Clegg has gambled his party's future on another hung parliament

His decision to remake the Lib Dems as a centrist "party of government", rather than a centre-left outfit, could prove ruinous if the next election doesn't produce the right result.

This was the speech that many thought Nick Clegg would never deliver. Back in 2010, when millions of Lib Dem voters defected en masse to Labour, Westminster sages predicted that by 2013 he would be in retreat from British politics, preparing for a return to Brussels as the UK's new EU commissioner. But today Clegg stood before his party as a politician reborn, buoyed by the Eastleigh by-election, the economic recovery and the prospect of another hung parliament.

Of the six conference speeches Clegg has given as leader, this was by some distance the best. It was by turns witty, moving and self-deprecating. In a clarion call to Labour supporters in Tory-Lib Dem marginals to come home to his party, Clegg reminded us just how much worse a majority Conservative government would have been: "Inheritance tax cuts for millionaires - no. Bringing back O’ levels and a two-tier education system - no. Profit-making in schools – no. New childcare ratios – no. Firing workers at will, without any reasons given – no, absolutely not. Regional pay penalising public sector workers in the north - no. Scrapping housing benefit for young people – no. No to ditching the Human Rights Act. No to weakening the protections in the Equalities Act. No to closing down the debate on Trident." He pointed out that it was David Cameron who told him during the 2010 leaders' debate that the country couldn't afford a personal tax allowance of £10,000 and smartly took ownership of equal marriage, the coalition's greatest achievement and one that would have been impossible without Lib Dem support. And he reaffirmed his party's status as the surest defenders of civil liberties, the greatest champions of Europe and the most committed environmentalists.

The announcement of free school meals for all infant pupils was a masterstroke, drawing some of the sting from Labour's "cost of living" attack and cheering his party's universalist wing. How foolish of the Tories to press ahead with their discriminatory tax breaks for marriage, giving the lie to their claim that they wish to support all and any "hardworking families".

But there were two problems with Clegg's speech that he evaded, rather than confronted. The first, if we are entering a new era of hung politics, is the question of whether the Lib Dems view Labour or the Tories as their natural coalition partner. Clegg sought to present himself as agnostic between the two but the polls repeatedly show that it is the former that his party's activists and voters are drawn towards. In the case of Clegg, the reverse is the case. Today, he declared that "I don’t look at Ed Miliband and David Cameron and ask myself who I’d be most comfortable with, as if I was buying a new sofa." But his staff routinely brief that they crave a renewal of vows with Cameron. If the next election results in another hung parliament but both Labour and the Tories win enough seats to form a majority government with Lib Dem support his party risks a damaging schism. Jeremy Browne and David Laws will look towards Cameron, Vince Cable and Tim Farron to Miliband.

The second problem is that Clegg's positioning of the Lib Dems as a "party of government" is premised on the belief that another hung parliament is likely in 2015. It certainly appears more probable than it did last year, but recall that while even a seven-point lead wasn't enough for the Tories to secure a majority, a lead of just one-point will be enough for Labour. Clegg confidently ended: "Our place is in Government again." But if Miliband leads Labour into government after 2015, he will be left as the head of a marginalised party, bereft of members and seats (even now, the Lib Dems will struggle to hold onto more than 30), and discredited for a generation by collusion with the party that was for so long its greatest foe.

The Lib Dems' new raison d'être is to serve as a centrist party that takes office in order to ameliorate the extremes of Labour and the Tories. To this end, Clegg has been prepared to trade principle for power. For every one of the Tory policies that he prevented, one can name others that he enabled: the immigration cap, NHS privatisation, £9,000 tuition fees, the VAT rise, the abolition of the 50p tax rate, the benefit cap and the bedroom tax. In the trade-off between principle and power, the danger is that Lib Dems will lose both.

Nick Clegg delivers his speech at the Liberal Democrat conference in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Is TTIP a threat or an opportunity?

TTIP offers potentially huge opportunities to both Europe and the US - we should keep an open mind on what the final agreement will mean.

Barack Obama made it abundantly clear during his visit to the UK that if Britain left the European Union then it would be quite some time before we would be able to negotiate a trade deal with the United States. All the more reason to examine carefully what the Transatlantic Trade and Investment Partnership (TTIP) will mean for the UK. For Labour this is especially important because a number of trade unionists and Party members have expressed concerns about what TTIP could mean.

The economic worth of such a partnership between the European Union and the US has been questioned and it has been frequently stated that TTIP could give multinational companies unprecedented influence and undermine the British NHS.

With regard to the economic benefits of TTIP there are few that would argue that there are no economic gains to be achieved through the partnership. The question is to what extent economic growth will be stimulated. On the positive side the European Commission has argued that an agreement could bring economic gains of between €68 billion to €119 billion per year to the EU (0.3% to 0.5% of GDP) and €50 billion to €95 billion (0.2% to 0.4% of GDP) to the US. For Britain, this means that an agreement could add up to £10 billion annually to the UK economy.

On the negative side, a study commissioned by the European United Left/Nordic Green Left Group in the European Parliament has maintained that TTIP would bring only “limited economic gains”. These gains have to be weighed, it was argued, against the “downside risks”. Those risks have been identified as coming from the alignment of standards in areas such as consumer safety, environmental protection and public health.

