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Cuts Agenda and AV

Last Updated: Tuesday, August 10th, 2010

Dear subscriber,

It’s been a tough week for the Coalition on cuts. The reality of the public spending squeeze is becoming apparent. Michael Gove’s announcement of an end to many school building projects has provoked howls of protest from Conservative MPs, as well as Labour MPs. Many Tory-run local authorities did not do well during the Labour years in terms of resource allocation and it is no surprise that Conservative MPs from Somerset and Kent are complaining that their local infrastructure cannot wait any longer for investment.

Liberal Democrats are unhappy, too. The Leader of the Liberal Democrats in Liverpool described the cancellation of school building plans as “unforgivable”.

Boris warned Cameron that it would be “barking”, “madness” and “insane” to cut funding to London. He wants particular protection for Crossrail, policing and affordable housing.
Next year’s Scottish and Welsh elections will be very uncomfortable for the Coalition, particularly the Liberal Democrats – who have most to lose.

The Coalition needs to rethink the announcement of cuts on a week-by-week-by-week basis. They should be saved up until the autumn spending announcement. The political pain will still be severe but more containable.

At their recent Cabinet in Bradford the government said that it wanted to emphasise economic growth as much as budget cuts. That is the right aspiration but there is not yet enough political or policy commitment to growth.

‘Ownership of the economic future’ may be the defining political battle between the Coalition and the new Labour leader.

Tim Montgomerie

Why the Conservative leadership is warming to AV

The Coalition’s plan to hold a referendum on the voting system for the House of Commons, while also legislating to reduce the number of Parliamentary constituencies, is full of paradoxes. The referendum will propose replacing the present first past the post system (FPTP) with the Alternative Vote system (AV).

Labour do well out of FPTP, but are signed up in their manifesto to a referendum on AV. The Liberal Democrats want proportional representation, but support a change to AV – even though AV isn’t a proportional system. The Conservatives do badly out of FPTP, but are that system’s staunchest defenders – as Tory backbenchers proved when Nick Clegg outlined details of the referendum in the Commons earlier this week.

The Deputy Prime Minister said that a bill will be put to Commons proposing that the poll take place next May and confirming a cut in the number of MPs from 650 to 600 (which will therefore be introduced by the time of the next election, which the Coalition plans to take place in 2015). Some Conservative MPs criticised the timing of the vote – which will coincide with the Scottish, Welsh and local elections – and the lack of a referendum threshold.

These MPs tended to be drawn from the right of the Party: David Davis (the former leadership contender), Eleanor Laing, Peter Bone, Conor Burns. More significantly, it later emerged that Bernard Jenkin, a former Shadow Minister and member of the 1922 Executive Committee of Tory backbenchers, had been deputed by it to discuss the referendum details with Ministers.

The ’22 Executive is dominated by Right-wingers who dislike the Coalition and distrust their leader (who tried unsuccessfully to merge the body with the frontbench in order to prevent Graham Brady, the Right’s candidate, from winning the Chairmanship election). Of its six Executive members from older MPs, five are from the right – which in another internal poll this week took all three of the Parliamentary places on the Party’s Board.

Jenkin was involved in the successful campaign to dynamite the Labour campaign to establish a regional assembly in the north-east. The campaign hammered home to voters that such a body would provide more politicians at further cost – and the proposal fell in a referendum. Discontented Conservative backbenchers will maintain that a referendum shouldn’t be allowed to pass if turnout falls below, say, 40 per cent – a hurdle that sank a referendum on devolution for Scotland during the late 1970s.

No-one knows what a change from FPTP to AV would bring. Some claim that it would lead to more hung Parliaments and therefore to weaker government. Others argue that AV accentuates swings against the government of the day (which could benefit the main opposition party). Labour’s official view, too, will be unclear until its new leader is elected – although a significant part of its Parliamentary Party, drawn largely from Scotland and the north of England, supports FPTP.

What’s certain, however, is that the Liberal Democrats will support AV in any referendum campaign, and that although David Cameron is committed to taking the opposite view, he’ll be wary of letting too great a distance appear between himself and Nick Clegg – especially if the new Labour leader tries to split the Coalition, and cosy up to the Liberal Democrats, by declaring prominently that “On AV, I agree with Nick.”

Furthermore, there are signs that the Prime Minister is well aware of the paradoxes described earlier. Under FPTP, the Conservatives require a vote share lead over Labour of about 10% to form a government on their own, while Labour need a lead over the Conservatives of only some 3% to do so. Even if the Liberal Democrat vote collapses at the next election, it’s unlikely that the Tories can hoover up enough of it to get 10 points clear of Labour.

Although the seat reduction will be helpful to Cameron’s Party, it looks to be a smaller reduction than previously envisaged – from 650 seats to 600, rather than to the 580 or so previously floated – and therefore unlikely to offset any damage done to Tories by AV. This may take the form of losses to the Liberal Democrats – since it’s likely that, under AV, they’d be able to take some seats off the Conservatives in which they currently come second.

This is because AV’s a system in which candidates with fewer votes are eliminated from the bottom during an election. If they’ve expressed a second preference, that’s transferred to the candidates remaining. Labour votes would thus, it’s said, transfer to the Liberal Democrats – to keep the Tories out. However, the Prime Minister will be well aware of polling suggesting that in seats fought largely between his Party and Labour, Liberal Democrat voters might – if the Coalition holds – be prepared to transfer in greater numbers to the Conservatives.

