Autumn challenges for Clegg and Miliband

As he contemplates the next parliamentary year from the comfort of his Spanish holiday, the Deputy Prime Minister will have plenty of time to consider the perils of coalition. With a stand-off between Nick Clegg and David Cameron over constitutional reform, it is becoming increasingly clear how little the Liberal Democrats have gained from being in power with the Conservatives.

There are two reasons why this is so. First, Clegg failed to secure unconditional support for key policies from Cameron. He won a referendum on the alternative vote, but had no guarantees that his position would not be trashed by his coalition colleagues. Instead of just having a referendum, he should have made boundary changes conditional on AV being passed, and put both on the ballot. Now, rather belatedly, he has chosen to link the constituency carve-up to the failure to get Lords reform through. It looks petulant done this way, and does Clegg few favours in the eyes of voters.

But the second failing was not to insist that the Conservative Parliamentary Party be asked to endorse the coalition agreement in the same way that Clegg gained the support of his Liberal Democrat colleagues. This has allowed many Tories to take a pick-and-mix approach to its measures. This was, of course, as much Cameron's failure rather than Clegg's, but it was a weakness of the whole arrangement.

Of course, a bigger problem for Clegg is that on measures where his party gained seats, notably tuition fees, he has accepted a position the exact opposite to that which he argued for during the election. The concessions on repayment thresholds may make the loans more attractive to some, but have made the finances of higher education less sustainable. Clegg would have been better insisting on a lower cap on fees which might have appeared less daunting to potential students in the future.

Where the Lib Dems claim some credit for policies delivered - the pupil premium and a higher tax threshold - it can plausibly be argued that they are delivering policies that most Tories willingly embrace. The pupil premium also featured in the Conservative manifesto. But. so far, its failure to link with a national funding formula and to recalibrate the much higher premium inherited from Labour, means that it is often being used to mitigate cuts elsewhere in the budget rather than for proven measures that could tackle achievement and aspirations among target students.

If he is to regain some of the credibility he enjoyed before the last election, Clegg needs to be ready to revisit the coalition agreement in the autumn, and establish some key priorities for the second phase of the government, some of which should reflect the reality that George Osborne's economic policies are not working as intended. Top of the list should be a serious investment package in national infrastructure, one that starts to have a real impact on the economy, and a stimulus to service industries that pump money directly into the UK economy, perhaps through targeted VAT reductions for tourism-related industries or a strong incentive package to boost UK education. He should also try to put a halt in both cases to the Home Office's unstinting efforts to deter tourists and students from spending their money in Britain.

Meanwhile, Ed Miliband has benefited from the coalition's woes, but still lacks a strong enough policy on the economy and taxation. His challenge for the autumn is to put flesh on a policy that goes further than heckling 'I told you so' at the Chancellor. Ed Balls has argued for VAT cuts, but they need to be targeted on services and industries that are largely home-grown if they are to improve growth, not add to the trade deficit. Stella Creasy has rightly argued for a wholesale bottom up review of all public spending, with value for money at the heart of it. And the focus on any extra investment must be on infrastructure - both small-scale, such as restoring individual school capital budgets, and large-scale, including sorting out London's airports. Miliband has gained stature in the last year: this autumn is the time he needs to translate that into economic credibility.

Clegg's premium needs a harder edge to succeed

Last week Nick Clegg renewed his coalition marriage vows with David Cameron at a tractor factor in Essex. Today, the Deputy Prime Minister has reaffirmed his faith in the pupil premium as a great engine of social mobility, at a primary academy is Islington. Nobody could seriously oppose the pupil premium - indeed, it was as much part of the Conservatives' 2010 manifesto as it was that of the Liberal Democrats - but one can reasonably ask how much difference it will really make.

The pupil premium was supposed to rise to as much as £2500 per pupil by 2015, though changes to its calculation and topslicing mean it will probably be nearer £1200 - there will only be £2.5bn available in the last year of this Parliament and £1.25bn is being spent when it is only £600 in the next school year. Yet, as the Institute for Fiscal Studies has pointed out, extra funding in the current system attached to deprived pupils amounts to £2000 in primary schools and £3000 in secondary schools, funding almost double that attached to non-deprived pupils, on average. And there are still huge variations in performance between them. As Clegg himself pointed out in his speech,  

There are now 440 secondary schools - one in five - where disadvantaged pupils are doing better in their GCSEs than the national average for all children.

What that suggests is that they perform worse in four in five schools, despite their existing £2000-£3000 premium. Clegg has sort of recognised that a big problem with the premium is the lack of levers to ensure that schools use it to improve teaching for disadvantaged youngsters. So he has announced details of summer school funding and a sponsored competition for the best ideas on using the new premium. Summer schools were an idea of David Blunkett's first year in government - indeed they may even have been his first initiative - and while they had some positive results, they were no panacea. The contest may spur some good ideas, but it is still likely to leave most schools using the premium to plug the gaps left by the Government's cuts in the rest of the school budgets: again, the IFS has shown that around three-quarters of primary schools and 90% of secondary schools are seeing real terms cuts, though with lower salary inflation, the figure falls to 55% of primaries and 70% of secondaries. An NAHT survey recently found similar concerns.

