OK, so the scores are in. Unsurprisingly, Labour did well except for Scotland, the Tories held their core vote, and the Lib Dems got massacred. No won the referendum.
Our original mission was to report on how the coalition parties would settle their differences. As it turned out, the Tories adopted a plan of going as far and as fast as possible on their policy goals in the hope that the differences wouldn’t be tested - as a result, this blog has been more of an attack dog than we originally thought.
Now, though, the differences are really coming through. Among other things, some of the Liberal front bench seem to be taking the No campaign personally. This is just personality politics, but it is a real factor in events. More seriously, the big question is what the coalition partners have to gain from continuing the coalition.
For the Liberals, of course, it was all about the referendum. Did they actually believe that the Tories wouldn’t pull out all the stops to win it? It seems impossibly naive. Some of the bitterness might be explained if the Liberals thought there had been some sort of understanding to that effect. Now it’s gone, though, it’s hard to see what there is to stick around for.
One argument is that the alternatives are awful. Jumping now would just bring about a terrible beating in the elections. But is it really plausible that they would do any better in a year’s time, or three years’ time? What is the mechanism of action here? Arguably, this is what the Germans call Dienstautosuggestion - auto-suggestion, where the auto in question is a ministerial Jaguar.
From the Tory side, it’s worth noting that most of the big talk about perhaps having an election is just that. The Conservatives went into the 2010 campaign with a poll lead around 10 percentage points over Labour, and the gap tightened to about 5 percentage points over the campaign. That wasn’t enough for a solid Tory government, was enough for the Unholy Alliance, and was marginally enough for a Lib-Lab alliance depending on assumptions about the SNP’s behaviour. It is not obvious, to say the least, that re-running the race from a starting poll deficit of 5 percentage points is a winning proposition.
Pundit conventional wisdom is that in 2015 the economy will be much better and everyone will be grateful. It is no accident that this is perfectly in accordance with Conservative Party planning. However, there’s a fair amount of Dienstautosuggestion going on here too - the OBR’s numbers, which are after all meant to be the basis of the government’s scenario planning, require a number of remarkable things to happen in order for the economy to recover on time. The forecasts expect the consumer sector to load up on debt and there to be a renewed housing and construction binge.
This isn’t exactly six impossible things before breakfast - you wouldn’t have lost much money predicting a credit boom in the UK at any time from 1945 onwards - but it is questionable. Last time out, the property market didn’t bottom until 1996, six years from the peak. In fact, a relatively optimistic alternative scenario might be a replay of the 1990s - a strong industrial recovery boosted by cheap sterling, a bombed-out property sector, and a cuts-hammered public sector, with the Tories going into the 2015 elections whining about how ungrateful the voters are and how “yes it hurt, yes it worked”*.
In this light, a major reason for the Tories to stay on is simply that they have a policy agenda and therefore they can plan for a future. The key element of the Lib Dem agenda, though, is now gone and their only reason to stick around is fear. But the financial crisis has now been sticking around for three or four years, depending on whether you score from the August, 2007 freezing-up of the market for asset-backed commercial paper and the run on Northern Rock, or from the collapse of Lehman Brothers. And it looks like we’re heading for another round of recession. A pessimistic scenario from the economic point of view would be that we’re in 2011 - painfully staggering through the aftermath of an ugly recession - in 2014. If things get worse through 2011 and tip over in 2012, we’d be well on course.
Nick Clegg is committed by his past costly signalling. But for the individual Lib Dem MPs, there may well be nothing to gain by waiting. Just how bad things could be is shown by their disaster in Scotland. The historic Liberal base seats are no longer to be relied upon. Perhaps it might be best to jump?
*Can we not invade Iraq this time?