In the Tory–Lib Dem coalition, the junior partner is running the firm
Just days before reaching its landmark “100 Days,” David Cameron’s Conservativeâ€’Liberal Democratic coalition government suffered a minor but significant shipwreck. David “Two Brains” Willetts, the minister for universities and science, was on television defending a junior colleague whose letter detailing possible spending cuts had been leaked to the media. One potential cut had aroused particular interest: withdrawing universal free milk for children under five. A similar proposal 40 years ago created mayhem and gave its ministerial proposer, Margaret Thatcher, then secretary for education and science, her first hostile sobriquet: “Milk Snatcher.” Would a similar slur now be invented for a prime minister who has so assiduously distanced himself from her?
Undeterred, Willetts set about dutifully explaining the presence of “free” milk on the list of potential cuts needed to shrink a fiscal deficit equal to about 12 percent of GDP — when Cameron changed the policy. In mid-interview the BBC interviewer told him Downing Street had just announced that universal free milk was no longer on the list of potential spending cuts.
Bold spending cuts are the “Excelsior” on the banner of this government. They are also the glue that holds it together. They are the reason David Cameron enjoys the admiration of American conservatives, including some who differ strongly with him on social and foreign policy. And they are the principal justification (others include radical conservative reforms in education and welfare) on the Tory right for embracing a long list of policy concessions to their Lib Dem partners and, more broadly, to progressive and establishment opinion.
Large and small, these concessions arrive almost daily. What follows is a modest sample:
- Almost the first major decision made by the government — and its first major defeat — was its agreement to transfer regulatory powers over the financial-services industry from Britain to the European Union. The powers include tough regulations on hedge funds, even though these are concentrated overwhelmingly in London. (Not coincidentally, the City of London — i.e., the financial district — pays approximately 12 percent of U.K. income taxes.) Given the desire of France, Germany, and the Eurocracy to subject “Anglo-Saxon” market liberalism to government control, investors will increasingly prefer to place their money elsewhere. This decision, which signals the gradual decline of London as a world financial center, was trumpeted by the government as a victory because the EU regulatory body will be based in London. (Interestingly, Tim Geithner and the U.S. Treasury urged the Brits to resist these regulations as best they could. This is a very rare example of the U.S. government’s seeing a risk to American interests in European integration.)
Other decisions to transfer powers from London to Brussels have continued at irregular intervals. These include:
London’s “opting in” to the European Investigation Order, which will allow prosecutors from any EU country to bug the phone calls of British citizens, monitor their bank accounts, and gain access to their DNA if they suspect them of committing a crime in their countries, even if the alleged offense is not a crime in the U.K. Opting in was, incidentally, voluntary; Denmark opted out. And it seems to contradict both the Tories’ manifesto promise to make no further transfers of power to Brussels and their pledge to restore civil liberties lost under Labour.
Chancellor George Osborne’s budget raised the capital-gains tax on higher-income taxpayers by ten percentage points, to 28 percent. Measured tax increases can be justified in the present budgetary climate, but the prime minister’s justification rankled: “There is a very big difference between the capital gains that someone pays on, say, a second home — which is not necessarily a splendid investment for the whole economy — there’s a difference between that and actual investment in business assets.” But people invest in second homes as nest eggs rather than as residences. They are saving for their old age, hoping to stay off welfare. And they tend to be Tory voters.
Unusually, Osborne has made clear that the full cost of Trident — Britain’s nuclear deterrent — will have to be met from the Ministry of Defence’s budget rather than from national finances. The MOD budget itself is likely to be cut by 10 percent at a time when increases in the budgets for health and overseas aid are “ring-fenced.” Because Trident’s cost is estimated at $30 billion over a five-year period, this means draconian reductions elsewhere in the defense budget. Among those signaled through press leaks are: cutting 7,000 airmen and 295 aircraft from the Royal Air Force (leaving it with fewer than 200 aircraft); reducing the navy by two submarines, three amphibious ships, and more than 2,000 sailors; disbanding a 5,000-strong army brigade (after Afghanistan); transferring the Royal Marines from a weakened navy to army control, and perhaps merging them with the Special Air Service; and — in an especially symbolic move — selling one of the Royal Navy’s two new aircraft carriers to India. One prominent figure will be disconcerted by these defense reductions: hawkish defense secretary Liam Fox, who has never been a favorite with the Cameroons. But he is putting up a good struggle launching guided leaks (see immediately above) and fighting hand to hand in the Whitehall trenches.
