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3 March 2011

The deficit keeps the coalition together

Britain’s Budget deficit obscures any differences between the Lib Dems and the Tories.

By Olly Grender

What is the glue that holds the coalition together? In the early days, Oliver Letwin, one of the coalition’s founding fathers, suggested that because it was a friendship rather than a marriage, there was a certain politeness – the opposite of the familiarity that breeds contempt.

But a coalition needs more than that. It needs more than common ground on localism or an obvious chemistry between the two party leaders.

And here is the irony. One of the central forces that holds this coalition together is the structural deficit. The mathematical outcome of the election aside, the deficit is the driving force that provides common purpose and suppresses issues of ideology which could so easily tear this partnership apart.

Before the May general election, Chris Huhne argued that a deficit could only be dealt with by full coalition. Immediately after polling day, it drove the pace of decision-making, with the markets breathing down the necks of the negotiators. Since then, it is the deficit that has obscured differences over practically every policy, from health and education to welfare reform and defence.

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It is the deficit that has forced a level of co-operation and given a drive and a narrative to two political tribes that are normally at war.

For Labour, this must be the height of irony. The crisis for which they felt unable to plan or that they felt unable to tackle in the run-up to an election is the crisis that keeps their opponents united.

For the Lib Dems, this means that they need to prepare for the tensions that will rise to the surface as the deficit gets paid off.

While there is a deficit to be paid off, that David Cameron “came into politics to lower taxes” is irrelevant. But with the election looming and the deficit falling, critical decisions about spending versus tax will signal a difficult period in this “polite” relationship. This is why Ed Miliband – who, we learn in the latest version of the Peter Mandelson memoirs, was in favour of a Lib-Lab coalition – needs to play a long game and prepare for that debate.

Attacking on the deficit only drives the Lib Dems towards the Tories. Preparing for what will happen next would be a more realistic approach for Miliband if he wants to drive a wedge between these friends.