Clegg says that Ofsted will be reporting on how the pupil premium is used. But unless there is a link between the premium and some narrowing of the gap in Key Stage 2 or GCSE results for poorer pupils (with no loss of performance at the top end) then the pupil premium is unlikely to achieve much at all in the majority of schools and for most disadvantaged pupils. The Government already publishes a lot of this data: why not say that a significant proportion of the premium after three years is dependent on better results for those from poorer backgrounds? The premium needs such a harder edge if it is to succeed.

Clegg should demand real investment for renewing those vows

With Francois Hollande elected in France and Labour's modest triumph in the council polls, it is hardly surprising that David Cameron and Nick Clegg feel the need to renew the vows they exchanged in the shotgun wedding of 2010. But whether they should stick to the letter of the pre-nup that they signed on that fateful day is another matter. The economy desperately needs investment, and the government badly needs a sense of purpose. There are few signs that either are planned. And that reflects a failure of imagination by Nick Clegg and his improbably sidekick Danny Alexander.

The Budget was not just a disaster for the Tories, countering George Osborne's smugness with its extraordinary collection of crowd-displeasers. It was also a failure for Nick Clegg, because he failed to persuade his coalition partners that cutting the 50p tax rate at a time when the country (and Europe) has entered into a populist anti-rich rage might not be the best idea, just at the moment.

But then despite the hype there is little sign that the Liberal Democrats have gained much beyond becoming a punching bag for liberal initiatives already favoured by Cameroon reforms, such as gay marriage or even Lords reform. The Lib Dems have failed utterly to promote the sort of infrastructural investment that might move the economy from Osborne's recession into lasting growth. School building has been slashed. House building is a combination of anti-Labour spin and coalition inaction. The high speed rail will take years to materialise and Heathrow is chaotic not just because of Teresa May's passport panic, but because there is nowhere for the planes to land half the time. High speed broadband seems a distant dream, especially with BT involved.

We have seen that infrastructure can be delivered on budget and on time with the Olympic stadium. And I have no quibble with efforts to get better value for money than Labour in public building projects. But there is simply not enough action on providing the major infrastructural investment that could give the economy the kickstart it needs, boosting demand and jobs, and ensuring more people pay taxes rather than draw benefits. Rather than fighting plans for an extra £10bn cut in welfare budgets, Clegg should be seeking to cut the budget by getting people into real jobs. At present, all that's on offer is the dubious rebadging exercise known as the Youth Contract.

Within months, Europe including Germany will recognise - in part because of what's happening in France and Greece - that it needs a better balance between austerity and growth, and that investment projects are needed for the latter. The US under Barack Obama has recognised that, as has the IMF and OECD in its advice to member nations. This is not about cutting day-to-day spending, which will have to continue, though Osborne always underestimated its knock-on impact on private sector services, but about medium to long-term investments that will have a return.

So, rather than whining about Lords Reform, Clegg and his colleagues should force the investment issue with a real determination: new rail, schools, housing, airports. If he focused on that rather than the dubious achievements that he cites for his role in Government to date, the voters might even notice. By the same token, Labour should switch its arguments from the speed of the spending cuts to a ceaseless demand for more capital investment, with a strong critque of the government's enduring incompetence and inability to deliver. It too might find that a successful formula to consolidate and advance on Thursday's success.

Clegg's summer school pupil premium raid another reduction in school freedoms

When I heard news that Nick Clegg has borrowed David Blunkett's 1997 summer school idea to give himself something to say in his conference speech, I wondered where the money was coming from. After all, the coalition has been busy axing Labour agencies and initiatives to disguise its cuts to the general school budget and to pay for the much-vaunted pupil premium. And a principle of the premium has been that it is up to heads, not central or national government, to decide how to spend it.

Now don't get me wrong. Summer schools are not a bad idea, though their impact in the late nineties was not as strong over time as we hoped. I have also long seen a role for earmarked spending when you want to focus on a particular programme or goal. Blunkett used the Standards Fund both to direct a degree of spending on key programmes and to lever in additional resources. A big weakness in the pupil premium has been its lack of leverage or conditionality. But this has not -until now - been the view of the coalition.

So, the summer schools will take £50m from the £1.25 bn pupil premium pot for next year. They will do it by penalising schools that don't set up summer schools, which is the same as earmarking the funds. That may not be a huge amount - £50 from each pupil on free school meals, perhaps - but a principle has been broken. As ministers want something else new to announce, the pupil premium pot can again be raided in the same way, especially as its value increases year-on-year (all paid for by cuts in other school funding). At the same time, the funding consultation - lauded by Clegg in his recent education speech where he hailed resurgent local authorities - proposes to continue to allow local authorities a significant say over the distribution of school resources, moving away from a national funding formula.

With an increasing straitjacket also being imposed on the curriculum through measures like the English Baccalaureate, is it any wonder that a growing number of school and academy leaders are wondering whether all the coalition rhetoric about greater freedom for schools is increasingly feeling like so much hot air?

