The battle of the Lords is on

The government is not backing down on reform of parliament's upper house despite the threat of a hug

So House of Lords reform will go ahead. Or rather, a Bill reforming the House of Lords was named in the Queen’s Speech. That doesn’t guarantee it will happen, only that the government will try to make it so. This shouldn’t be a surprise. Nick Clegg and David Cameron have both re-stated their commitment to the plan in recent weeks (although the Lib Dem leader naturally does it with a great deal more enthusiasm than the Prime Minister). But rumours started to surface yesterday of a deal to shelve the proposals, which are certain to provoke a massive rebellion among Tory MPs. The creation of a substantially elected second chamber is the price the Lib Dems demand if they are to allow changes to parliamentary constituency boundaries to go ahead. The Tories see the redrawing of the electoral map as a way to eliminate a pro-Labour bias in the system.

If there were to be a climbdown, both reforms would have to be ditched or postponed until after the election. Tories familiar with Downing Street thinking were very sceptical about the rumours of a retreat last night precisely because the boundary changes are so important in Cameron and Osborne’s minds as part of the strategy for getting a majority. That logic appears to have prevailed.

The Conservative rebels are not happy. They are already complaining bitterly about the prospect of weeks of parliamentary time being taken up with an issue that will strike voters as a perverse distraction from economic woes.  One Conservative MP described it to me recently as “a test of the government’s legitimacy” – in other words, if it goes ahead, the coalition will look as if it is giving up on trying to fix the economy and engaging in displacement activity instead. The counter-argument from Lib Dems - echoed a little more discreetly by Number 10 - is that governments can do many things at once and Lords reform only threatens to become a legislative quagmire because recalcitrant Tories want to make it one. Lords reform of some kind is in the coalition agreement, say those who treat that document as a sacred text, so Tory MPs should get behind it. Lib Dem MPs also point out how much marching behind government policy they have done with clothes pegs on their noses. It’s about time the Tories did the same, they say.

But there are a whole lot more Conservative MPs than there are Lib Dems and Lords reform is in danger of becoming a lightning rod for wider discontent with David Cameron’s leadership, much as rebellions on Europe have done in the past. As I write in my column in this week’s magazine, there is a feeling on the Tory benches that the Prime Minister and the Chancellor have been outwitted in a few too many coalition negotiations; that they are overestimating the strength of the Lib Dems and giving away too much. By some estimations, over 100 Conservatives could rebel on Lords reform. This cannot be dismissed as mischief by “the usual suspects” (although Downing Street is currently deploying that line).

There is some room for manoeuvre. The precise shape of a new upper House has yet to be decided – how many members, what proportion will be elected and by what voting system etc. The question of whether a new settlement should be put to a referendum also has to be resolved. (The Lib Dems think not; Cameron has kept the option open.) But every dilution of the principle of a more democratic parliament will require compromises from Cameron on something else and the boundary changes do not lend themselves so easily to the pick and mix approach. Either they happen in time for the next election or they don’t.

The importance that Cameron and Osborne attach to the new constituencies is in itself revealing. It is a symptom of their anxiety about the next election and the difficulty their pollsters are having finding people who didn’t vote Tory in 2010 but might do next time. It is a sign that they are relying on fairly desperate tactical ploys to collect seats in what looks, on current projections, like being another hung parliament. It expresses the fact that they haven’t hit upon a big, overarching campaign message.

But while the boundary review helps the Tory party in aggregate terms, it makes life pretty tricky for many Tory MPs. Some of their seats will be abolished, others will be less safe and many will be forced to seek reselection in battles with neighbouring MPs.  In other words, the price that the Lib Dems would demand for shelving Lords reform feels much higher inside Downing Street strategy seminars than it does in the parliamentary Conservative party – just another reason why the forthcoming battle will be gruesome.

The House of Lords. Photograph: Getty Images.

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

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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.