The real lessons for Labour and the Lib Dems from the 2010 talks

It wasn't ideology that led the Lib Dems to reject coalition with Labour, but the reds' near-complete lack of preparation.

I've just finished reading Andrew Adonis’s 5 Days in May: The Coalition and Beyond and it has given me food for thought both about how the 2010 coalition negotiations proceeded and what lessons we might learn for any potential future coalition discussions.

Having already read David Laws’s 22 Days in May and Rob Wilson’s 5 Days to Power and having watched various radio and TV programmes about the 2010 negotiations, I already had a reasonable idea about how they went. But it was interesting to get a Labour perspective on the talks.

The fairly settled view from Lib Dems is that Labour were unprepared for discussions and some members of their negotiating team and parliamentary party seemed to be mentally ready for opposition, rather than seriously trying to make the necessary compromises to stay in power.

One figure, however, in all the accounts that I have seen, heard and read, who clearly did want to try and make the negotiations work was Gordon Brown. There is no doubt in my mind that he really did want to see a Lab-Lib coalition. Unfortunately, because he had not properly prepared the ground for any such discussions, having been so used both as Chancellor and PM to working majorities, he was destined to fail. The passion with which Brown tried to make the discussions with the Lib Dems work comes across in Adonis’s book as almost tragic, but given how much we already know about what a tribalist was, he cuts a contradictory figure, desperately trying to convince Nick Clegg of how a radical Labour-Lib Dem coalition could deliver.

A telling vignette from 5 Days in May is how Peter Mandelson, Ed Miliband and Ed Balls all discussed with Adonis how they had never come across Andrew Stunnell before and did not know who he was. He had been Lib Dem MP for Hazel Grove since 1997 and a frontbench spokesperson for almost all of that time. This demonstrates a shocking level of engagement by Labour with the party that they were supposedly attempting, in good faith, to form a government with.

An important theme from the Adonis book is that of how the question of 'the numbers' seemed to be eminently solvable in the view of Brown and some other senior Labour people. Despite the fact that Labour only had 258 seats and the Lib Dems 57 (so a total of 315 vs the Tories' 306, with a majority requiring 326) Brown was convinced that most of the minor parties would fall into line. I’m not sure if I would describe this as wishful thinking or self-delusion but the idea that a 'rainbow coalition' or even a minority coalition that took the votes of the SNP, Plaid Cymru, Caroline Lucas, the SDLP and the DUP all pretty much for granted would have been plain sailing, and was somehow an obvious and equal choice to the stability of a solid working majority with the Conservatives, is optimistic in the extreme.

It also suggested to me a level of arrogance, perhaps fostered by 13 years in government, within senior Labour ranks that the minor parties would come to heel. The Lib Dems were doing the responsible thing in not assuming that all these smaller parties would stay in line and instead considering that any deal with Labour would be on the basis of a minority government which would have been very difficult to control. This was not least because a number of Labour MPs spent the five days of the coalition negotiations making it clear that there were things they would not agree to or vote for. So far from Brown being sure of being able to deliver his 258 MPs, it was far more likely that the total would regularly fall short of that depending on which issue the vote was on.

A good example of this is how during the first formal discussion with the Labour team, Adonis highlighted how Labour was open to a proportional representation option being on the AV ballot paper. But I know from my own personal discussions at the time that Labour MP Tom Harris would never have voted for a bill that included a PR option in the referendum. He told me categorically. It was also clear to me that he was not alone in this respect and there were a number of Labour MPs who would also have defied party whips to defeat this. Labour was negotiating on something it would never have been able to deliver on.

So what lessons can we draw from the various accounts of the 2010 coalition negotiations? I would say the most important thing is preparation. Both the Lib Dems and the Conservatives wargamed a number of scenarios before the 2010 election. They approached coalition negotiations professionally and with the clear purpose of forming a stable government that could last for a whole parliament. Contrast this with Labour, which didn't even start seriously planning for coalition until after the result was announced. And it made a big difference. The Lib Dems did not take Labour as seriously as the Conservatives as potential partners, not for ideological reasons (as Adonis seems convinced of), but primarily because the reds had not done the basic groundwork. So the key lesson from 2010 for Labour is to be open to the possibility that there will be a hung parliament in 2015, long before it actually happens, and to plan, war-game and prepare in advance for this outcome. Even just making sure the basics, such as having enough backchannel communication between key players. Happily, there are signs that Ed Miliband gets this now and is preparing the ground for just such an eventuality.

Another important factor is to be realistic about what can be achieved. Brown's offer of PR on the AV referendum ballot simply could not have been delivered by him in the circumstances he found himself in. Indeed the numbers made any alliance at all very tricky. If the maths makes things difficult, parties should be open about this. That is the only way that good faith can be maintained.

The final lesson to draw for now is more related to how the current coalition has played out. The Lib Dems have been reasonably disciplined in keeping their troops in line and ensuring that most items from the coalition agreement have gone through, even when, as in the case of tuition fees, they have gone directly against what the party wanted. Whatever you may think of the individual policies, this has been done in the name of coalition cohesion. By contrast, the Conservative backbenches have been much more restive and have forced defeats on measures such as Lords reform in defiance of their party leadership.

The various processes that the Lib Dems had (and have) in place to facilitate buy-in from the parliamentary and wider membership were seen by both Labour and Conservatives in 2010 as somewhat eccentric. Indeed, one of the reasons Brown found it so hard to get hold of Clegg on several occasions during the five days is because the Lib Dem leader was in one meeting or another keeping colleagues closely informed of what was happening and consulting them. But it is hard to argue that the legitimacy those processes conferred on the coalition from a Lib Dem perspective is anything other than a very good thing. I was one of the party members who voted in the special conference convened towards the end of May 2010 and it certainly gave me a feeling of ownership which has been sorely tested over the last three years. It is not a panacea and we enter a grey area when measures that were never in the coalition agreement are legislated on, sometimes to the chagrin of myself and my fellow party members. But a complete lack of any such process within the Conservative Party has led to a widespread feeling amongs its members, both in parliament and more widely, of a lack of legitimacy in the current coalition.

There was no modern precedent on which the parties could draw three years ago and they were, to an extent, flying blind. But in 2015, should such discussions become necessary, that will not be the case. All parties should learn the lessons from those five heady days in May 2010.

Mark Thompson is a political blogger and commentator who edits the award-winning Mark Thompson's Blog and is on Twitter @MarkReckons.

He is also co-host of the House of Commons podcast, which this week discussed the 2010 coalition negotiations 


Nick Clegg and Ed Miliband attend a ceremony at Buckingham Palace to mark the Duke of Edinburgh's 90th birthday on June 30, 2011 in London. Photograph: Getty Images.
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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.