Confusion grows over the purpose of the coalition

Coalition 2.0, an attempt to thrash out a joint agenda for the second half of parliament, has been w

They called it Coalition 2.0 -- a working group of ministers and policy wonk Tories and Lib Dems, with the task of thrashing out a joint agenda for the government for the second half of the parliament. Last summer's coalition agreement doesn't contain enough plans to fill up a whole legislative term. Or at least it wasn't meant to, but with sufficient "pauses" along the lines of the recent NHS reform pit stop, they might eke it out for a good few years. That wouldn't look good though and the more enthusiastic supporters of Coalition 2.0 thought it might deliver a second formal agreement. It won't. The whole thing has been downgraded, with one participant telling me recently it is most likely to deliver some vague statement of shared principles after the Olympics next summer. It is a sign of growing confusion at the heart of government about what the coalition is actually for -- the subject of my column in this week's magazine.

On the Conservative side, I've looked at the competition between what I call Romantic and Pragmatic tendencies in David Cameron's inner circle -- those that see the whole project in terms of a grand re-alignment of politics, and those that see coalition more as a means to a Tory end: securing a second term with an outright majority.

That has focused Lib Dem minds on the need to carve out a distinct and positive agenda within the coalition. Party strategists know they won't make any progress with voters by simply watering down Tory proposals, as they did with the NHS reform.

Clegg can hardly build an electoral recovery by casting himself as an iceberg, lurking mostly beneath the surface waiting to sink Tory boats. If the Lib Dems block too much legislation the Tories will denounce them as unfit for office. "There's no advantage to us from stalemate government," says one senior Clegg aide.

How to avoid stalemate was the main subject of discussions at a recent Lib Dem "away day" (technically two days) in Bingley, Yorkshire -- in a conference centre and hotel in a converted Gothic mansion. One detail from that meeting of no great consequence and therefore not included the column: there was a pub quiz to break up the heavy political chatter. The result was close, but I gather deputy leader Simon Hughes's table won. Clegg's Special Branch security protection team also put in an impressive performance, apparently.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.