UK News

The reform that breaks the camel’s back?

Trade union leaders have been warning for some time now that it would be pensions reform — not pay freezes or job cuts — that could prove the trigger for widespread public sector strikes this year.

Now activists, eager to punish the Conservative-Liberal Democrat coalition government, have all the ammunition they need in the Hutton pension review.

Few can argue that pensions do not need to be reformed. People in Britain are living longer, making it more expensive for the government and taxpayer to fund pension payments.

And private sector workers have long grumbled that the public sector has it too good when it comes to retirement.

Hutton’s recommendation to remove the final salary scheme was expected and hardly surprising.

But its consequences could be huge.

If the government adopts the suggestions of this former Labour minister, do not expect the unions to take it lying down.

from Matt Falloon:

It’s snow joke

Snow or no snow, these GDP figures are a nightmare for the Conservative-Liberal Democrat coalition government and throw up the risk of a self-fulfilling spiral of gloom.

When the shock 0.5 percent drop in economic output at the end of 2010 hits television screens on Tuesday night as families sit down to dinner, already-cautious consumers will feel more than a winter chill.

These numbers are likely to knock confidence just when the government needs businesses and households to step up to the plate.

Will businesses unleash investment and take on hoards of new staff now, or will they wait for signs of improvement?

Will families, facing a hike in VAT sales tax and high inflation, flash the credit card on big purchases or tighten their belts and hope for cheaper prices in the future?

If either of those scenarios play out over the next few months, Britain's economy faces a real risk of stagnating or worse -- and that doesn't even start to take into account the spending cuts waiting in the wings this year.

Even without the snow, the economy still ground to a halt in the last three months of 2010.

Oldham could be shape of things to come

As voters drifted towards polling stations on a damp winter’s night in Oldham East and Saddleworth, it was hard to find anyone bursting with good things to say about Britain’s Conservative-Liberal Democrat coalition government.

Even some Lib Dems, who came so close to beating Labour in this marginal seat in May, seemed to be voting out of a sense of duty rather than conviction, hoping to limit the shame of defeat to a Labour party still struggling to assert itself in opposition.

“I did vote for them, but I’m not happy with them,” said 59-year-old Lib Dem supporter Lorraine Marner.

The Lib Dems are in danger of losing their way — and perhaps chunks of their core support — in government.

Party aides insist it is better to be involved in making policy than not, in spite of the inevitable compromises, but the risk is that the Lib Dems emerge from the coalition in 2015 as the fall guys, shielding the larger Conservatives from the fall-out of five years of austerity.

There is also the possibility that sustained pressure on the Lib Dems might destabilise the coalition.

Lib Dem party structure “tailor-made for trouble”

Liberal Democrats are proud of the democratic character of their party. The members have sovereign rights over party policy, proposing, amending and debating motions at their two conferences a year.

But is that the best way to run things now the party is unexpectedly in government? Historian Dennis Kavanagh thinks not. The structure of the party is tailor-made for trouble, he told a fringe meeting at the LibDem autumn conference in Liverpool on Sunday.

It has an elaborate constitution that suited a party that didn’t expect to get into power, for people who don’t want to take decisions and would rather have debates, he said.  As a result, the structure gives dissidents a lot of room to cause delay when they don’t like a policy the leadership – now in the cabinet – wants to adopt.

Kavanagh sets out his case in this short video clip recorded after the event, a meeting of the Liberal Democrat History Group.

Kavanagh, Emeritus Professor of Politics at Liverpool University, has co-written histories of  every general election since 1974, the latest being “The British General Election of 2010″ (published by Palgrave Macmillan) with Nottingham University’s Philip Cowley.

This may hurt a little

Britons are being prepared for the hardest of hard times. Prime Minister David Cameron has warned the public that they will feel the impact of deficit-cutting decisions for years and maybe even decades. Cameron justifies the pain by saying that doing nothing about debt would be disastrous and that Britain will come out of the other side as a stronger country.

His finance minister George Osborne and LibDem sidekick Danny Alexander were setting out plans on Tuesday for how to conduct this year’s spending review, with  unions, the public and the private sector asked to contribute ideas.

Former Canadian finance minister Paul Martin told Reuters that the key to his country’s 1990s deficit cuts was being honest with people about what was to go.

The problem Cameron and his coalition may face is that spending cuts seem justified — as long as it’s someone else’s benefits or perks that are being pruned.

Where would you swing the axe to help cut the budget deficit?

Reality intrudes on new British political order

Britain’s new political order was on display in the House of Commons on Tuesday when Lib Dem leader Nick Clegg squeezed  happily between Prime Minister David Cameron and Foreign Secretary William Hague  on the government front bench.

The house was packed and in an excited, start-of-term mood. Everything was going swimmingly, with former Conservative minister Peter Lilley cracking jokes as he gaves what is typically a light-hearted response to the Queen’s Speech.

Lilley played around with the apt description of the Lib Dems, settling for allies as he mused that partners might imply an inappropriate degree of intimacy.

Lilley told the house it was his wedding anniversary and was greeted by cheers. But when he turned to themore serious  issue of coalitions, he made  it clear that he regarded the current arrangement very much as a marriage of convenience.

He said he would not support changes to the voting system that makes hung parliaments the norm and would campaign vociferously against a switch to the Alternative Vote system when a referendum is held. For the Lib Dems such a change is the bare minimum.

