Would Clegg’s head be the price of a Lab-Lib coalition?

Shadow cabinet minister John Denham suggests that the Liberal Democrats would need a new leader.

This week brought the "revelation" that Nick Clegg insisted on Gordon Brown's head as the price of a Lab-Lib coalition but could Labour turn the tables on the Lib Dems at the next election?

Should Labour emerge as the single largest party in a hung parliament, many will want to force Clegg's departure before any coalition is formed. In an interview in the latest edition of Fabian Review, John Denham, the shadow communities secretary, suggests that Labour could not work with a Clegg-led Lib Dem party:

It would require a new leader and a new politics. The idea that the Lib Dems can do this now, and then, in a few years, say they'd like to be friends with Labour when they are fundamentally unchanged is out of the question. Many people, including electoral reformers like me who always thought there could be a centre-left coalition with the Lib Dems, have to understand they have taken a historic position which puts them outside that game until they change profoundly.

That Denham, a Labour pluralist who supported attempts to form a "progressive coalition", feels this way suggests that many others in the party do, too. For now, the Lib Dems remain surprisingly united behind Clegg. As Richard Grayson points out in his cover story for the latest issue, the trauma of losing Charles Kennedy and Ming Campbell in quick succession has made the Liberal Democrats extremely leadership-loyal.

But Clegg's fate is now almost entirely intertwined with that of the coalition, which could leave him dangerously exposed if, as expected, the forthcoming spending cuts make the government rapidly unpopular. Should the Lib Dems suffer significant losses in the May 2011 local elections, we will start to hear the first proper rumblings of discontent.

Either way, it makes sense for Labour to begin planning war-gaming scenarios for a hung parliament now. So which Lib Dem figure could replace Clegg and win over a rejuvenated Labour Party? Step forward, Charles Kennedy.

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George Eaton is political editor of the New Statesman.

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.