So although at the one end the Conservatives could lose some seats to the Liberal Democrats under AV, they could gain some from Labour under the same system. And if the Conservatives and Liberal Democrats were returned in sufficient numbers, Cameron and Clegg could simply re-form the Coalition.

Under circumstances in which parties struggle to win much more than a third of the vote – an increasing feature of recent British general elections – the Prime Minister is said to be mulling over the benefits of semi-permanent centre-right coalition government. His grip on office would be consolidated. Labour would be shut out. The Tories would become a more centrist party, which would accommodate his instincts.

The Bill may not make it through the Commons unamended, of course – or even at all. Labour may find ways of undermining it. The Tory rebels will seek ways of imposing a threshold and moving the date. Conservative and Liberal MPs, worried about losing their seats if the overall number of constituencies is reduced, could revolt. Nothing’s certain – except that a gap’s opening up between the view of the Tory leadership on AV and that of its MPs.

Paul Goodman


  • MP for Tunbridge Wells since 2005
  • Minister of State at the Department for Communities and Local Government, with special responsibility for Decentralisation and Planning
  • An economist by training with a doctorate from LSE
  • Before entering politics he was a strategic consultant with Boston Consulting Group and Head of Commercial Policy at the BBC
  • From 1996 to 1997 Greg had his first experience of government as Special Adviser to Ian Lang who was then Secretary of State for Trade and Industry
  • From 2001 to 2005 GC was Head of Policy for the Conservative Party. During that time he oversaw some radical thinking on alternatives to taxpayer-funding of the NHS, an overhaul of the charitable sector and an agenda for localism, entitled ‘Total Politics’
  • ‘Total Politics’ was a critique of Labour’s targets culture, its tendency to cenrtralisation and its politicisation of the bureaucracy. As a guide to what GC will do as Minister for Decentralisation it remains indispensable (even though it was first written in 2002). Copies of the paper grace most desks of senior staff at DCLG
  • Greg is on the pragmatic Right of the Conservative Party. Although he backed David Davis for the Tory leadership in 2005 he is not seen as tribal. He was an effective Shadow Secretary of State for Energy and Climate Change but lost a seat at the Cabinet table because of the Coalition deal. He is a hot tip to return to the top table in the future
  • Alongside Michael Gove and Nick Herbert he is one of the party’s most innovative thinkers. Behind-the-scenes he is set to be an important player in devising policy ideas for years three, four and five of the Coalition government.
  • Greg Clark’s key adviser is Peter Franklin. PF has written detailed policy papers over the years for Oliver Letwin, Iain Duncan Smith and Tim Yeo. He has been an important influence on the party’s social justice and environmental agendas in opposition. PF first worked with GC in the Conservative Party’s Policy Unit and then joined his parliamentary operation in 2005. Although based in the Commons, PF still works closely with GC on speeches, policy and strategy.

Tim Montgomerie


NHS reorganisation: “Those strategic regional authorities and primary care trusts are to be scrapped. Doctors will take over their budgets, worth up to £80 billion… The BMA and the Royal College of Practitioners are expected to welcome the changes. There’s also to be a new contract for GPs. Tens and thousands of jobs in the abolished authorities are to go.” More:

The coming together of The Tory Right: “For some years the Right-wing factions among Conservative MPs have been just that – factional and not necessarily working together. But I can reveal that the different groupings have now opted to begin co-ordinating their activities – and the spoils of success are already being seen…” More:

The Development budget: Andrew Mitchell has begun an exercise to ensure poverty-focussed Official Development Assistance spent by other Departments is maintained. Approximately £100m of money spent by the FCO is expected to be transferred to the DFID budget as a result. There are two ways of looking at this. One is to worry that FCO spending is being smuggled into the DFID budget. The other is to be glad that money aimed at fighting global poverty won’t be cut as part of FCO cuts but will continue. More:

The Revenge of the Bureaucracy: Ministers need to brace themselves for a lot more of the trouble experienced by Michael Gove this week. The bureaucracy isn’t going to like 10%, 25% and 33% cuts. It won’t make life easy for Secretaries of State who have to wield the axe. Liam Fox, for example, is under fierce attack from within the MoD because he wants to axe HQ staff and protect frontline troops. More:

The latest opinion polling: “The trajectory of the Coalition is now very clear. The large-scale defection of left-inclined voters from Clegg to the new Labour leader will either force the Liberal Democrats out of the Coalition or Cameron will accelerate the leftwards direction of the government. There will be more concessions of the kind we have seen on electoral reform, prison sentences and human rights legislation to sweeten Mr Clegg’s relationship with the big, left-wing beasts in his party.” More:

The Coalition’s localism: “Localism means experiment, risk and imperfection, but the new Leader of the Opposition may well find that being on the side of pessimism is a bad place to be. That the state should fund but not run all public services – because others can often do the job better – isn’t dogmatic ideology, it’s common sense.” More:

Boris getting ready to run as Mr London, not as a Tory: “Boris said that it would be “madness” to stop Crossrail; “insane” to cut funding for affordable housing; and “barking” to cut police numbers when Londoners might need them most. He said that the government must not starve London of funding.” More:

As always, please call me on 0771 726 1570 with any questions.

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