A Game of Two Halves - Institute for Government

7/31/2019 A Game of Two Halves - Institute for Government

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A game of two halves:how coalition governments renewin mid-term and last the full termAkash Paun and Stuart Hallifax


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PreaceAll governments tend to run out o steam in mid-term. The energy and momentum romtheir initial ormation disappears as governing turns out to be more diicult than wasexpected, at least by ministers, i not by worldly-wise civil servants. Governing partieslose popularity, in both the polls and at local elections; they make mistakes which areseized upon by an increasingly critical media; and underlying personal tensions suracein bickering and actionalism. These are not just political issues. They are about how torenew eective government so as to ensure that diicult problems are tackled and radicalchanges implemented.

These dilemmas o government renewal are even more acute in the case o Coalitions,like the Conservative/Liberal Democratic administration now. This is largely new territoryin Westminster and Whitehall where politicians, civil servants and commentators are

all going through a learning process. But what is new or them is amiliar in many otherwestern democracies.

A Game o Two Halves puts the challenges acing British politicians and civil servants inan international context: looking at how renewal has been tackled in other Coalitions. Anumber o the practices adopted by coalition governments overseas should be consideredhere, not just mid-term stocktakes but also in the negotiation and creation o the originalprogrammes or government to permit greater lexibility later in their lie.

The report continues a major strand o the Institute or Governments work. This started in2009 with a report on government transitions, co-authored by Dr Catherine Haddon andmysel, and a joint publication with the Constitution Unit on the impact a hung parliamentwould have on Westminster and Whitehall. Our work in this area continued ater theelection, with a report on the lessons learnt rom the 2010 transition, and Akash Paunsexamination o the unctioning o the Coalition in its irst ew months (United We Stand?).The latter proved to be highly inluential and led, ater initial Whitehall reluctance, to astrengthening o support or the Liberal Democrats in government.

Akash Paun, with support rom Stuart Halliax, outlines the case or renewal o the

Coalition now; examines the options, notably or policymaking, as the Coalition partnersseek to dierentiate themselves; and looks towards the next general election. There is notonly the unknowable question o whether the Coalition will hold together until May 2015but also the tricky issue o how the parties and the Civil Service prepare in very dierentcircumstances rom 2010. This aects the Opposition as much as the current two Coalitionpartners. The transition in 2015 could be as challenging, and possibly more controversial,than in 2010, as Akash Paun makes clear in his thought provoking inal chapter.

Peter Riddell

Director, Institute or Government


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About the authorsAkash Paun is a senior researcher at the Institute or Government, where he has led anumber o projects on the challenges o coalition government. In 2009 he co-authoreda report assessing the implications or Westminster and Whitehall o a hung parliament,and in 2010 he wrote a report assessing the irst ew months under the Coalition. He hasalso worked on projects exploring the role o select committees in public appointments,the diiculties aced by Whitehall in working across departmental boundaries, and themechanisms used by political parties to select parliamentary candidates. He previouslyworked at the Constitution Unit, University College London.

Stuart Hallifax worked at the Institute or Government rom September 2011 to May2012, where he was involved in work on Civil Service reorm as well as on the six-monthresearch project leading to this report. He holds a DPhil rom Oxord University on civilian

experiences o the First World War in Britain and previously worked as a curator at theNational Army Museum.

AcknowledgementsThe authors would like to thank a number o colleagues or their support during the writingo this report and the research that preceded it. Peter Riddell, in particular, providedintellectual guidance and helped deine the scope o the project, as well as editing theinal drat. Julian McCrae and Nadine Smith provided useul comments on drats andrecommendations. We have also drawn on research conducted by others at the Institute,notably Catherine Haddon, Peter Riddell and Justine Stephen. Finally, we are grateul toAndrew Murphy and William Knighton or their invaluable help in bringing this report topublication.

We are also hugely grateul to all the busy people in Westminster, Whitehall andgovernments elsewhere in the world or sparing their time to share their experience andadvice. Some o these are cited by name in the pages that ollow, but many others mustremain anonymous. This report could not have happened without their contribution.

Cover images rom STEFAN WERMUTH/AP/PA and rom the oicial photostream o thePrime Minister o the United Kingdom, available under a Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic license.

As ever, the authors bear responsibility or any errors and inaccuracies.