This post also appears at Public Finance and has been highlighted by Polly Curtis on her Guardian Reality Check blog.

Clegg's real threat to coalition school plans

The Deputy Prime Minister's spinners were out on manouevres this weekend, briefing a lot of nonsense about how our hero had defeated the nasty Tory profit-monger Michael Gove over his plans to allow greedy capitalists to make a few bob out of free schools. Since no such plan is on the agenda in Government (much to the annoyance of some providers and think tanks) and was even ruled out in the Tory manifesto, this particular Aunt Sally seemed to have been introduced merely to impress the more gullible types at the forthcoming Liberal Democrat conference, as well as the Sunday lobby with its particular fondness for the genre.

Unsurprisingly, there is little in Nick Clegg's actual speech today to justify any of that hype. But there is a lot that is potentially rather more alarming for free schools and academies, and is a real threat to their independent development. This threat comes from a clear desire by the DPM to restore the role of local authorities in several crucial respects. Here is what he says:

I think some confusion has been allowed to grow around our long term vision for schools: There’s an increasing belief that we are trying to sideline local authorities altogether because Academies so far have only had a direct relationship with the Secretary of State and the department in Whitehall. So let me straighten this out once and for all. This government wants all schools, over time, to have the opportunity to be autonomous with Academy freedoms. Both Liberal Democrats and Conservatives promised that in our manifestos. But we do not want that to lead to mass centralisation of the schools system. Far from it: as Academies become more commonplace, and eventually the norm, we will make sure people do not lose their voice over what local schools provide. So we will need to develop a new role and relationship between schools, central and local government.

Councils have an essential job. We will ensure they have a stronger role in making sure there are school places in the area for every child, not just those who know how to play the system. We have strengthened their role in admissions. They will oversee our new, fairer, admissions code. A code which makes it easier for the poorest to get the best places and easier for any citizen to complain if the rules are broken. We will strengthen their role supporting children with special needs. Sarah Teather is bringing forward a radical set of reforms which will ensure local councils can help knock heads together to get a better deal for disabled and disadvantaged children. And we will give them a critical role ensuring there is fairer funding Local authorities will help ensure the schools forums which currently divide up the cake locally are more transparent and they will help guarantee that academies, and other schools, are funded on exactly the same basis.

But we can – and we will – go further. Where there are no schools the local authority "owns" any more - there should be no barrier to the local authority working in a new relationship with academies, in partnership with central government.
The local authority could have a key role in deciding who new providers are and holding existing providers more sharply to account. Local authorities, closer by their very nature to their community than the Secretary of State, could be more determined than distant Whitehall to drive up attainment in their own patch – for example by setting higher standards for all schools in their area. That is why I am inviting those local authorities which wish to move to the new phase to grasp this opportunity and be involved in piloting this new role, starting from next year.

For most of the schools converting to academy status, a desire to have greater independence from the local authority is a big selling point. So too for some of those involved with free schools: read what Patricia Sowter, who is sponsoring Woodpecker Hall Academy, told me in my article in this month's Public Finance.

Already, that independence is being eroded, the result one suspects as much of pressure from a resurgent Conservative-led Local Government Association as of the DPM's arm-twisting at the cabinet table. The Government has retreated on plans to move to a national funding formula, as the DPM notes approvingly in his speech, and is giving the job to local authorities to decide (with a few extra restrictions) on the funding of academies and free schools in their area, even if the money is paid by a national agency. It remains to be seen, too, whether large authorities like Birmingham and Kent, where their Conservative politicians oppose coalition academy policies, not to mention the councillors across the country of all parties who are hostile, will see this new phase in quite the same spirit that the DPM envisages.

Yesterday, I thought that Clegg's spin about profit-makers was all about currying favour with his activists. Today I wonder whether it was as much about deflecting the media from his rather more worrying pledge to revitalise the role of local authorities in education. That is a battle that he and his Tory councillor allies appear already to have won.

The morning after

Were it not for Scotland, Ed Miliband could claim to have had a good night. As it is, the extraordinary SNP surge will overshadow some genuinely impressive achievements: potentially gaining a majority in Cardiff (providing a lesson in the benefits of coalition for the larger party), routing the Lib Dems in cities like Sheffield, Manchester, Birmingham, Hull and Stoke, winning back Gravesham and good results in places like Telford and Luton. Yet Labour also lost ground in key seats like Gloucester and Dartford. Of course, results have still to come in many areas. But the fact that one cannot say it was an overwhelmingly good night for Labour is a measure of the uphill struggle that Miliband still faces.

For he is the leader of the party in the whole of Britain, not just England; and he can't accept credit for Cardiff without also accepting the embarrassment of Edinburgh. He needs now to work to ensure that there is a root and branch reorganisation of the Scottish Labour Party, with the persuasion of a heavy hitter to position him or herself to do an Alex Salmond on the whole Scottish Labour party. After all, Salmond had the confidence to stick his name on every Scottish ballot paper.

