Who passes the Clegg test?

How many of Nick Clegg's four demands do Labour and Tories meet?

So Vince Cable won't be the next chancellor after all. Today's Guardian reports that the Liberal Democrats are planning to rule out forming a coalition government with either the Conservatives or Labour in the event of a hung parliament. But they will be prepared to offer parliamentary support to any party that accepts their "shopping list" of four demands.

So who, as things stand, would pass the Clegg test?

1. "Investing extra funds in education through a pupil premium for disadvantaged children."

Conservatives: The Tories have already promised to introduce a pupil premium, with extra funding for schools that take children from the poorest homes. But the party has yet to say anything about how much it would spend, or where the money would come from.

The Lib Dems have said that the policy would cost £2.5bn a year, with the average school receiving roughly £2,500 extra for every disadvantaged child on its roll.

Labour: Ed Balls opposes a pupil premium, arguing that it would not guarantee that pupils with disadvantages or extra needs actually get the support that they need.

Verdict: A point to the Tories. None for Labour.

2. "Tax reform, taking four million out of tax and raising taxes on the rich by requiring capital gains and income to be taxed at the same rate."

Conservatives: A number of Tories are impressed by Nick Clegg's plan to raise the income-tax threshold to £10,000, but David Cameron has yet to poach the idea. Instead, he plans to focus on cutting inheritance tax and recognising marriage in the tax system. In addition, George Osborne has pledged to reduce corporation tax from 30 per cent to 27 per cent. The Tories have no plans to raise capital gains tax (CGT).

Labour: No plans to cut income tax, but Alistair Darling is said to be looking at raising CGT in the Budget to stop the wealthy exploiting a tax loophole by declaring income as capital gains. This would please the Lib Dems, who could claim to have led the agenda.

Verdict: In anticipation of a rise in capital gains tax, Labour wins half a point.

3. "Rebalancing of the economy to put less emphasis on centralised banking and more on a new, greener economy."

Conservatives: Osborne is sympathetic to calls to split investment and retail banking but has stopped short of calling for a complete separation. Cameron has promised a "localist green revolution" with companies such as Tesco and Marks & Spencer helping to make homes more energy-efficient. But will his backbenchers stand in the way? A ConservativeHome/ConservativeIntelligence survey revealed that reducing Britain's carbon footprint was the lowest priority for Tory candidates.

Labour: The government has so far refused to separate retail from investment banking and is unlikely to change its position. On the "green economy", Labour has promised to create a more than a million new green jobs and to cut UK greenhouse-gas emissions by 34 per cent by 2020.

Verdict: Half a point to the Tories on banking and half a point to Labour on the green economy.

4. "Political reforms, including changes to the voting system and a democratically elected Lords, that go further than proposed by Labour."

Conservatives: The Tories are opposed to any electoral reform and support the current first-past-the-post system. Cameron opposes proportional representation on the grounds that it hands power to the "political elites".

The Tory leader has said he supports a largely elected second chamber but is reluctant to challenge his own peers on the issue, as they are opposed to reform. In private, Cameron has described Lords reform as a "third-term issue".

Labour: Supports the replacement of first-past-the-post with the Alternative Vote and has passed legislation to ensure a referendum will be held. The Lib Dems support the move as a "step in the right direction", but are disappointed that Labour did not opt for a proportional system.

The government continues to favour a predominantly elected Lords. However, Jack Straw has warned campaigners that they will have to wait more than decade before this is achieved.

Verdict: Half a point to Labour.

Final score: Conservatives: 1½ out of 4

Labour: 1½ out of 4

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George Eaton is political editor of the New Statesman.

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Brexit has opened up big rifts among the remaining EU countries

Other non-Euro countries will miss Britain's lobbying - and Germany and France won't be too keen to make up for our lost budget contributions.

Untangling 40 years of Britain at the core of the EU has been compared to putting scrambled eggs back into their shells. On the UK side, political, legal, economic, and, not least, administrative difficulties are piling up, ranging from the Great Repeal Bill to how to process lorries at customs. But what is less appreciated is that Brexit has opened some big rifts in the EU.

This is most visible in relations between euro and non-euro countries. The UK is the EU’s second biggest economy, and after its exit the combined GDP of the non-euro member states falls from 38% of the eurozone GDP to barely 16%, or 11% of EU’s total. Unsurprisingly then, non-euro countries in Eastern Europe are worried that future integration might focus exclusively on the "euro core", leaving others in a loose periphery. This is at the core of recent discussions about a multi-speed Europe.

Previously, Britain has been central to the balance between ‘ins’ and ‘outs’, often leading opposition to centralising eurozone impulses. Most recently, this was demonstrated by David Cameron’s renegotiation, in which he secured provisional guarantees for non-euro countries. British concerns were also among the reasons why the design of the European Banking Union was calibrated with the interests of the ‘outs’ in mind. Finally, the UK insisted that the euro crisis must not detract from the development of the Single Market through initiatives such as the capital markets union. With Britain gone, this relationship becomes increasingly lop-sided.

Another context in which Brexit opens a can of worms is discussions over the EU budget. For 2015, the UK’s net contribution to the EU budget, after its rebate and EU investments, accounted for about 10% of the total. Filling in this gap will require either higher contributions by other major states or cutting the benefits of recipient states. In the former scenario, this means increasing German and French contributions by roughly 2.8 and 2 billion euros respectively. In the latter, it means lower payments to net beneficiaries of EU cohesion funds - a country like Bulgaria, for example, might take a hit of up to 0.8% of GDP.

Beyond the financial impact, Brexit poses awkward questions about the strategy for EU spending in the future. The Union’s budgets are planned over seven-year timeframes, with the next cycle due to begin in 2020. This means discussions about how to compensate for the hole left by Britain will coincide with the initial discussions on the future budget framework that will start in 2018. Once again, this is particularly worrying for those receiving EU funds, which are now likely to either be cut or made conditional on what are likely to be more political requirements.

Brexit also upends the delicate institutional balance within EU structures. A lot of the most important EU decisions are taken by qualified majority voting, even if in practice unanimity is sought most of the time. Since November 2014, this has meant the support of 55% of member states representing at least 65% of the population is required to pass decisions in the Council of the EU. Britain’s exit will destroy the blocking minority of a northern liberal German-led coalition of states, and increase the potential for blocking minorities of southern Mediterranean countries. There is also the question of what to do with the 73 British MEP mandates, which currently form almost 10% of all European Parliament seats.

Finally, there is the ‘small’ matter of foreign and defence policy. Perhaps here there are more grounds for continuity given the history of ‘outsourcing’ key decisions to NATO, whose membership remains unchanged. Furthermore, Theresa May appears to have realised that turning defence cooperation into a bargaining chip to attract Eastern European countries would backfire. Yet, with Britain gone, the EU is currently abuzz with discussions about greater military cooperation, particularly in procurement and research, suggesting that Brexit can also offer opportunities for the EU.

So, whether it is the balance between euro ‘ins’ and ‘outs’, multi-speed Europe, the EU budget, voting blocs or foreign policy, Brexit is forcing EU leaders into a load of discussions that many of them would rather avoid. This helps explain why there is clear regret among countries, particularly in Eastern Europe, at seeing such a key partner leave. It also explains why the EU has turned inwards to deal with the consequences of Brexit and why, although they need to be managed, the actual negotiations with London rank fairly low on the list of priorities in Brussels. British politicians, negotiators, and the general public would do well to take note of this.

Ivaylo Iaydjiev is a former adviser to the Bulgarian government. He is currently a DPhil student at the Blavatnik School of Government at the University of Oxford

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