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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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.