The coalition is entering a phase of division of backbiting, where the differences between leaders and parties are becoming much clearer to the public. The Liberal Democrats have moved towards a pernicious narrative of public sector protection: promoting the smallest reforms necessary to curb the public sector borrowing requirement and preening themselves as guardians of the vulnerable. Whether it be health, education or social rights, they attempt to outflank Labour at the expense of Liberalism.
The Liberal Democrats are divided between Left and Right. A predictable Tribune article notes that the strategy of differentiation has silenced the Orange Book wing and upplayed the profiles of Huhne and Cable. Yet frustration must be mounting within the Tory party. To continue postponing the necessary reforms on the supply side, reducing the cost of jobs and regulation, because Vince Cable is a thorn in the side of the economy, must be galling (And the Liberal Democrats are old Labour for the public sector professionals). To find that our policy on Europe is subjected to policy paralysis because do-nothing is better than undermining the coalition breeds anger on the right.
Will the coalition find a better configuration, easing pressures through shared policies in other areas? Both parties have an incentive to play up differences in order to appeal to their base. Yet, the pro-market liberalism identified in the early days of the coalition has certainly been submerged. Is this a reaction to the political needs of each party and the polling evidence, as Tory dominance in numbers begins to count? Was the classical liberalism wish-fulfillment on the part of the media? Or does this disappearance herald dissent amongst the Liberal democrats, who find that they share more common ground with socially liberal Tories than they realised?
The stresses in the coalition may ebb and flow: but the real calamity for this government is that Liberal Democrats footdragging on reform may have reduced the flexibility needed to deregulate. We are in the worst of all possible worlds: facing the necessity of austerity with an economy hobbled by the legacy of New Labour's regulation, defended by the ultimate insiders of the producer interests. Stagnation beckons...