How Labour is preparing the ground for a coalition with the Lib Dems

Ed Miliband's PPS John Denham warns Labour not to assume it will be able to govern alone after the next election.

One reason why the Lib Dems are less despondent than their poll ratings would suggest is that the party could still hold the balance of power after the next election. The Conservatives will struggle to win the majority they failed to secure in 2010 - no governing party has increased its share of the vote since 1974 - but the party's existing support could prove sufficiently resilient to prevent Labour getting over the winning line of 326 seats. For this reason, the Lib Dems, who expect many of their sitting MPs to defy the national swing, believe that Ed Miliband's party could be forced to turn to them for assistance in another hung parliament.

There are now signs that Labour is acknowledging as much. Yesterday on The Staggers, former cabinet minister John Denham, previewing the launch of a new group called Labour for Democracy, wrote that "rather than Labour re-establishing itself as the sole party of choice for progressive voters, it's more likely that the progressive vote will be split as it has now been for decades." In other words, the Lib Dem vote will prove more durable than many in Labour currently assume. It is a message reinforced by Labour for Democracy, which states on its website: "All Labour members will work hard for every Labour vote.  But whether we win the outright Labour majority we all seek, or end up with a less conclusive result, the change Britain needs will require the support of all who share our values."

Though the words "tactical voting" do not appear in Denham's piece, his prediction that the progressive vote "will be split" is a reminder that it could play an important role at the next election. The Conservatives are in second place in 38 of the Lib Dems' 57 seats and half of those on its target list are held by Clegg's party. If Labour is to prevent the Tories from decapitating scores of Lib Dems, it will need to consider whether to advise its supporters to cast tactical votes (as Peter Hain and Ed Balls came close to doing at the last election).

Denham goes on to note that "despite the failures of the coalition, the public still generally want politicians to work together when they can, rather than exaggerate their differences." What makes his intervention particularly significant is that he is now PPS to Miliband (he was one of the Labour leader's early shadow cabinet supporters), suggesting that he is acting with the approval of the leadership. He concluded:

It is tempting to see pluralism as a sign of weakness, a lack of confidence; even an unwanted attempt to give Nick Clegg a permanent and undeserved place in government.

But we must be bigger than that. Tribal differences have obstructed progressive change in the past. Voter allegiances to the major parties are declining as fast as the icecaps are melting. There are even signs that the ‘progressive majority’ that split its vote in the 1980s is itself shrinking in the face of recession and insecurity.  If we want to change Britain in a progressive direction, Labour must show it is willing to work with, not just lead, everyone who will support all or part of that change.

So, while Clegg's head remains the price of a Labour-Lib Dem coalition (indeed, Denham was one of the first senior Labour figures to state as much), Labour is increasingly clear that it may not be possible for it govern alone after the next election. Expect Denham's article to mark the beginning of a prolonged rapprochement.

Labour leader Ed Miliband's PPS John Denham called for Labour to work with other progressive parties. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Debunking Boris Johnson's claim that energy bills will be lower if we leave the EU

Why the Brexiteers' energy policy is less power to the people and more electric shock.

Boris Johnson and Michael Gove have promised that they will end VAT on domestic energy bills if the country votes to leave in the EU referendum. This would save Britain £2bn, or "over £60" per household, they claimed in The Sun this morning.

They are right that this is not something that could be done without leaving the Union. But is such a promise responsible? Might Brexit in fact cost us much more in increased energy bills than an end to VAT could ever hope to save? Quite probably.

Let’s do the maths...

In 2014, the latest year for which figures are available, the UK imported 46 per cent of our total energy supply. Over 20 other countries helped us keep our lights on, from Russian coal to Norwegian gas. And according to Energy Secretary Amber Rudd, this trend is only set to continue (regardless of the potential for domestic fracking), thanks to our declining reserves of North Sea gas and oil.


Click to enlarge.

The reliance on imports makes the UK highly vulnerable to fluctuations in the value of the pound: the lower its value, the more we have to pay for anything we import. This is a situation that could spell disaster in the case of a Brexit, with the Treasury estimating that a vote to leave could cause the pound to fall by 12 per cent.

So what does this mean for our energy bills? According to December’s figures from the Office of National Statistics, the average UK household spends £25.80 a week on gas, electricity and other fuels, which adds up to £35.7bn a year across the UK. And if roughly 45 per cent (£16.4bn) of that amount is based on imports, then a devaluation of the pound could cause their cost to rise 12 per cent – to £18.4bn.

This would represent a 5.6 per cent increase in our total spending on domestic energy, bringing the annual cost up to £37.7bn, and resulting in a £75 a year rise per average household. That’s £11 more than the Brexiteers have promised removing VAT would reduce bills by. 

This is a rough estimate – and adjustments would have to be made to account for the varying exchange rates of the countries we trade with, as well as the proportion of the energy imports that are allocated to domestic use – but it makes a start at holding Johnson and Gove’s latest figures to account.

Here are five other ways in which leaving the EU could risk soaring energy prices:

We would have less control over EU energy policy

A new report from Chatham House argues that the deeply integrated nature of the UK’s energy system means that we couldn’t simply switch-off the  relationship with the EU. “It would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks,” they argue. “A degree of continued adherence to EU market, environmental and governance rules would be inevitable.”

Exclusion from Europe’s Internal Energy Market could have a long-term negative impact

Secretary of State for Energy and Climate Change Amber Rudd said that a Brexit was likely to produce an “electric shock” for UK energy customers – with costs spiralling upwards “by at least half a billion pounds a year”. This claim was based on Vivid Economic’s report for the National Grid, which warned that if Britain was excluded from the IEM, the potential impact “could be up to £500m per year by the early 2020s”.

Brexit could make our energy supply less secure

Rudd has also stressed  the risks to energy security that a vote to Leave could entail. In a speech made last Thursday, she pointed her finger particularly in the direction of Vladamir Putin and his ability to bloc gas supplies to the UK: “As a bloc of 500 million people we have the power to force Putin’s hand. We can coordinate our response to a crisis.”

It could also choke investment into British energy infrastructure

£45bn was invested in Britain’s energy system from elsewhere in the EU in 2014. But the German industrial conglomerate Siemens, who makes hundreds of the turbines used the UK’s offshore windfarms, has warned that Brexit “could make the UK a less attractive place to do business”.

Petrol costs would also rise

The AA has warned that leaving the EU could cause petrol prices to rise by as much 19p a litre. That’s an extra £10 every time you fill up the family car. More cautious estimates, such as that from the RAC, still see pump prices rising by £2 per tank.

The EU is an invaluable ally in the fight against Climate Change

At a speech at a solar farm in Lincolnshire last Friday, Jeremy Corbyn argued that the need for co-orinated energy policy is now greater than ever “Climate change is one of the greatest fights of our generation and, at a time when the Government has scrapped funding for green projects, it is vital that we remain in the EU so we can keep accessing valuable funding streams to protect our environment.”

Corbyn’s statement builds upon those made by Green Party MEP, Keith Taylor, whose consultations with research groups have stressed the importance of maintaining the EU’s energy efficiency directive: “Outside the EU, the government’s zeal for deregulation will put a kibosh on the progress made on energy efficiency in Britain.”

India Bourke is the New Statesman's editorial assistant.