In England, this is a better result than it might seem, because Labour has once again become the largest party in votes cast. This is important with the Tory gerrymeander still set to be introduced despite the failure of AV. It is a mark of the ineffectiveness of Nick Clegg that he didn't insist that the two measures were dependent on each other, thus forcing Cameron and crew to restrain themselves over their No enthusiasm. The Liberal Democrats are facing potential revolts over key coalition policies which will strain the partnership, and should certainly scupper Andrew Lansley's barmy NHS plans (if not restoring those waiting time targets that had been a huge success for patients) and may force speedier Lords reform and turn the pupil premium in schools into a meaningful incentive to attract poorer students. And while the Tories will be pleased not to have seen their vote drop significantly, they may find that this is the last time they can feel so smug: as Lib Dem councillors disappear, voter anger will find a new home.

For Labour, it is vital that the party does more than sort out Scotland. The extra councillors should help consolidate the party organisation. But Miliband needs to show some policy mettle too, and not wait until his various reviews have pronounced. Voters don't know what he stands for, and he needs to pick some strong symbolic policies on which to take a stand: that might mean outpacing the Tories where their policies are potentially popular, like on academies and free schools, and providing radical alternatives where they are getting it wrong, including on crime and prisons. He should not let the Lib Dems take the initiative on constitutional reform, but he needs a clear and credible economic and social policy that appeals to working class and Middle England voters alike. Of course, he should not unveil all - or even most - of his policies now, but he does need to show where he stands. Otherwise it will be difficult to turn last night's genuine gains into an election winning strategy for 2015 - or before.

An updated version of this posting appears on the Public Finance blog.

Changing the NHS changes

Readers of this blog will not be surprised that David Cameron and Nick Clegg are being forced into full-scale rescue mode for Andrew Lansley's health 'reforms' this week. The attempt to force GPs to become NHS managers was always bonkers, however good the more entrepreneurial GPs may be at managing local healthcare budgets. While Cameron clearly should have known this, he was clearly adversely affected by Francis Maude's decision to deny him a reasonable level of politically-savvy advice within No. 10. The removal of the quasi-accountable role of the Primary Care Trust clearly ran directly counter to Liberal Democrat policy (even if the latter sought to bring local authorities into the picture). It was also inevitable that their initial attempt to create a market based on price rather than quality would have to be reversed, given all the Cameron guff about the 'NHS safe with us' before the election. And the removal of waiting time targets (despite 'guarantees' in the NHS constitution) was always going to affect patients adversely - and it has started to do so.

So, the conjoined coalition twins have a chance to reverse Lansley's mess before the legislation is torn apart in the Lords. But they should not pretend that all they are doing is minor tinkering if they are making the more significant changes that are required. If they really want to win back public support, they need first to apologise for the changes, which were a clear breach not just of the coalition agreement but also of the solemn promises (there were a lot of those, weren't there?) made by Cameron and Clegg before the election. They then need to spell out what they will do and what they will not do, as a result of their U-turn. That should mean at the very least voluntary participation in the fundholding scheme, a residual role either for PCTs or local authorities and competition based firmly on quality. They need also to be rather more honest about the extent of improvement since 2000 - which is pretty obvious to anyone who has experienced the system before and after - as well as the extent to which it still needs to improve. And finally, they need to restore the maximum waiting times until such time as they genuinely are no longer needed, with any Tory who says that they 'distort clinical priorities' being forced to wait on a trolley in A&E on a Saturday night without being seen for a minimum of 10 hours. Only then will they start to convince the public. Anything less is (not very good) spin.

2011: The year for honest votes?

In his column today, Daniel Finkelstein (£) shrewdly recognises that the referendum on the Alternative Vote could be one of the most important political decisions of the year. At the same time, the IPPR has produced an excellent report making the case for this voting reform. As a long-time supporter of the Additional Member System (or AV + a proportional top up) I can see why some supporters of voting reform may be sceptical about this more limited change. But it is surely better to achieve one of the principles of reform than wait in vain for something more substantial: after all, the Liberal Democrats didn't exactly go out on a limb for such reform when they had their chance.

I am pleased that Ed Miliband is backing AV: doing so wholeheartedly will help to give him the definition that he has been slow to acquire. But it is vital that the case for AV is made vociferously and the decision to coincide the referendum with the local authority vote is regarded as an opportunity to maximise people's understanding of the change and to achieve a respectable turnout. Put simply, AV allows people to vote for the candidate they most want without losing the chance to vote tactically for their second best. It is a far more honest system than First Past the Post and should be sold as such. Of course, it is not a proportional system, and could even end up less so. But it does reflect voters' preferences at a constituency level more accurately.

It is interesting that when people are told precisely what is involved in AV, they support it, whereas when AV is shrouded in mystique, it has rather less support. So, the pro-AV campaign should not only promote 'honest voting', it should find ways clearly and simply to explain what's involved and its simplicity. With both those characteristics, there is every chance that 2011 could become the year when honest voting wins the day. Despite Nick Clegg.

Happy New Year

The new localism (Lib Dem coalition approved)

If there is one thing on which our new coalition is surely agreed it is that it will not be a bossy centralising force. Local government will be given its head. Local voters should be able to decide on things that are best left to local decision-making. After all, the Coalition Bible says so in plain terms:

We have a shared ambition to clean up Westminster and a determination to oversee a radical redistribution of power away from Westminster and Whitehall to councils, communities and homes across the nation.

