Will the reshuffle actually matter?

by Stephen Tall on September 5, 2012

That’s the title of a post I’ve written for the Endeavour Public Affairs website here. And here’s my answer…

Will this reshuffle actually matter? That’s the question which looms over the current version of musical chairs currently obsessing the Westminster Village, as David Cameron and Nick Clegg re-model the Coalition in an attempt to give the Government the re-boot up the backside it so desperately needs.

Some say no, it won’t matter a jot. They’re half-right for two reasons.

First, the single biggest issue the Coalition faces – the one which will determine the fate of both Tories and Lib Dems at the next election – is the economy, and the reshuffle does not signify any real change at all to the Government’s Plan A. George Osborne remains firmly embedded in Number 11 as Chancellor (there was never any doubt Mr Cameron would shift his closest political friend and ally) and just as firmly set on keeping his Triple-A rating: Austerity, Austerity, Austerity. The Coalition will continue cutting the deficit, and keep its fingers crossed that the private sector compensates for shrinking the public sector, and that the official growth figures turn out to be overly pessimistic.

For the Lib Dems, Nick Clegg and Vince Cable will continue to push the case for more borrowing for infrastructure projects through the Green Investment Bank and by turning state-owned RBS into a lending bank; while the Conservatives will ramp-up calls for further deregulation in employment laws. The nature of Coalition politics means that neither side will get its own way: expect a lot of give-and-take jostling in the coming months.

I think the reshuffle is a missed opportunity to inject some economic radicalism into the Coalition, especially as (ironically) the economy is the issue on which there has been least serious disagreement between the Lib Dems and Conservatives. Compared to tuition fees or the NHS or Lords reform, deficit reduction has been a relatively smooth Coalition ride. The Government should be building on this with a radical and popular agenda to create a more competitive and much, much fairer economy, as I argued here on LibDemVoice. This would mean further banking reform than currently proposed, for example by separating completely retail and investment banking, and parcelling up and selling on the currently state-owned banks into a number of smaller ones to create greater plurality in the system. More than this, it should be looking to re-invigorate capitalism by ensuring success not failure is rewarded, with shareholders given powers genuinely to hold executives to account for their performance. Nothing in the reshuffle suggests the Coalition is gearing up for this challenge.

The second reason the Coalition doesn’t ostensibly matter can be summed up in three words: The Coalition Agreement. This document – hastily written in a fortnight two years ago – is still the covenant for the Government. So however much the Tory right may huff and puff about a new third runway at Heathrow, the text of the Programme for Government could not be clearer: ‘We will cancel the third runway at Heathrow.’ Though David Cameron has given himself wiggle-room by shunting Justine Greening from Transport in favour of the more pliable Patrick McLoughlin, there is no chance of a U-turn this side of a general election — and even if there were, the combined opposition of Lib Dem, Labour and south-west London Tory MPs would swiftly sink the plan. Mr Cameron’s decision to appoint his third Transport Secretary is made less as Coalition Prime Minister and more as as leader of the Conservative party with an eye to his 2015 manifesto.

In fact, the more I look at this reshuffle the clearer it seems that it was as much about Tory positioning – and differentiating – ahead of the next general election as it was about the next three years governing. Cuddly justice secretary Ken Clarke – the ‘sixth Lib Dem’ cabinet minister, and the most popular among Lib Dem members – gives way to Tory hardliner Chris Grayling, while right-wing climate change sceptic Owen Paterson replaces the haplessly beige Caroline Spelman.

Put bluntly: the Cameron modernisation project to position his party in the political centre is dead. This reshuffle marked a definite shift to the right for the Tories. By contrast, the two newest Lib Dem ministers – Jo Swinson and Tom Brake – are squarely in the mainstream of the party, neither identified with the economically liberal ‘Orange Bookers’ nor the Social Liberal Forum.

I said at the outset it was only half-right to say reshuffles don’t matter. That’s because however much the Coalition Agreement defines this Government’s policies, they are still implemented by people so their personalities, and their relationships with colleagues, absolutely matter. The return of David Laws – whose clear-thinking intellect is respected across the two parties, even by those within the Lib Dems who disagree with him – is significant. Since his enforced departure from the cabinet in May 2010, he has remained a crucial behind-the-scenes figure, trusted implicitly by Nick Clegg, as demonstrated by his new roving role. His main job will be schools minister, keeping a Lib Dem eye on Michael Gove and pushing the party’s flagship ‘pupil premium’ to help disadvantaged children; but he will also ensure the Tories keep to the agreed line on the review of the Trident nuclear weapons system, with the Lib Dems continuing to push more effective and more responsible deterrent options; as well as having a voice on Coalition economic policy. He’ll have his work cut out!

Bottom line: don’t expect this reshuffle to change Coalition policy. Much. But do look to it as a guide to the big dividing lines at the next general election, when we’ll see the re-emergence once again of a right-wing Conservative party, and the Lib Dems looking to stay firmly anchored in the centre of British politics.