Well, they went for it anyway – the Lib-Dems that is. I guess they hope that an AV referendum plus a House of Lords elected by PR will pave the way for more substantive electoral reform for the Commons. (It might also lead to some interesting legitimacy issues too – that has always been the potential problem with a directly elected upper chamber.)
From the coalition policy statement that’s been produced and the attitude of David Cameron (plus the fact that William Hague has thankfully been dispatched to foreign parts) it rather seems that he (Cameron) was really a closet Lib-Dem all the time! Quite a few Conservatives must now be waking up to this fact with some horror – it may well be from the Tories right wing that the immediate threat to this coalition lies.
From my economic point of view I am glad to see action taken to curb the banks, the setting up of a green investment bank and the intention to increase taxation on ‘non-business’ capital gains. It’s a pity the mansion tax has been dumped but at least we shall hear no more of the inheritance tax boondoggle for now. To be fair, and to limit damage to effective demand, spending cuts must be accompanied by a shift in the burden of taxation from the earning and consumption of the less well-off to the wealth of the better off.
This passage sounds quite encouraging:
We agree to bring forward detailed proposals to foster diversity, promote mutuals and create a more competitive banking industry.
We agree that ensuring the flow of credit to viable SMEs is essential for supporting growth and should be a core priority for a new government, and we will work together to develop effective proposals to do so. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.
We will have to see if it comes to anything much.