So, just how radical will this redistribution be? First, Michael Gove has published legislation which effectively transfers all planning decisions on schools to his department. Then, Eric Pickles stops councils from deciding for themselves (and facing the electoral consequences) how to improve recycling quotas. And the coalition is barely a month old.

Don't get me wrong. I'm not against either decision: councils too often rode roughshod over parents when it came to schools, and I've no wish to pay bin taxes. But then I've never come out with guff like this when trying to woo council leaders:

So today I want to look at what decentralisation should really be about. What it can achieve. And how we can make it more than a rhetorical fad. I am drawn to the philosophy of decentralisation and local empowerment for many reasons. There’s the basic principle of subsidiarity – the liberal belief that decisions just ought to be taken as close to the people they affect as possible.

Another Lib Dem triumph in coalition then.

Coalition catastrophe

David Cameron has proved his political ineptitude by allowing David Laws to be thrown to the wolves. Laws was a key figure in his government, yet Cameron refused to back him and allowed the media to pick him off. Cameron enjoyed a potential position of strength in these early days of his new government, yet he squandered it by refusing to support one of his most important ministers. God knows what Nick Clegg thinks he was doing allowing this to happen. By allowing a spurious and intrusive Telegraph story to destroy the career of such an able politician, Cameron has given the green light to the media to pick off his ministers as they see fit. In doing so, he has declared his own insubstantial weakness. Today is a sorry day for politics. And Cameron (with Clegg in a minor supporting role) must accept responsibility.

The greatest reform act since 1832. Come off it.

David Cameron promised an end to the age of spin. Clearly Deputy PM Nick Clegg wasn't listening. In his hyperbolic speech today he describes his decision to reduce police access to DNA and CCTV, and to settle for the Alternative Vote instead of proportional representation as the "greatest shake-up of democracy since 1832."

What ahistorical rot. This is to ignore the changes to the House of Lords after their attempts to usurp the Liberal government in the 1911 Parliament Act. It is to pretend that the extension of the franchise after the Great War with universal suffrage in 1918 and 1928, trebling the electorate, never happened. It is to forget that the last government introduced devolution in Scotland, Wales and Northern Ireland, freedom of information, an end to the hereditary principle in the Lords and proportional representation for many non-Westminster polls.

But perhaps this hyperbole is a mere cover for the confusion at the heart of government over civil liberties and the police. For Clegg's speech comes a day after Theresa May rightly imposed control orders on two Al-Qaeda suspects who could not be deported (something the Liberal Democrats would abolish) and on the day that she wants to give 'frontline police officers more discretion' in charging people . So, the police will be able to charge people for minor offences more easily (though, presumably, only if they meet a requisite evidence requirement) but they will be denied access to DNA and CCTV evidence that has been so crucial in not only convicting people recently but also in uncovering miscarriages of justice. And, those of us green enough not to drive cars will still have to produce passports when our ID is demanded, as happens frequently, as we will not even be allowed to buy a government-approved ID card. I feel safer and freer already.

The Lib Dems are the big losers in the coalition

I wish the new Government well. There are some good policies in the Coalition agreement, some on political reform like PR for the Lords - though not the absurd 55% requirement in a vote of confidence - and on education (if Michael Gove uses the right levers). But one thing is clear: despite all the rantings and ravings of the Tory right, it is the Liberal Democrats that have been the clear losers. Cameron has played a blinder by convincing the world and the Lib Dems that he has had to make huge sacrifices to win this agreement.

First, the Lib Dems' power is limited. Nick Clegg as Deputy PM has settled for a desk in the Cabinet Office, but no real job. David Laws has a poisoned chalice implementing the cuts as chief secretary. Vince Cable has been sidelined on banking reform in the business department without the influence of Lord Mandelson. Danny Alexander has Scotland, a non-department. Only Chris Huhne has some influence at energy, but on nuclear power is stymied by his own party's opposition. The Lib Dem junior ministers are unlikely to have much of a role to play in each department, though they may prevent the wilder excesses of right-wing Tory ministers. Bizarrely, the Lib Dems accepted all this in preference to insisting on even one major office of state or spending department like education or health.

Second, on policy, as John Rentoul has pointed out, Clegg has been royally outmanoeuvred by Cameron. The pupil premium was Tory policy anyway: Michael Gove will be pleased to have some money for it. The £10,000 tax threshold will mean a middle class tax cut paid for by public sector savings, not a more progressive tax system (though economically a better approach, this is hardly what the Lib Dems wanted). The fixed term parliament suits Cameron as it ties in the Lib Dems. On the abstention votes on tuition fees, marriage tax or nuclear power, the Tories will win anyway with a 307-286 majority. And whether or not an AV referendum succeeds, the Tories will still be able to push through their gerrymander of English constituencies to make more of them Conservative. Cameron will be delighted to neutralise his right-wing, ditch crazy policies like the inheritance tax cut and avoid a distracting row in Europe.

