque. A natural consequence of coalition is that while a prime minister may wish to set the direction of government through his appointments, he will always be constrained by the wishes of the minority partner. The Liberal Democrats have 50% representation in the so-called “Quad” (where Cameron, Osborne, Clegg and Alexander agree a common direction for the Government to take). It is therefore unclear to commentator and voter what direction the government will take.
Macmillan commented that the British do not like coalition government. That is because our adversarial politics is based upon giving the voters a clear choice and being able to assess a party on its record in government. Unless a voter pays inordinate attention to the machinations of coalition politics he will either simply judge both parties according to the compromised policies they agree on or will be unclear as to what the two parties stand for. It is no accident that political parties that prefer coalition government also favour other constitutional arrangements such as proportional voting that make government opaque and strengthen the political class.
Without the compromises of coalition, the Prime Minister could fully exercise the Royal Prerogative to set the direction of the Government.  It is unfashionable to defend the use of the Prerogative, but it does mean the Prime Minister sets the agenda by his appointments and therefore voters know what they are getting and can vote accordingly. It gives a clear choice to voters and that must be democratic.
Coalition government reduces the clarity of the choice voters can make and increases suspicion of the political class as they are perceived to compromise on manifesto commitments and reach deals to keep them both in government.  This coalition came together because of the lack of a clear election result and the dire state of the economy. People did not vote for a coalition of course, they rather voted for different parties. The economy was a strong reason to enter coalition and it is by its record on the economy the coalition will be judged.
The apparent lack of growth is perhaps a reason for retaining Ken Clarke in the Cabinet, without portfolio.  Clarke of course oversaw a period of economic growth while addressing the government deficit. This was following a period of supply-side reforms that freed up the private sector, allowing it to grow.
The criticism of the Chancellor is unfair. His policy on the deficit has ensured that Britain has retained its Triple A status; this when other major Western nations are losing theirs. The deficit-reduction plan is vital for setting the foundations for growth. It ensures a low interest rate because the bond markets retain their confidence in Britain’s ability to pay its debts and it means that private sector investment is not crowded out by public debt.
Rightly though, there is concern that growth is not faster. Conservatives generally believe that rather than the Keynesian approach of stimulating demand and relying on major government projects to achieve the multiplier effect, supply-side reforms are what enable the private sector to grow. This is why the Beecroft Report was commissioned, which came forward with radical proposals to foster private-sector growth.
Ironically it was the Secretary of State with responsibility for business, Vince Cable, who prevented these reforms being delivered. As much as Mr Cameron wants to refocus his Government on economic growth, because of the politics of coalition he cannot move Mr Cable, who is ideologically opposed to many of the supply-side measures needed for business.    
The power to reshuffle has allowed Mr Cameron to move two economically savvy Conservatives, Matthew Hancock and Michael Fallon (who has experience of business in the real world), to the Business Department.  Because of coalition constraints however, he can only manoeuvre and not set a new direction to the Business Department.
This is not just a problem with one individual minister. It is a problem with coalition government and its limits on the Prime Minister’s power to appoint his own ministers thereby setting the direction. The Conservatives at the next election will be judged on their economic record. MPs such as David Davis have been calling for supply-side reforms, but the Conservatives will be judged on the record of coalition, not their own beliefs. The danger is that because the Liberal Democrats hold a veto over economic policy, growth will be restricted. Meanwhile, because of this policy logjam, the Conservatives are looking for other options, such as relaxing planning laws.  This could well risk alienating their voters in the Shires. 
Unless someone is especially politically interested and follows the manoeuvres of coalition government, the average voter will simply judge both parties on their record. This means that the choice is not as clear as it should be. It would be far more democratic to allow a party to deliver on its programme and then to be held to account for it, rather than to be hemmed in by a party with far less democratic support and then be punished at the polls for not delivering on the growth that many Conservatives believe could be achieved were the junior coalition partners to allow them more of a free-hand on this key area of policy.
Of course the Conservatives did not achieve an outright majority, but this coalition came together to solve the economic difficulties of the country. The Prime Minister is unable to demote Liberal Democrat Ministers and unless they prove less obstructive on supply-side reform, delivery of economic growth will be very difficult and coalition government as an approach will be perceived by the public as not having worked. If coalition does not allow the Prime Minister a freer hand on reshuffles, then the onus is on those ministers he cannot reshuffle to be more on board with achieving economic growth.  

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