Justice Secretary Kenneth Clarke proposes to axe the prison-building program and rely more on “non-custodial” sentencing in the community. This reverses the previous Labour government’s plan to build five more prisons, ignores pledges in the Tory manifesto supporting the Labour policy, and glides smoothly over the evidence from U.K. crime statistics that “prison works.” But be of good cheer, Tories: It fulfills a pledge in the Liberal Democrat manifesto.
From 2016, it was announced by the Housing Ministry, every new home is to be powered by a green-energy plant to offset its environmental impact. If properties do not reach a standard where their own green-energy production offsets their emissions, developers would be charged a tariff of around $22,500 by the local council. This would go in part towards a “buy-out fund” to finance the construction of wind farms, solar panels, or geothermal technologies in the local area, which would supply the new development with green power. This would also add $22,500 to the cost of every new house. What that, coupled with the tax hike on second-home capital gains, would do to the housing market does not inspire optimism.
- Above all, the Tories are committed by their coalition agreement to pass legislation changing the electoral system from U.S.-style “first past the post” to the Alternative Vote. This system, in which voters cast alternative votes that are counted if their first choice falls out of contention, would greatly benefit the Lib Dems, making them the permanent governing “center party” in a multi-party spectrum. But it would almost certainly mean that the Tories would never again win a governing majority — and that in the next election they would lose seats from their present minority. The same legislation also proposes a fixed five-year parliamentary term — with elections any earlier requiring a 55 percent majority of MPs — to make Cameron and Nick Clegg, the Lib Dem leader and deputy prime minister, feel secure from rebellion and defections this time around.
Such proposals and the “progressive” priorities they reveal are deeply unsettling to non-Cameroon conservatives, though they are offset to some degree by concessions exacted from the Lib Dems. Energy Secretary Chris Huhne, a Lib Dem, has recently had to explain — to the surprise of all — how he has always seen a place for nuclear power in national energy production. Some Lib Dems dislike the Tories’ school and welfare proposals (though others independently proposed similar ideas before the election). But the balance of concessions falls clearly in the direction of the Lib Dems and the more excitably dogmatic Cameroons.
The lesser justification for this bias is that the Lib Dems are in greater need of such concessions. Their precipitate fall in the polls — one showed them down to 12 percent support, from 23 percent at the election — means they need help. So the Tories must continue to yield to them, lest they leave the coalition to preserve their seats. But why should the Tories worry about the Lib Dems’ losing seats if, as seems likely, they would lose most of them to the Tories?
The answer to that lies in the greater justification advanced by Cameron: The coalition is necessary since it alone can push through the spending cuts needed to restore Britain’s budgetary and financial stability. A Week item in the last issue of National Review listed the economic exaggerations in that proposition. Massive spending cuts were on the agenda of every political party because the markets and the rating agencies were demanding them. There is no alternative to them. Indeed, in March the Labour government itself proposed cuts that, in the words of its chancellor, Alastair Darling, would be “deeper and tougher” than those of Margaret Thatcher. What the coalition has done is to add about 5 percentage points to Labour’s 20 percent reduction over four years — a useful but hardly decisive difference.
Now, however, a political weakness has been added by the televised abandonment of David Willetts: Will the cuts actually materialize when the going gets tough? It suddenly looks less certain.
Listen to Michael Brown, a former Tory MP who is now a columnist for the Independent and who knows the ways of government: “Across Whitehall, this week, under-secretaries and ministers of state may now be less brave as they try to second-guess Downing Street’s likely reaction to any bold proposal they might instruct officials to prepare. ‘Minister, I’m not sure this will go down too well if No 10 gets to hear about this’ . . .”
If the cuts are gradually whittled down by such nervousness, the Tory case for the coalition will shrink with them. If, however, ministers press ahead with them, they will face bitter struggles and deep unpopularity. The political logic of this second course for Tories is that they should spend the next five years trudging through the Slough of Despond to enter an election fought on a new electoral system that will deny them a majority even if they have somehow managed to become popular. “Very brave of you, if I may say so, prime minister,” as Sir Humphrey Appleby used to say.
We should therefore assume that the Cameroons at least have an escape hatch. That could only be a permanent coalition with the Lib Dems and the creation of a new Center party, facilitated by the defection of either left-wing Lib Dems or right-wing Tories or, more probably, both.
After the election, NR advised the Tory Right to establish an internal caucus within the Tory parliamentary party to protect the long-term interests and traditions of British conservatism. That still looks like good advice.