Third, in return for the happy couple pix and a host of ministerial cars, they have destroyed their credibility with many of their own voters, particularly in areas like the South West where they were seen as a repository for anti-Tory votes and in Northern cities where their council base had already started to crumble. Many Lib Dem members are already joining Labour.

None of this is to suggest that the Lib Dems weren't right to enter a coalition deal. Indeed, they deserve some praise for being prepared to sacrifice their party for the sake of stable government. But anyone who thinks that they are the winners from the whole deal has been spending far too much time watching 24 hour news and reading the papers.

This post has been picked up by Iain Dale.

The opportunity of the new politics

The Tories' obsession with party interest looked like it trumped their supposed concern for the national interest. Their unwillingness to cede any ground on electoral reform until tonight's grudging concession on the Alternative Vote suggested that their shrill concerns about the economy amount to nought. Instead they assumed that the Liberal Democrats would be bullied into doing a deal on their terms, where Cameron failed to win over sufficient voters through such an approach. Now they know otherwise, and their offer may be too little too late.

Gordon Brown's brave decision to stand down as leader is right both for the Labour Party and the country. It offers a chance of an alternative government. As I said here on Friday, the 320 votes that it would generally command (including 5 Northern Ireland MPs) means that it would only require the support of one of the DUP, SNP or PC to have a Commons majority given the absence of Sinn Fein and the neutrality of the Speaker.

It is important, however, that any new Government has a clear but minimalist agenda, which reflects the best of both parties' policies. It should certainly prioritise economic stability, with a clear timetable for the savings needed, and political reform, with the Additional Member System for Westminster elections a sensible compromise for a referendum. Labour's NHS guarantees should not be traded, and there must be a rigorous approach to welfare reform. On education, the pupil premium in education is a good idea, but it must be funded, and there should be renewed enthusiasm for academies. However, higher tuition fees for universities will be necessary, despite the Lib Dems misleading pitch to student voters. Where possible, investment in new schools and high-speed railways should continue. Equally, given Labour's losses in the South last week, it is vital that nothing is done to increase income taxes further: there are alternatives like VAT which hit luxuries but not food or children's clothing. A new government may wish to drop ID cards (though as a non-driver, I'd quite like one) but must be wary of losing traditional Labour support on crime or immigration.

A new outward-looking and forward-looking party leader like David Miliband has the chance to revive Labour's fortunes. It is vital that Labour does not choose a leader who has all Brown's faults but none of his virtues. And Gordon had his strengths, particularly on the economy; moreover our results last week were not as bad as many feared, particularly in local government. But equally there is no doubt that his leadership cost us a lot of seats in the South and South West. A new leader with a less statist approach to public services and a more open approach to the public has the chance to reconnect with those voters.

Today's changes offer an opportunity for genuine new politics, even though the odds may still be on a Tory-Lib Dem arrangement. Whether the opportunity succeeds will depend as much on whether the Tories offer a real vote on PR as it will on the ability of Labour to agree the right deal and retain the support of smaller parties through very tough decisions.

Cameron's failure and Clegg's surge

The unpredictability of the current political climate makes analysis a foolhardy enterprise. Yet there is one thing that seems clear from the surge in support for Nick Clegg and the decline in support for David Cameron since last Thursday's debate: it is a sign of Cameron's failure to follow the logic of his initial attempts to modernise the Conservative Party. Support for the Tories has always seemed tentative over the last year, rarely topping 40% in opinion polls. It was a reluctant support that quickly crumbled when an alternative seemed available. Yet whatever policy criticisms may justifiably be levelled at Clegg and the Liberal Democrats could equally be laid at Cameron's door. He simply didn't do his homework.

There is a myth that the Labour government came to power in 1997 unprepared for what faced it. And it is true that the party had not yet developed its theories of public service reform to the extent that Blair wanted, and it took until the late second and third terms for that to be fully articulated. But a huge amount of groundwork had been done, and it has been very apparent to me over the last year that little such effort has been going on in terms either of policy or reshaping the Conservatives with the present Opposition, even if shadow ministers have been having lots of chats with civil servants. And that is Cameron's big failing.

Take education. We are told by uber-cheerleaders like the Spectator editor Fraser Nelson that there has been huge preparation in this policy area. And I have no doubt that Michael Gove is both the most personable and best informed education spokesman the party has had (save, perhaps, David Willetts) since 1997. Yet there are huge glaring gaps in policy. There is no money for pupil premiums - something the Lib Dems have at least costed at £2.5 billion - and there is a foolish pretence surrounding the free schools policy that it will be cost neutral, when the truth is that if it succeeds it will cost between £1-2 billion a year. There have been daft inconsistencies, such as a flirtation with worker co-ops and threats to scrap Key Stage 2 tests. And there is a conceit that the schools will largely be parent-led (which is backfiring badly on the doorsteps) when the reality is that they are more likely to be run by academy-style sponsors and chains. Compared with the huge detail and costing of Labour education policy pre-1997, this is very much policy lite.

