If the coalition really does fracture after tonight’s vote, will Labour be ready?

by Atul Hatwal

Tonight’s the night. The Commons votes on House of Lords reform and a series of dominoes will start to topple.

First, the government’s attempt to limit debate on the House of Lords reform bill through a “programme motion” will be defeated by a coalition of Labour and Tory votes.

It will mean Tory rebels in the Commons can filibuster the House of Lords bill, and the rest of the government’s legislative programme, into extinction. Faced with this threat, the prospect of the government throwing in the towel on House of Lords reform tomorrow morning seems almost a racing certainty.

Second, the Lib Dems will hit back by scuppering the Tories’ plans for revised parliamentary boundaries. It’s hard to see how the Lib Dem leadership could hold their party together without some retribution against the Tories. Again, on balance this seems a highly likely scenario.

Third, notwithstanding many Tories’ secret yearning to bury the new boundaries, there would be an explosion of Tory backbench, even frontbench, rage at their junior partners.

The price demanded by angry Tories would be new, true blue Conservative policies defined by the inability of the Lib Dems to support them. Lists are already being drawn up. The word “Europe” features heavily.

This is where there would be a speculative if not impossible next step. The final domino. Relations would become so strained between the government partners that they mutually lose the will to go on. They row. They snipe. And finally, they vote against each other. It would culminate in the death knell of all broken parliamentary partnerships, a failed vote of no confidence.

In the chaos of the ensuing election, out of the wreckage of the coalition, maybe, just maybe, a Labour government with a small majority would emerge.

Blinking, in the pouring rain in Downing Street, sometime in early Autumn, Ed Miliband would face the assembled media, intone solemnities about the gravity of the challenges facing the country and then turn to enter Number 10 for the first time to begin his tenure as prime minister.

Miliband has performed well on Leveson and Libor while the government has loosed off numerous rounds into its feet, over pasties, caravans, Murdoch and the 50p tax rate. Labour has gained ground in the polls and prospered.

But this would be different. Reality would bite. Choices long avoided and ignored would become instantly pressing.

Lurking at the top of a bulging in-tray would be the most uncomfortable of all problems for any Labour government, let alone this Labour leader: cuts.

Last November’s Autumn statement estimated the structural deficit to be at £114bn. This is the deficit that would remain even if the economy recovered and was operating at full capacity. Regardless of stimulus, upturn and growth, this deficit would require either major cuts or tax rises or both.

Admittedly, it is notoriously difficult to define the actual level of the structural deficit, but even at the more optimistic end of the scale there would still be upwards of £80bn of pain to endure for the new Labour government.

In the absence of any clear recent policy on reducing the structural deficit, a reduction approach based on the template of the Darling plan would see two-thirds of the deficit being tackled over four years.

That’s £53bn to be found in some way within one parliament. Back in 2010 and early 2011, Labour seemed to have opted for a 60:40 ratio of tax rises to cuts to reduce the deficit.

If this approach were retained, it would mean prime minister Ed Miliband trying to find £32bn of tax rises and £21bn of cuts.

It’s not difficult to predict the reaction of unions such as Unite, who would have just poured millions of pounds into Labour’s campaign, and rallied their troops on the basis of a stop to cuts, at the prospect of a £21bn cuts programme where the impact would inevitably be felt mainly in the public sector.

What would Ed Miliband say when the first of the anti-Labour, anti-cuts strikes were called across the public sector? How would the parliamentary arithmetic stack up? A small majority, angry unions and an energised left-wing rarely make for a happy life for a Labour prime minister.

Equally, £32bn is a non-trivial amount of extra tax to raise. How would this be piloted through the Commons?

Looking back three generations to survivors of the Callaghan government, the experience is salutary: deals with the nationalists, knife-edge votes and constant pressure to find extra funds for truculent backbenchers’ pet projects, to guarantee passage of the latest legislation.

To an extent, these are the facts of life with a small majority. But for Labour, in the unlikely event of government beckoning within months, the scale of the problem would be exacerbated because of the expectations gap.

The gap between what the unions and the left of the party expect from this leader, indeed, what this leader would like to do and the fiscal reality he would face the moment he crossed the threshold of Number 10.

Later tonight, when the first of the dominoes falls and the programme motion is voted down, this collision of aspiration and reality could draw that bit closer.

Atul Hatwal is editor at Uncut

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8 Responses to “If the coalition really does fracture after tonight’s vote, will Labour be ready?”

  1. swatantra says:

    No chance. We’re stuck with this lot till 2015. And if Labour doesn’t get its act together, possibly longer. Opinion polls don’t tell the real picture.

