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Why Clegg's head is no longer the price of a Labour-Lib Dem coalition

With Labour uncertain of winning a majority and the Deputy PM certain to be around in May 2015, Miliband and Balls can no longer afford to treat him as a barrier to an agreement.

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.

In the aftermath of the 2010 general election, senior Labour figures wasted little time in signalling that Nick Clegg's departure would be a precondition of any future Labour-Lib Dem coalition. As Ed Miliband told the New Statesman in August 2010: "Given what he is supporting, I think it is pretty hard to go into coalition with him." Asked again, "so you wouldn't work with Nick Clegg?", he replied: "That's right. No."

Ed Balls similarly suggested that there was little or no prospect of Labour working with Clegg, stating as recently as September 2012: "Nick Clegg made his decisions and I think the way he’s gone about his politics makes things very difficult [to form a coalition with him]". Just as Clegg demanded Gordon Brown's head in 2010, so Labour would demand his if it won in 2015. 

But as my interview with Balls in this week's NS revealed, the shadow chancellor has had a dramatic change of heart. After telling me that he had a "friendly chat" with the Deputy PM in the Commons a few hours before we met, he said of the possibility of a coalition with Clegg: 

I think what you always have to do is deal with politics as you find it. We’re fighting hard for a majority, who knows how things will turn out, I think, look, very many Labour Party members, voters, supporters, would find that very difficult and some Liberal Democrat voters would find that very difficult as well, but we’ll deal with the situation as we find it. I saw that subsequently he made a further statement to one of the newspapers that these things weren’t about personalities, and I think he’s right about that.

While criticising Clegg's support for an accelerated deficit reduction programme in 2010, for the abolition of the 50p tax rate and for the bedroom tax, he also told me that he "understood" his decision to enter coalition with the Conservatives and his need to support "a credible deficit reduction plan", because "it was necessary in 2010". 

Miliband has not gone as far as Balls in seeking rapprochement with the Lib Dem leader, but it is notable that he no longer suggests that his departure would essential for a coalition agreement between the two parties. Last summer, for instance, he told the Independent, "I would find it difficult to work with him", which is some distance from the unambiguous "no" he offered in 2010. 

So what's changed? First, Labour's poll lead is no longer large enough for the party to be confident of winning a majority in 2015. At the end of 2012, its average lead in YouGov surveys stood at 10 points, it now stands at six with over a year still to go until the general election. As a result, Labour cannot afford to ignore the significant possibility of another hung parliament and of coalition negotiations with the Lib Dems. One shadow minister recently told me that he had been encouraged to look for "points of agreement" with the Lib Dems and to consider constitutional reforms that would appeal to the party, citing the example of proportional representation for local elections. 

Second, Clegg is now almost certain to lead his party into the general election. Until last year's Eastleigh by-election (defeat in which would likely have been terminal for the Deputy PM) and the humbling of Vince Cable at the 2013 Lib Dem conference, it was far from clear that this would be the case. As Balls told the Times in September 2012: "I would be very surprised if Nick Clegg fights the next election for the Liberal Democrats — I don’t think it’s in the Liberal Democrat or the national interest."

But the Eastleigh victory, which reassured the Lib Dems that they are not destined for electoral wipeout in 2015, and the return of economic growth, which raised hopes that they could derive some political benefit from the coalition, combined to shore up Clegg's position. The Lib Dems' subsequent decision to endorse his stances on deficit reduction, tuition fees and the 50p tax at their conference finally confirmed him as master of his party. 

Third, defining politics by individuals, rather than ideas, sits uneasily with the more principled approach that Miliband is a tireless advocate of. It is not personalities but policies that will determine how and whether Labour strikes a deal with the Lib Dems in the event of a hung parliament. As Harriet Harman recently noted, Clegg and Miliband have worked together on issues including the boundary changes and press regulation. She said on Question Time: "He's [Miliband] worked with him on, for example, tackling the problems of all the phone-hacking and the Tories trying to rig the boundaries, so actually when we've put forward a proposal that the Lib Dems are prepared to support then they do work with us."

Labour MPs have been struck by the increasing degree of policy overlap between the two parties. In the last year, Labour has called for the introduction of a mansion tax on property values above £2m, a 2030 decarbonisation target for electricity, the removal of Winter Fuel Payments from the wealthiest 5 per cent of pensioners, higher capital investment (in preference to a temporary VAT cut) funded by a rise in borrowing, and a reduction in the voting age to 16. What all of these policies have in common is that they have all either been proposed or championed by the Lib Dems.

This is far from the only motive for their adoption but Miliband and Balls are too shrewd not to know that this shift will greatly enhance their chances of reaching an agreement with the third party in 2015. One of the most popular reads among Labour MPs last summer was Andrew Adonis's 5 Days in May in which the Labour peer and former transport secretary laments the party's failure to prepare for the 2010 hung parliament and urges it not to repeat this error. His advice has not been ignored. 

In response to the voting age pledge, Lib Dem MP Stephen Williams remarked: "If we can bank that as an agreement then if the next parliament does result in an inconclusive election, which I think is quite likely, the more issues that we know in advance that we're likely to agree on will make the negotiations swifter." His parliamentary colleagues are saying much the same thing. 

In 2010, the thought of Clegg and Miliband ever working together in government after 2015 seemed fantastical. But as so often in politics (recall that David Cameron described Clegg as his "favourite joke" before the 2010 election), all sides have been forced to think again.