And on other areas, the party is in a much worse state. Plans for US-style elected sheriffs have been attacked by the police, with justification. Health policy is thoroughly regressive for patients and lacks any reforming zeal. Economic policy has seemed dangerously half-baked, with the National Insurance wheeze only the latest example, and George Osborne has lacked the gravitas of a would-be Chancellor. But over-riding all this is something that the voters have noticed: despite a few high profile efforts to promote women and minority candidates, the Tory party itself seems relatively unchanged on the ground. There has been no Clause 4 moment: even on grammar schools, a shibboleth if ever there was one, a quick retreat took place. While Labour always had its internal battles, there were many new Labour members in the party in 1997 in constituencies like the one I chaired; the Cameroons seem like a small elite without any roots. The change was far too superficial, unlike the change effected by Blair from 1994-7. Voters see this locally.

So, the fact has always been that the Cameron project was far less solidly built than the Blair project, and far more likely to crumble in the face of a plausible alternative. Once Cameron had conceded equal billing to Clegg in the TV debates, he sealed his own fate. Of course, it is not good for Labour if its support falls below 30% or leaves it in third place, though a Lib-Lab government seems a real prospect, though there is still a chance that Lib Dem support will fall back as their policies are scrutinised more. But the Tories should never have allowed themselves to be in this situation. And for not taking his project forward properly, Cameron has only himself to blame.

Hanging in the Balance

I have written about hung parliaments for this week's Public Finance:

Liberal Democrat leader Nick Clegg said last Sunday that a narrow victory for either Labour or the Conservatives could create ‘social unrest’. And the opinion polls still suggest that the Conservatives will find it difficult to secure an overall majority on May 6.

Media and City pundits tell us we are ‘in danger’ of having a hung Parliament. Yet if that’s what our democracy produces, why should we be so afraid of such an outcome?

Clegg might be mixing disingenuousness with party advantage: he refuses to say who he would favour in a hung Parliament, yet clearly wants one to give the LibDems the upper hand. Even so, in the current economic circumstances, such a result could be better not only for the country but also for the main party leaders than a narrow majority for either of their parties.

Indeed, a weekend poll for the Independent on Sunday showed that Labour could benefit most from talk of a hung Parliament: 51% of voters want the party to be in power either on its own or as part of an alliance with the LibDems (with 26% favouring a Lib-Lab alliance and 25% a majority Labour government) against 49% saying the same about the Conservatives (split 29-20).

Yet saying so is heretical for Prime Minister Gordon Brown and Conservative leader David Cameron, even if LibDem voters are actively courted by the likes of Transport Secretary Lord Adonis. But across Europe, coalitions are the norm. In part, that’s the result of their more proportional electoral systems: governments need more than 40% of the popular vote. It is also often the result of a political system that is rather more honest with the voters than ours.

Here, po-faced hedge fund managers tell us that a hung Parliament would cause a run on the pound. They seem to forget that British political parties are broad, often disunited coalitions. Labour’s rebellions have reflected strong differences between Left-wing radicals and a centrist leadership. In Germany and Scandinavia, such views are represented by several different parties.

Similarly, John Major’s Conservative government in the 1990s struggled as Eurosceptic and Europhile MPs constantly bickered. In a Cameron-led government, there would likely be big differences with those who favour a return to Thatcherite certainties, as rows over grammar schools have shown.

In truth, there is more uniting the mainstream leadership of the three main parties – on issues such as policing, education and the need for spending cuts – than they might care to admit or than this week’s manifestos might suggest.

But Clegg’s strongest point was about the difficulties involved in making public service cuts or raising VAT, decisions a new government will have to make. Chancellor Alistair Darling has already said that the cuts will be deeper than anything experienced in the Thatcher years and his Tory counterpart George Osborne is keen to be seen as an even more fervent cost-cutter.

These cuts will be deeply unpopular. One only has to look at Ireland for a flavour of what might lie in store: higher staff contributions to public sector pensions, big public sector staff and pay cuts, major reductions in public spending. The idea that a party with less than 40% of the popular vote would be better able to withstand this than a government with the combined support of say, 55% or 60% of voters, is fanciful. Whether this involves a formal coalition or agreement to support a minority administration, it would still potentially be stronger than one party governing with a slim majority.

Of course, all this presents a real dilemma for the LibDems. It was easier in Scotland, where they happily supported Labour. That is, as Adonis mischievously pointed out last week, where their activists see their natural allies. Indeed, Clegg’s reluctance suggests that he and his allies feel closer to the Conservatives.

The LibDems need to tell voters where they would stand if no party won an outright majority. In Germany, federal voters knew that the liberal Free Democratic Party would back Chancellor Angela Merkel’s Christian Democrats in last September’s elections even if the details had later to be agreed.

But whatever happens, we shouldn’t buy the myth that what might result would be any less stable for the country than a single party government with a tiny majority. It might be just what the economy needs.

Clegg could destroy the Liberal Democrats

Nick Clegg's conceit in pretending that the Liberal Democrats are not thinking about what might happen if - as seems increasingly likely - there is a hung parliament after the general election will fool nobody. But Andrew Adonis was right yesterday (on this, as on the BA strike) in pointing out just how damaging an alliance with the Conservatives would be to the Liberal Democrats.

