Annual Policy Review 2015



When David Cameron signed up to five-year fixed-term Parliaments in the Coalition Agreements, critics argued that by this stage in the Parliament there would be a fag-end government short of activity and purpose.

As Portland’s expert team outline in our policy review, by and large this has not been the case. The frequency of public rows and stage-managed disagreements has increased, for sure, but the final 18 months of the Coalition has seen some major policy announcements.

The biggest political event of 2014 was the Scottish referendum, the tremors of which will continue to be felt for decades to come. The hastily made ‘vow’ to the Scottish people, brokered by Gordon Brown and signed up by all three main party leaders, possibly helped turn the vote against independence, but the implementation of the devolution that it promised could still break the Union in the long run.

The leaders at Westminster now find themselves caught between two stools – offering enough powers to Scotland to fulfil their promises, while answering the growing clamour for equal powers for England (and Wales and Northern Ireland, too). Navigating these troubled waters will be central to each party’s manifesto and will dominate the agenda of whoever forms the next government. Ed Miliband is struggling most with this tension, and his worries are further amplified by a resurgent SNP that could take enough seats to scupper Labour’s chance of a majority.

Following closely behind the referendum has been the continued rise of UKIP especially their victory in the European election and the election of their first two MPs. Previously we have wondered how ‘sticky’ the UKIP vote would be – that is, come the general election, would they peel off back to the Tories? The answer so far seems to be ‘very’. Indeed the flypaper of English populism is proving increasingly attractive to working class and socially conservative Labour voters too. Consequently, an unprecedented amount of political attention has been paid to immigration. Attempts by the major parties to neutralise the issue have not yet succeeded.

The elephant in the room is the UK’s membership of the European Union and the free movement of labour it demands: this is the principal cause of the Prime Minister failure to achieve his goal to limit net migration to the tens of thousands each year. British citizens will have their say on whether to remain in the EU, but not until 2017 and seemingly only with a Conservative-led government. This remains the biggest carrot Mr Cameron has to dangle in front of UKIP waverers at the election.

Ed Miliband has had a difficult year as leader of the Labour Party, but managed to hold his party together by shifting onto more comfortable territory. His conference speech, harmed by major omissions on immigration and deficit reduction, nevertheless refocused the party onto its strongest suit – the NHS – paid for by clobbering the rich with a mansion tax. This is a major area of shared interest with the Liberal Democrats and would form the bedrock of any discussions between the two after the general election. The huge pressure on health services that have manifested themselves this winter will only add to Labour’s confidence that the NHS will be their trump card.

The economy is, of course, where the Conservatives want to fight the general election, and George Osborne has achieved the remarkable feat of missing – by some margin – all of his deficit reduction targets while maintaining a notable poll lead over his shadow, Ed Balls, on economic competence. The reason for that is not only strong economic growth and positive employment figures, much of the latter being due to Iain Duncan Smith’s ‘tough love’ welfare reforms, but the also continued ambiguity over Labour’s spending plans and public concern over whether they have learnt the lesson of the great recession.

The Autumn Statement revealed that whoever is in charge after May will have to implement “colossal cuts” to public spending to eradicate the deficit, and the respected Institute for Fiscal Studies has said that a reimagining of the state will be needed to achieve this goal. That is a decent yardstick by which to judge each party’s manifesto. The fear so far is that they will all be found wanting.

The Chancellor has a knack of pulling rabbits from the hat, such as the genuinely radical pension reforms announced in the Budget and the rather more timid (though politically well-directed) stamp duty changes in the Statement, both of which mostly benefit what Ed Miliband used to call the “squeezed middle”. But come election time average real incomes may still be lower than before the crash – the Coalition’s Achilles’ heel – and Labour intend to take advantage of this issue.

One area where Labour has pledged to spend more money is on infrastructure, prompting the government to bring forward a number of big projects, including a £15 billion road-building target, Crossrail 2, and proposals for HS3 in the North. Infrastructure has traditionally been an area of cross-party agreement, and while the levels of proposed spending might vary, the pipeline of projects is unlikely to change much, whoever is in charge.

After the debacle of the Syria vote in 2013, foreign and security policy has also seen consensus this year as all parties – especially the Liberal Democrats – adjust to a world in which the threat from terror has never been greater. The Islamist attack on satirical magazine Charlie Hebdo in Paris will serve to further cement this broad cross-party agreement. Limited military engagement in Iraq against ISIS was initiated with cross-party support, though Syria is still out of bounds for British forces. The withdrawal from Afghanistan was finally completed, and we await history’s judgement as to whether the gains in stabilising the country were worth the 453 British military deaths that occurred on its soil.

So the Rose Garden romance is long gone, and the Coalition Government is now transactional rather than trusting in nature, but the last year shows that both parties have a continued desire to reform and can still work together when the going gets tough. This will be important in the aftermath of the general election: if no party gets a majority, as seems likely, then history and personality will be even more important than policy when it comes to forging the next government. Might the representatives of each current governing party look across the negotiating table and say to themselves: ‘better the devil you know?’