Cracks in the coalition

[malaise]

http://www.guardian.co.uk/commentisfree/2012/mar/11/coalition-breakdown-nhs-row-mansion-tax
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A conference is a wonderful thing: without today's vote against the NHS changes at the Lib Dems' spring gathering in Gateshead, we would have believed the party, worn out by the struggle in parliament, had accepted this key Conservative measure. Instead the recent impression of a coalition in the throes of nervous breakdown seems even more compelling.

The real breakdown could come at any time, over a number of issues: if Lib Dem peers listen to their own membership they are now released from previous pledges and could still try to change the bill when it is debated again on Tuesday. This would threaten not only Andrew Lansley's painstaking compromise but also their working relationship with Tories. Dr Evan Harris, the former Lib Dem MP leading the anti-legislation campaign in the party, claims MPs could also still act, bringing in motions of disagreement with the Lords.

He told me that if Clegg continues to support the bill – which he shows every sign of doing – the issue "could come back to haunt him". Harris argues that Lib Dem parliamentarians, having supported the coalition agreement and a very different NHS plan, were now released from any commitment to back the bill.

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A coalition breakdown may come sooner than we think

The NHS row, mansion tax v tycoon tax, Lords reform: the Tories and the Lib Dems look to be heading for an all-out war

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Jackie Ashley
Jackie Ashley
guardian.co.uk, Sunday 11 March 2012 19.00 GMT
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Andrzej Krauze coalition illustration
'The real breakdown in the coalition could come at any time, over a number of issues.' Illustration: Andrzej Krauze

A conference is a wonderful thing: without today's vote against the NHS changes at the Lib Dems' spring gathering in Gateshead, we would have believed the party, worn out by the struggle in parliament, had accepted this key Conservative measure. Instead the recent impression of a coalition in the throes of nervous breakdown seems even more compelling.

The real breakdown could come at any time, over a number of issues: if Lib Dem peers listen to their own membership they are now released from previous pledges and could still try to change the bill when it is debated again on Tuesday. This would threaten not only Andrew Lansley's painstaking compromise but also their working relationship with Tories. Dr Evan Harris, the former Lib Dem MP leading the anti-legislation campaign in the party, claims MPs could also still act, bringing in motions of disagreement with the Lords.

He told me that if Clegg continues to support the bill – which he shows every sign of doing – the issue "could come back to haunt him". Harris argues that Lib Dem parliamentarians, having supported the coalition agreement and a very different NHS plan, were now released from any commitment to back the bill.

A last minute assault on the legislation, backed by Labour, would infuriate Tories. This isn't because they like the bill – many of them don't, albeit for a variety of reasons – but because they would see it as a further example of Lib Dem ill-discipline and hostility, coming so soon after Vince Cable's leaked letter, devastatingly critical of the government's lack of strategy.

So nothing about the next week or two should be taken for granted. This is now a very fluid and dangerous situation for Clegg, weakened by his party's rebuff, even if in the end, I suspect Lib Dems won't destroy the bill. Had this conference happened even a month ago it would have had a decisive impact, but the time may now be past. If the NHS does not break the coalition, however, then both tax and Lords reform seem likely candidates.

In general it is best for a party to have one policy on any one issue, and on taxing the richer citizenry, the Lib Dems have two. The mansion tax (George Osborne seems interested in it, but David Cameron opposes) is historically the party's next tax of choice, which Vince Cable has been energetically pushing. Taxing wealth more, rather than income, is clearly needed in Britain, where property prices are still ludicrous. A mansion tax has the added attraction of being harder to dodge. There are problems with pensioners on small incomes living in family homes in the south, and no doubt Cameron is having his ear bent by his chums; but in most respects this seems a thoroughly sensible option.

Now we have this idea of a tycoon tax, which, apart from its ringingly populist name, seems suspiciously hazy and late-in-the-day. If it means a clear floor to tax-avoiding measures, so that everyone pays, say, 30%, there is a danger that those rich enough to employ accountants will simply order them to find ways to get around it. But it has the feel of a wheeze to get somebody off the mansion tax hook. That somebody must be Cameron and the man doing the unhooking would therefore have to be Clegg, who seems not to have told his senior Lib Dem colleagues about the plan ahead of time – never a good idea.

The growing suspicion among Lib Dems I talk to is that the "quartet" of Cameron, Osborne, Clegg and Danny Alexander, comprises two Tories and two of the most eager Lib Dem fellow-travellers and that, therefore, it is not a fair reflection of the original deal between the two parties. The NHS row and the struggle to produce a real tax on richer people are marks of the unease felt very widely in the party now.

But the most toxic issue is Lords reform. If the Lib Dems don't get any movement on this then they will likely leave office electorally shattered and with nothing to show for it in terms of their longer-term future. It's quite close to an institutional life or death issue. But they won't get it through the Lords. Tory peers will block them. Tempers are fraying: Lord Oakeshott told me last week, in an interview for the Guardian's website: "Some of us didn't realise how nasty the Tories can be." He promised to "hold Cameron's feet to the fire" over Lords reform, probably blocking constituency changes in return.

This would mean all-out war. Coalitions can survive leaks, rows, conference votes and dark suspicions about where their leaders' real loyalties must lie, but they can't survive that. At the beginning of the coalition, I argued that it would never last its five years. I wish I'd put some money on it, too.