Would a “No” on AV keep the Lib Dems in the coalition?

If the Alternative Vote system is rejected in May’s referendum, it could mean greater unity for the

If the Alternative Vote system is rejected in May’s referendum, it could mean greater unity for the coalition, rather than the predicted schism.

In assessing the future unity of the coalition, much of the focus has been on how the Lib Dems in particular would react to the big political events of the parliamentary term so far: the Strategic Defence Review, the Spending Review, Lord Browne's review of higher education funding, and next May's referendum on voting reform.

The assumption has been that, if under pressure from party grass roots and sour public opinion – over their previous pledge not to raise university tuition fees, for instance – in the face of reversed coalition policy, at least some Lib Dems could rebel, or even walk away from the coalition altogether.

The Alternative Vote referendum, expected to take place in May along with proposed changes to constituency boundaries, was reportedly the price Nick Clegg asked for his party's membership of the coalition, back in May.

It is an issue of paramount importance to the party at all levels, thus a "No" result would be a great blow to Lib Dems in government, prompting speculation and, in turn, denials that the party would "walk away" from the coalition if the public rejected AV. If the Tories do indeed actively campaign against reform, it would undoubtedly be a problematic situation.

But Nick Boles, the Conservative MP for Grantham and Stamford, who made a small splash a while back by writing a book calling for an electoral pact between the Tories and the Lib Dems in 2015, has now suggested in an interview that a "Yes" on AV would make the Lib Dems more likely to walk away from the coalition, while a "No" would leave them with no choice other than to stay the course. Boles said, in an interview with the website Yoosk:

If they were to win the referendum and AV were to be brought in, you could imagine a lot of Liberal Democrats saying, "Right, we got what we came for, now we'll withdraw from the coalition and make ourselves an independent voice again on the presumption that in a future election we'll do better than under first-past-the-post." So actually, if anything, they're more likely to leave if they win the referendum. If they lose the referendum, the only thing left to them is the persuade the British people that coalitions are a good thing, and to do that they have to stick with it until 2015.

This point was also made back in July by Peter Oborne (highlighted here by my colleague Jon Bernstein). Given that the Lib Dems seem, so far, to be holding on despite the storm surrounding tuition fees and spending cuts, commentators, including Boles, are agreed that the referendum will be a watershed for the coalition.

Whether a "Yes" on AV will prompt the Lib Dems to take their chances as an independent party remains to be seen. However, it is worth noting that, according to the Guardian's arithmetic at the time, had the last election been conducted under AV, the Lib Dems could have expected a further 20 seats only.

Whatever happens in May, they aren't out of coalition territory just yet.

Caroline Crampton is assistant editor of the New Statesman. She writes a weekly podcast column.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.