  2. Quick point: The answer with tax, particularly given the nature of globalisation, must be involved with an increased taxation focus upon that which is immobile (e.g. land) and less upon that which is mobile and can more easily be transferred to other jurisdictions. Shifting the tax burden towards the immobile wealth of land would reduce, at least in relative terms, taxation upon income, which would incentivise hard work. Given that inequalities of wealth are more extreme than inequalities of income and given that incentivising hard work would be good for growth, taxing land would be both more equitable and efficient. Labour should be building the case for this reform now.

  3. madasafish says:

    Johnathan Todd said:
    Shifting the tax burden towards the immobile wealth of land would reduce, at least in relative terms, taxation upon income, which would incentivise hard work

    Hmm just like the Poll Tax you mean?

    That was a great idea: look how well it worked..

    You need to do some sums instead of coming up with on the face of it good ideas. Then you will find your good ideas will not work..

  4. Robin Thorpe says:

    @madasafish – Poll tax is different animal; yes it was conceived on the principle of an immobile asset, but was massively unpopular because it was not fair. It was not based on the ability to pay. I completely agree with Jonathan on this. A land tax is a very obvious way of raising funds; in my personal opinion i would like to see a land tax replace council tax and be paid directly to local authorities to fund police, fire, social housing, local infrastructure etc. I don’t think we need additional taxes, as this would create complexity, which breeds avoidance. Investing in HMRC would also be a way of capturing more revenue from existing taxation and cracking down on secrecy havens (such as Jersey, Isle of Man), which are used to funnel money away from the UK as well as from Nigeria etc.

  5. Anon E Mouse says:

    Labour needs to keep it’s fingers crossed that this coalition holds.

    If an election were held tomorrow the Tories would sweep into power as the Liberal vote collapsed and they promised an In/Out referendum on Europe.

    Until Labour apologises for the massive mistakes and the mess it left this country in it will not be taken seriously as a candidate for government….

  6. BenM says:


    The economy is diving, the NHS is fracturing, the banks are unreformed and as stinking as they ever were, an utterly incompetent chancellor who is diverted onto political scheming, unemployment is set to rise to over 3 million, staggeringly idiotic welfare reforms will pitch millions into penury, a PM and a lame duck Culture secretary who got to close to the discredited Murdoch empire, an education reform so wholly wasteful and wrongheaded that Gove will go down as the worst education it secretary we’ve ever had.

    This is by far the worst government since the War.

    The wrong government with the wrong priorities and ideas at the wrong time for the country.

    And boy is the country paying for it.

  7. Anon E Mouse says:


    The most unpopular Prime Minister in history was Gordon Brown. At least I suppose even the Labour Party didn’t elect him leader.

    Every single complaint you have made is caused by the complete mess the Labour government left us in – Liam Byrne of Labour said “There’s no money left”.

    Tony Blair, Labour’s most successful leader in it’s history, is the godparent to one one of Murdoch’s children. Gordon Brown’s wife and children went to Murdoch sleepovers.

    No one sucked up to Murdoch more than Labour which is proven by the lists of their meetings.

    No one had political scheming like the last government and their PFI schemes are falling apart at the seams.

    As a chancellor no one was more incompetent than Gordon Brown claiming he’d “Saved the world and ended boom and bust” and selling our gold at a historic low.

    Oh and removing 10p tax from the poorest in society.

    Al that idiot Osborne has done is U turned on a couple of unimportant items. So what? The rich should be taxed irrespective of their age. Eric Clapton should not receive Child Benefit and Geoffrey Archer or the Queen should not have a free bus pass. Peter Green living in Monaco should not get Winter Fuel Allowance and pasty taxes show how little the current government has got wrong.

    If all the papers are complaining about is pasties the government will storm in at the next election. I remember Iraq BenM where a Labour Prime Minister lied to the commons to go to war in support of a Republican US president who appeared hell bent on it.

    Labour are lead by a schoolboy tax avoiding multi millionaire property owner who has never done a single days work in his life except play at a job for the Countess Toff Harriet Harman.

    Your comments display your usual Labour tribalism and I cannot accept that you are not a Tory plant. Have you really not noticed that government borrowing is up not down? What austerity?

    NO ONE who supported Labour could make the above comments and you have got to be a Tory BenM with your remarks!!!

  8. uglyfatbloke says:

    Well…the coalition has not unravelled yet, but Labour certainly does not need an election – no money for a start.
    Also…an election next month would probably see the gnats in Scotland get 20+..maybe even 30 seats, mostly at the expense of Labour and the glib-dumbs.
    It would not make a Labour victory impossible, but Ed would almost certainly need the support of the SNP as Wilson and Callaghan did in the 70s , but given that experience, the gnats are n’t likely to be too helpful are they?

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