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Forget a Lib-Lab pact: Clegg’s current position suits the opposition perfectly

Even those in Labour who were once sympathetic to the idea of working with the Lib Dems have lost faith in the idea.

There are all sorts of coalitions in British politics. The bloc of MPs supporting gay marriage includes the Conservative, Labour and Liberal Democrat leaders. There is also a grand alliance of Westminster parties that oppose the devolved Scottish government’s plans for independence. Pro- and anti-European feeling in parliament blends across party lines.

There is nothing new in political rivals teaming up to achieve their goals. One such alliance is now coalescing around support for Lord Justice Leveson’s proposals to embed press regulation in law. It is an issue on which Nick Clegg finds himself closer to Ed Miliband than to David Cameron. This particular overlap of opinion never fails to provoke speculation about a permanent shift in Lib Dem allegiance.

That won’t happen any time soon and it won’t happen over Leveson. Clegg is not going to surrender the Deputy Prime Minister’s office over an issue so marginal to the concerns of most voters. The Lib Dem leader will not end his partnership with Cameron on any pretext that doesn’t arrive conveniently close to a general election. The state of the economy prohibits an early Lib Dem departure from coalition. Having prefaced his participation in the project with a commitment to administer Budget surgery in the national interest, Clegg cannot be seen to flinch at the sight of blood.

Hedging strategy

Besides, the Lib Dems are pushing coalition as an attractive and stable system of government. That requires getting to the end of the parliament with a chest full of gleaming policy trophies. Prematurely flouncing away from power is not in the plan.

The awkward effect of Clegg’s strategy is to fuse the Lib Dems’ credibility as a party of power with George Osborne’s standing as a manager of the economy. The junior coalition partner wants to campaign in 2015 on a record of having injected fairness into the government’s austerity programme, demanding tax cuts for the low-paid and punitive tariffs on the rich. But if voters decide that Osborne has driven the country into a ditch, Clegg can’t emerge from the wreckage boasting of the compassion he urged from the passenger seat.

If, by contrast, the economy looks convalescent by 2015, the Tories will run a campaign warning that any deviation from their plans would put recovery at risk. It then becomes tricky for the Lib Dems to share any credit for an upturn without endorsing Osborne as Chancellor for another term.

That hazard is a regular topic of discussion in the Deputy Prime Minister’s inner circle, not least because the trap could be sprung well before an election. The Chancellor aims to conduct a spending review next year that will fix budgets for the financial year that begins this side of a May 2015 general election and runs into the next parliament. Osborne wants to use that review to lock the Lib Dems into such deep complicity with his plans that they are irreversibly cast as partners-in-waiting for a second term of coalition with the Tories. Blocking off Lib Dem escape routes to Labour is the Chancellor’s hedging strategy in case the Conservatives fail to win a majority at the next election.

“We can’t be seen to be throwing off the fiscal straightjacket at the first opportunity,” says a Lib Dem strategist of the party’s dilemma. “Nor can we stand at the next election in a position where people can say, ‘They have exactly the same platform as the Tories.’”

Labour is also committed to painting the Lib Dems as Osborne’s austerity handmaidens. Miliband has said he will work with the party if the parliamentary arithmetic demands it but that decision won’t need taking before 2015. Meanwhile, there are pressing reasons not to look cosy with Clegg. Labour MPs are too pumped up with anti-government vitriol. Even those in the party who were once sympathetic to the idea of working with the Lib Dems have lost faith in the idea. Andrew Adonis, a pluralist by instinct who tried to cobble together a deal with Clegg in 2010, recently declared himself “a lot more negative” about coalition in the future. The intervention was noted with dismay in the Deputy Prime Minister’s office.

The crude reality is that Labour’s poll lead is plumped by Clegg-hating Lib Dem defectors. The last thing Miliband wants to do is start inviting them to forgive and forget.

“There can be no more ‘I agree with Nick’,” says a senior shadow cabinet figure. “It’s important strategically that we don’t think the way to a majority is somehow with the Lib Dems.” For the same reason, senior Labour figures privately hope the Liberal Democrats don’t jettison Clegg and install a new leader who has a chance of wooing back their refugee voters. There is a definite hardening of the tone that shadow cabinet ministers take when talking about Vince Cable, the Business Secretary. He was once talked up as the kind of Lib Dem Miliband could work with. Now he is derided as “all talk” – a showboater who wants the moral privilege of dissenting from the Tories while lacking the power or guts to thwart them.

Bigger prize

This belligerence is hardly tempered by a dawning recognition that voters find party purism unattractive. There is a particular tendency among Labour stalwarts to stew in righteous indignation that comes across as sneering contempt for anyone who so much as entertains the idea of supporting other parties. Some of Miliband’s closest advisers are alert to the danger of such insularity, especially at a time when traditional party allegiance is in long-term decline.

Responding to that phenomenon requires dealing with what one close Miliband ally calls “the depth of tribal sectarianism in the Labour movement”. In the short term, however, the prospect of reuniting angry, left-of-centre votes in the Labour tent for the first time since the early 1980s is a bigger prize than any pluralistic culture shift.

Labour sees its interests best served by the Lib Dems continuing under their current leadership, nestled under the Tories’ wing. Conveniently, that is where Cameron wants his coalition partners, too, blending into anonymity as his fiscal sidekicks. Clegg will try to fight back and assert Lib Dem identity but he will find himself ranged against one of the oldest coalitions in Westminster – the tacit collusion of the two big players to suffocate the inconvenient third party.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 17 December 2012 issue of the New Statesman, Will Europe ever go to war again?

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.