These are important concerns and they should not be quickly dismissed. They are made all the more important because the existence of already low tariffs between the EU and the US make the negotiations to reduce non-tariff barriers to trade all the more significant.

There are a number of areas of concern. These include food standards and the regulation of GM crops and the worry that the EU’s focus on applying the environmental precautionary principle might be weakened. The European Commission, which has a responsibility for negotiating TTIP on behalf of the EU, is however acutely aware of these concerns and is mindful of its legal responsibility to uphold, and not to in any way weaken, the agreed legal standards to which the EU adheres. A concern has been expressed that irrespective of what European law may say, TTIP could undermine those standards. This I find difficult to accept because the ‘rule of law’ is absolutely central to the negotiations and the adoption of the final agreement.

But the EU is mindful of this concern and has brought forward measures which have sought to address these fears. The latest proposals from the Commission clearly set out that it is the right of individual governments to take measures to achieve public policy objectives on the level that they deem appropriate. As the Commission’s proposal states, the Agreement shall not affect the right of the parties to regulate within their own territories in order to achieve policy objectives including “the protection of public health, safety, environmental or public morals, social or consumer protection or promotion and protection of cultural diversity”.

Of course, this is not to suggest that there should not be vigilance, but equally I believe it would be wrong to assume the theoretical problems would inevitably become reality.

The main area of concern which has been expressed in Britain about TTIP relates to the NHS and the role of the private sector. Under the Investor-State Dispute Settlement (ISDS) provisions investors would be able to bring proceedings against a foreign government that is party to the treaty. This would be done in tribunals outside the domestic legal system. If a Government is found to be in breach of its treaty obligations the investor who has been harmed could receive monetary compensation or other forms of redress.

The concern is that the ISDS arrangements will undermine the ability of democratically elected governments to act on behalf of their citizens. Some have maintained that measures to open up the NHS to competition could be made irreversible if US companies had to be compensated when there is a change of policy from a future Labour Government.

In response to these concerns the European Commission has proposed an Investor Court System. This would be based on judgements being made by publicly appointed and experienced judges and that cases would only be brought forward if they were precisely defined. Specifically, it is proposed that cases would be limited to targeted discrimination on the basis of gender, race or religion, or nationality, expropriation without compensation or the denial of justice.

Why, you might ask, is there a need at all for a trans-national Investor Court System? The reason in part lies in the parlous state of the judicial systems in some of the relatively recent EU accession countries in Eastern Europe. To be frank, it is sadly the case that there are significant shortcomings in the judiciary of some countries and the rule of law is, in these cases, more apparent than real. It is therefore not unreasonable for investors to have an international framework and structure which will give them confidence to invest. It should also be noted that there is nothing proposed in TTIP which contradicts anything which is already in UK law.

We need to remember too that this is not only about US investment in Europe, it is also about European investment in the US. No US-wide law prohibits discrimination against foreign investors, and international law, such as free trade and investment agreements like TTIP, cannot be invoked in US courts. The Investor Court System would therefore benefit European companies, especially Small and Medium Sized Enterprises. 

It is of course impossible to come to a definitive conclusion about these provisions because the negotiations are ongoing. But it would surely be unwise to assume that the final agreement would inevitably be problematic.

This is especially true regarding the NHS. Last year Unite the Union commissioned Michael Bowsher QC to provide an opinion. His opinion was that “TTIP does pose a threat to a future government wishing to take back control of health services”. The opinion does not express a view on whether TTIP will “force” the privatisation of the health service (as some have claimed) and Bowsher admits that much of the debate is “conducted at a rather speculative level” and he has been unable to produce any tangible evidence to support his contention about future problems. On the other hand, it is the case that there is nothing in the proposed agreement which would alter existing arrangements for compensation. There are of course many legal opinions which underpin the view that existing legal arrangements would continue. While I accept that it is theoretically possible for the Bowsher scenario to occur, it is nevertheless extremely improbable. That is not to say that there ought not to be watertight safeguards in the agreement, but let us not elevate the extremely improbable to the highly likely.

A frequently heard criticism of TTIP is that the negotiations between the US and the EU are being conducted in ‘secret’.  Greenpeace, for example, has strongly sought to make this a central part of their campaign.  Although the Commission publishes EU position papers and negotiating proposals soon after they are tabled, it is impossible to see how complex negotiations of this kind can be practically conducted in public.  However, I believe that the draft agreement should be made public well before the final decisions are taken.

Once the negotiations have been concluded, the draft agreement will be presented to the European Council and the European Parliament, both of which have to agree the text. The European Council is, of course, made up of representatives of the governments of the EU and the European Parliament is democratically elected. Both Houses of the British Parliament will also debate the draft and there will need to be parliamentary approval of the agreement.

Transparency and democratic scrutiny are two things which there cannot be too much of. But, in practical terms, it is difficult to see how there could be more of either without making it nigh on impossible to secure such a complex agreement. Unite, of which I am a member, and others are quite right to express their concerns about TTIP, but let’s not exaggerate the potential difficulties and let’s not assume that the worst case scenario will always come about. TTIP offers potentially huge opportunities to both Europe and the US, and we should therefore at least keep an open mind on what the final agreement will mean.

Wayne David is the Labour MP for Caerphilly and is Shadow Minister for Political Reform and Justice. He is a former Shadow Europe Minister and was a junior minister in the last Labour government.