The tensions between Conservatives and their new Lib Dem friends are bubbling below the bonhomie.

from The Great Debate UK:

Cameron tasked with changing Brits’ expectations

-- Mark Kobayashi-Hillary is the author of several books, including ‘Who Moved my Job?’ and ‘Global Services: Moving to a Level Playing Field’. The opinions expressed are his own --

After thirteen years, it’s all over. The New Labour project is dead. Or is it? Tony Blair brought British politics to the centre-ground and ensured that a single party could support free-market economic policies as well as social justice.

And that’s what most people want today, a government that can help the citizen without hindering the economy through the dogma of dated ideology. The old notion of socialists waging war on small-government-right-wingers feels somehow quaint. Clearly Tony Blair knew that David Cameron would be his successor in the New Labour project, but nobody told Gordon Brown.

Now the back room deals have been done between the Conservatives and Liberal Democrats, and the cabinet post announcements are being released from Downing Street, the real work has to begin. I don’t just mean the public sector cuts. Any new government would have to cope with the deficit, though many in Labour are probably grateful that it’s the Tories who are going to be seen slashing public services.

I mean that we need to change the attitude of a generation that has only known affluence, constant growth, and easy borrowing secured against property that has only ever increased in value. British people are going to have to spend within their means, no matter how unfashionable that might seem in a society obsessed with the latest dress or jewellery worn by Cheryl Cole.

The boom of the eighties led to a mighty recession, yet memories of that time feel mild compared to recent events. Many high street banks in the UK remain in public hands and when they are returned to the private sector will they ever really be private again, or will they continue to operate safe in the knowledge that the government safety net will always be there to stop their fall? It seems that banking may have changed forever.

And don’t forget that much of the nineties now resembles a dream. A popular American president, the emergence of a popular British leader, the growth of the Internet, and constant economic growth that had apparently led to the death of the boom and bust cycle. The dot com crash felt like a blip to most property owners.

How long can the negotiations go on?

It should have been all over now. But no, we’re on day five and no one really seems to know which way things are going to go.

All over Westminster, people are looking tired. Journalists, politicians, aides and most of all the 24-hour news anchors.

You only had to watch Sky News’ Adam Boulton going at it with former Blair spin doctor Alistair Campbell live on air on Monday night too see that tempers are clearly getting frayed.

So how much longer? Nick Clegg says soon but nothing seems imminent. The LibDems are still talking with Labour. They may talk more with the Conservatives too.

“It’s too early,” said one Conservative source. “It”s finely balanced,” said a Labour one.

In the meantime, huge numbers of reporters are staking out Portcullis House, the new adjunct to the Palace of Westminster.

But it’s slim pickings. David Cameron walks through. So does George Osborne. But for now they’re just waiting too.

The big rescue package has bought the politicians some time

They promised us market meltdown if there was a hung parliament. That was the Conservative pitch before the election.

That isn’t quite what happened. The pound did fall a bit, so did gilts and stocks but most losses were made up by the end of the first day after the result became known, which had been widely expected.

Attention, anyway, had moved elsewhere. There was already mayhem in global markets when British voters were going to the polls on Thursday. One hedge fund manager described it as seven or eight out of 10 when compared with the peak of the crisis.

Things were getting even more hairy on Friday and over the weekend it became clear that the European authorities would have to act to prevent the problem in Greece and they duly did, leading to stocks and the euro rallying as risk appetite  returned.

The $1 trillion global emergency rescue package has calmed things for now and the UK story may have moved to Page 4 from  the front page for global markets.

Talks are still going on between the Conservatives and the Liberal Democrats over possible power-sharing but so far no end remains in sight.

Both sides keep saying they are making progress but at the moment there is precious little detail and in reality all options remain wide open.

Irish lesson for Clegg: get coalition right or face oblivion

If the Irish experience of coalition politics is anything to go by, Nick Clegg risks a lot more than unpopularity if he strikes a half-baked coalition deal with the Conservative Party. He also faces electoral oblivion should he fail to win enough concessions and power to carry his grassroots supporters with him.

Ireland’s pro-business Progressive Democrats (PDs) — relatively loyal junior coalition partners in successive administrations led by former Taoiseach Bertie Ahern — imploded at the last Irish general election, winning just two seats in parliament. They subsequently disbanded altogether.

The losses suffered by the PDs mean Ahern’s successor Brian Cowen now relies on a handful of Greens to make up the numbers but voters have also punished them for supporting an establishment party that has dominated Irish politics for decades, inflicting heavy losses on the Green Party in local elections last June.

Ireland’s Greens have subsequently enjoyed something of a recovery in opinion polls but only after standing up to Cowen, threatening to pull out of the government, issuing ultimatums and wringing concessions out of him, none of which augurs well for Britain’s oft-stated need for a strong and stable government.

Clegg can take some consolation from the fact that one junior coalition partner to strengthen its electoral position after entering into government was Germany’s Green Party. Despite winning less than 7 percent of the vote in 1998, it secured key concessions such as a policy to phase out nuclear power and three ministerial portfolios, including the high profile post of Foreign Minister for its party leader. The Greens — currently in opposition — were the big winners in regional elections at the weekend in which Germans punished Chancellor Angela Merkel’s centre-right coalition.

If Clegg is to enter into government with a party that many of his supporters will feel they have expressly voted against, he will need a strong deal that he can sell to them and to secure a position in government from which he can wield real influence and demonstrate leadership.

If he wants to make a go of it, Clegg is hopefully seeking counsel from Germany’s former Green foreign minister Joschka Fischer  – who, incidentally, made his political bed and his mark in a left- rather than right-of-centre administration — and learning salutary lessons from the ruins of other less fortunate coalition partners.