Deficits and hung parliaments

Just a month or so after we thought the Labour Party was about to sink without trace, recent opinion polls have raised the possibility of a hung parliament again. Last time I discussed this was way back during the last decade. The end of November, in fact, though it seems much longer ago. Like many people, I wondered whether a hung parliament would threaten the UK’s credit rating.

The FT’s Martin Woolf reckons this is nonsense.  He argues that a coalition government would have greater legitimacy to take tough decisions:

I can see no reason why it would be more difficult to implement the needed tightening under a coalition government. On the contrary, the legitimacy needed to take on the principal opponents of the cuts – the public sector unions – will be far stronger with a more representative government. Greater legitimacy is, after all, why the UK had a coalition government in the second world war.

Well, yes, but a war is way different from a financial crisis. No-one is being threatened with annihilation or slavery – at least, not yet. Getting groups with conflicting interests to pull together is a lot easier when there is someone sitting across the channel who wants to murder them all. When the enemy is the abstract concept of government debt, it is much harder to unite people behind an approach to dealing with it, especially when the results will hit some harder than others. 

Martin Woolf also points out that coalition governments have a good track record of reducing deficits:

Research by the House of Commons library shows that of the 10 largest fiscal consolidations in OECD member countries since 1970, seven occurred under coalition governments – in Italy, Denmark, Finland, Sweden, Belgium (twice) and Norway. Provided those in power are responsible and the public understands what is at stake, there is no reason why a coalition government should not deliver the restraint the country will need.

Again, yes but……These countries are used to coalition governments. Their political systems often deliver hung legislatures and so they have developed processes for managing the negotiations and building the alliances necessary to form governments. With the exception of Italy, the countries listed form their coalition governments smoothly and with a minimum amount of fuss. In contrast, the UK has no such mechanisms. Only a handful of MPs can remember the last hung parliament in 1974 and only a handful of constitutional experts fully understand the legal position and the protocols for forming a government under such circumstances. Unlike the Scandinavian countries, our transition from inconclusive election to a working government would be far from straightforward.

It is by no means certain that the horse-trading would stop once the government had been formed. In countries used to coalition governments, representatives assume that they will have to work together and are therefore more prepared to compromise with people from other parties. Our MPs have come up through a more adversarial system. Any coalition leader would have to devote considerable energy to holding his alliance together.

And all the while, investors would be getting nervous.

In some respects a hung parliament might improve our political process over the long-term and could create a system where a wider range of people make it into positions of power. In more stable economic times, that would be fine. Right now, though, a period of infighting and political uncertainty is not what the country needs. The level-headed and pragmatic Scandinavians might be able to deal with a financial crisis and a hung legislature at the same time but I reckon that might be too much of a stretch for our politicians.

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2 Responses to Deficits and hung parliaments

  1. MarkyMark says:

    Little old New Zealand may possibly be instructive.

    New Zealand has a similar constitutional set-up to the UK and in 1996 we changed from a first-past the post election system which always provided majorities to either of the two main parties (Labour + National) to a mixed-member proportional representation system (MMP) where all governments since then have been coalition governments (main party rump with one or more smaller parties).

    I expected it to be a disaster but it hasn’t been really. All governments have gone the full term (3 years) and the government of the day has managed by-and large to pass their agenda.

    The one twist perhaps is that Winston Peters the head of the New Zealand First Party famously said on the eve of the election that he wasn’t interested in forming a government with the National Party. Having secured his 5%+ and several seats he held the balance of power and promptly betrayed his supporters by entering into a deal with the National Party.

    The lesson for the UK i suppose is that if the Liberals hold the balance of power they will be in a tremendously powerful position and can play Labour off against Conservatives and go with the one that offers the best deal for them as a party. They will be able to demand a referendum on electoral reform at the very least and command several cabinet posts and generally influence things disproportionate to their numbers.

  2. roym says:

    “that might be too much of a stretch for our politicians.”

    time to get some new politicians

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