After we hung ’em

Twelve immediate reflections on the coalition.

1. David Cameron is the adroit driver of the coalition. He proposed an offer that the weakened Lib Dems couldn't refuse. His own strategy is to replace Tory nationalism with a 21st-century version of One-Nation "Whig" Conservatism, one that can appeal to urban and suburban multicultural Britain. (See my article "The end of Thatcherism" at OurKingdom.) Don't blame Nick; Labour wasn't interested in changing.

2. Nick Clegg's speech today confirms his commitment to the "modern liberty" agenda of rolling back the intrusive, database state. It is a tremendously positive outcome of the coalition agreement and a framework of principle that helps bind it together. Tragically, Labour were positive enemies of progress in this respect and don't understand what has hit them. Just because the BBC refuses to cover an issue doesn't mean it is not important.

3. But the coalition smacks of an attempt to create a new establishment (male, public school, enlightened) to replace the turpitude of New Labour's political class. While it is wonderful on liberty, noises about appointing swarms of new lords suggest an underlying attempt to preserve the old order. The expenses scandal isn't over yet.

4. The Tory aim is to win the next election outright. The Lib Dems need a strategy that will leave them stronger not weaker when they leave the coalition. If, as he told James Macintyre, Nick Clegg wants to be prime minister, he has to be better at playing chess than David Cameron.

5. The Tories will be stupid to tell voters we can decide on our electoral system and then refuse to permit us the choice of a significantly different one. They can't "restore trust" by spending millions on a referendum designed not to trust us. The Lib Dems will be hammered, too, if they go along with this. A proportional choice should be included in the referendum. Liberty can only be safeguarded by democracy but democracy is the coalition's political fault line.

6. A new generation that grew up under the spin of New Labour, and for which the wit and facility of the web are second nature, is starting to mobilise against being fitted up by half-measures that preserve the old regime. The demand for fair votes has taken to the streets under the colour of suffrage and added a new dimension to UK politics. The purple revolution may pause for breath but it is likely to grow -- it is an irresistible claim, not a protest.

7. Britain is much better in many ways thanks to New Labour, but the new leaders will need not just to admit they were wrong on Iraq, but explain why they persisted in being wrong when so many of us, including the Lib Dems, were right. A dishonest electoral system gave them many more seats than they deserved, but this will be corrected and they have no chance of expanding the support they need until they rethink what kind of a state they offer voters, and how we can be sure it will be both politically and economically honest, as well as creating policies that don't need borrowed money. If, like the Compass "A New Hope" conference sponsored by the New Statesman, Labour ignores the implications of its database state, then its cause is already hopeless and it will lose the next election.

8. The desire to preserve the Union and prevent a boost for the SNP in Scotland was an important motive for Cameron's offer of a coalition. Otherwise, the government would have had one MP, rather than 12, from north of the border. But its effect might be to destroy the Lib Dems in the Scottish Parliament elections next year. The national question is a burning fuse that might be slowed but can't be extinguished.

9. The coalition agreement stipulates that there will be a report on what to do about the West Lothian Question, that is to say, the unfairness of the present arrangements for the English (England returned a Tory majority). The official answer to the West Lothian Question has always been not to ask it. Once England enters the mix as an acknowledged grievance, stand back!

10. The row over whether parliament can be forced to rewrite the fundamental rule that if a government loses the confidence of the House it has to resign shows that the British constitution's famed flexibility has been tested to destruction. To put it politely, the UK's uncodified constitution is broken beyond repair. The coalition won't whistle it back together again. This could provide a way for Labour to be more democratic in its strategy than the Liberal-Conservative government.

11. The "Portillo moment" of election night, signalling that something historic had happened, was Caroline Lucas's victory. The Greens have a politics of the totality, linking the economy and our environment to our democracy. If "new politics" means anything, it means green. The Greens need to grow.

12. Will the dire state of the deficit and the coming cuts be used to preserve the dominance of the City and its economic system? Or is that system so obviously dysfunctional and deep cuts so likely to provoke rioting that the Conservatives (for such they are) will seek a "fair" way out of the mess to preserve the social order? No one understands what is going to happen to capitalism on a world scale. All we know is that the UK is exceptionally exposed, not least thanks to the policies of Brown and Balls, and there is a fear that something dreadful awaits us just over the horizon.

Anthony Barnett is co-founder of openDemocracy and co-edits its British blog, OurKingdom. Read his original article for the New Statesman, "Hang 'em high with this election", here.

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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 50p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits. It's not easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough.

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