Their trouble is that, even if their voters are split in their second choice between the Tories and Labour, most of their own members are instinctively opposed to the Tories, and would find themselves to the left of Labour on a range of issues. Education is a good example. David Laws, their intelligent schools spokesman, has to tie himself in knots in a bid to embrace a position that he clearly supports - the development of academies and Tory-style free schools - whilst satisfying the traditionalists in the party by promising a strong role for local authorities and claiming to back 'academies for all' (a position which would probably mean no improvement in the weaker schools that academies largely embrace). Equally tortuous is their continued promise to get rid of university tuition fees, a position that has no intellectual coherence at a time when their finance spokesman Vince Cable is demanding public spending restraint.

These disingenuous compromises don't come in for a great deal of scrutiny when the party is unlikely to be in government, and Clegg has cleverly put forward his bottom lines on issues like education - where he promises to scrap the child trust fund to pay for a pupil premium - and voting reform, knowing that these are issues on which he can carry his party. But what if Clegg takes his party into a coalition, or more probably, props up a minority Conservative government? Unless Clegg calls a conference to ratify his decision, something he seems reluctant to do, he will destroy all the gains that his party has made since 1997. Minority parties can gain all the blame from the voters in such circumstances with little credit for the 'stability' or 'responsibility' that may also have resulted, or indeed for the policies they have successfully had introduced. So Clegg may be the kingmaker after the election, but if he gets it wrong, he may also be the author of his own party's downfall.

Secrets, lies and grown-up politics

George Osborne has a rather shabby piece in today's Mail on Sunday accusing Gordon Brown of lying over planned spending cuts. Yet the economically illiterate Osborne has been caught by the independent Institute of Fiscal Studies - so often cited by David Cameron - either telling massive porkies of his own or being asleep on the job, as he tried to claim that figures in the public domain about projected tax receipts as a result of growth were a secret plan to put 3p on taxation.

Meanwhile, having expressed a relish for savage cuts, Liberal Democrat leader Nick Clegg was impressively evasive on this morning's Andrew Marr show about what it would all mean. He couldn't even bring himself to pledge to keep tuition fees, one of the most progressive changes introduced by the Labour government, because as Charles Kennedy effectively admitted on the same show, it had been useful in hoodwinking student voters in some university seats.

But perhaps the most remarkable intervention of the day is from the schools secretary Ed Balls, who has been thinking imaginatively about using federations and sharing senior staff, as well as keeping teachers' pay in check, to drive down costs. While the Sunday Times suggests this is about secondary schools, it is particularly valuable in small rural primaries, which cannot sustain or often cannot find a head for each school. Whether this is easy to introduce given the relative independence of state schools remains to be seen, and its desirability will be questioned in some cases, but at least it has the merit of honesty in a debate that has been characterised by people shouting 'liar' at the opponents whilst claiming honesty for their own imprecision.

Yet, when this idea is put to Honest Nick Clegg, who surely knows exactly what Balls means, all he can do is throw about silly accusations about damaging children's lives. What people want from Clegg and Osborne is a sense of where they believe savings could be made. And they then want those things debated on their merits. The yah-booh-sucks politics of previous elections - of which I know Balls was an advocate until some months ago and from which Vince Cable is often impressively immune - has little place in these straitened times. It is time that all those engaged in the political debate realised it and treated us all like grown-ups.

Time for Southern Africa to get Mugabe out

The Liberal Democrat leader, Nick Clegg, has supported calls from a growing number of respected African voices for decisive action to remove Robert Mugabe from office. Mugabe has already lost an election, despite his best efforts to rig it. He has failed to take the chance given to him to develop a workable coalition with Morgan Tsvangirai. The economy has been a basket case for months, with the currency beyond parody. Now with cholera spreading rapidly in a country without proper clean water supplies in the cities (thanks to Mugabe placing urban systems under the aegis of his corrupt cronies) and without adequate health services, the other countries of Southern Africa must act. If they don't, Robert Mugabe will not be the only leader in the region responsible for the deaths of thousands of Zimbabwean citizens.

Clegg goes for nostalgia

David Cameron wannabee and Lib Dem leader Nick Clegg chose to use a hovercraft when being filmed for the BBC Politics Show yesterday. Could his choice of vehicle have represented nostalgia for the good old days of Liberal politics?

Nick Clegg's tax rises

So despairing are some Conservatives about David Cameron's embrace of tax rises that they are giving house room to Nick Clegg's pretensions of being a tax cutter. In one sense, you could credit Clegg with being the heir to Margaret Thatcher: after all, her income tax cuts were paid for by a hike in VAT. In fairness, Clegg's proposals are more progressive. But Clegg is promising two tax rises that will hit middle earners hard: an extra £1000 a year tax for £50,000 earners contributing 10% of their income to pension (something that will particularly hit those who save for old age without employer contributions) and a big rise in council income tax (for many, it will be over £1000) to boot. For them, this is a tax rise. There is certainly a case for raising the threshold at which people pay tax - perhaps by removing some tax credits - but I do wonder how many Lib Dem voters realise that for them, Clegg's tax 'cuts' would leave a big hole in their pockets.