ContentsAbout the authors 3

Acknowledgements 3

Executive summary 4

1. Introduction 10

2. Whats different about Coalition government? 12

3. Mid-term policy renewal: options and constraints 16

4. Reshuffles and machinery of government change 345. Renewing while differentiating: what works? 39

6. The final straight: governing up till the next election 52

Notes 63


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Over time, however, its importance has waned. Departments are strongly driven byexpenditure commitments agreed through the spending review, and to some extent bybusiness plans.

The centrality o the programme or government has also been diminished by the naturalneed or government to respond to events such as the economic downturn and to rereshbusiness plans accordingly.

Commitments in the programme or government are seen as binding, and this has helpedthe Coalition push through controversial policies such as ixed-term parliaments, andpolice and crime commissioners.

But this is a double-edged sword. Proposed policies that were not explicitly agreed in 2010(including the NHS and Lords reorm plans) have increasingly encountered opposition onthe grounds that they are not in the Coalition Agreement. The ability o the Coalition to

reresh its policy agenda is restricted as a result.

Implementation or animation o important reorms passed in the irst parliamentaryterm (2010-12) will take up a signiicant proportion o the Coalitions energy over the nexttwo to three years.

However, the idea loated by at least one government adviser that there will be no needor new initiatives or legislation is naive. The government already recognises the needor action on economic growth, banking reorm, adult social care, anti-social behaviour,amilies policy, local government inance, party unding and more.

The question is not whether there is work or government to do, but whether the twohalves o the Coalition will be able to agree on a shared way orward in many o thesecontentious areas.

We conclude that the Government should undertake a mid-term renewal of its policyprogramme to forge a shared agenda for the second half of its term.

We also note that the Governments renewal options are more limited than single-party

governments because o the greater diiculty o undertaking ministerial reshules andmachinery o government changes in a Coalition context.

This has some beneits most observers eel that Labour reshuled and reorganised toooten. But it also limits the capacity or a relaunch, making the task o policy renewal moreimportant still.

Renewal options for the CoalitionEarly aspirations or a ull renegotiation o the programme or government have adedbecause the risks o ailure and leaks are perceived to outweigh the potential beneits o anew agreement.

Executive summaryAs the Coalition approaches the mid-point o its planned ive-year term, it is passingthrough its most diicult period to date. The economy is in recession, both parties havehit or remained at post-2010 nadirs o popularity, and tensions between the two sides aregrowing. Ater two years o reormist momentum, a big whats next? question hangs overthe Government.

Most governments grapple with the challenge o mid-term renewal, and there is rarely astraightorward solution. For a Coalition, the process is complicated urther by the actthat the parties comprising the government will eventually separate, and as time passes,the incentives grow to emphasise dierence over unity. The risk that Coalitions ace iso driting without direction through the second hal o their term, as consensus on newpolicies grows increasingly elusive.

This report is a study o how Coalitions can renew themselves in mid-term and givethemselves resh momentum and a clear sense o purpose as they move towards the nextelection.

How coalition government is differentResourcing a two-party government poses some distinctive challenges. The Governmenthas sensibly recognised this, increasing the support to the deputy prime minister andLiberal Democrat junior ministers, to help them ulil a watching brie role in theirdepartments.

The policy-making process under a coalition is slower and more subject to running intoideological dierences. But the dierences between the parties are out in the open. In asingle-party government, disputes are more likely to be swept under the carpet.

Decision-making processes are more ormalised and transparent. This is necessaryto ensure policies have bipartisan support and all sides have had good opportunityto contribute to the policy process. In particular, the Quad (David Cameron, GeorgeOsborne, Nick Clegg and Danny Alexander) has emerged as the central dispute-resolution

body, and is recognised as such across Whitehall.

Relationships at the heart o the Coalition remain strong, but personal rapport can take youonly so ar. Beneath the level o ministers, the wider Conservative and Liberal Democratparties are exerting a growing centriugal pressure on the party leaders.

Furthermore, the incentives or the two parties to pull apart will grow stronger over time this is the natural political cycle o coalition governments making the task o renewalever more diicult.

The case for renewalThe programme or government was initially the central reerence point drivinggovernment activity. Civil servants ound it useul in clariying the policy compromises andshared values underpinning the Coalition.


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The Government should also engage in longer-term horizon scanning andconsideration of policy issues that stretch beyond 2015. This is particularly challengingor coalition governments that may not expect to work together again post-election. TheSwedish Commission on the Future and Scotlands pre-2007 strategic policy review oerexamples o ways to do this.

Ministers rom both parties should be encouraged to think outside their departmentalbox about big challenges such as the countrys energy strategy, climate change, ageing,social mobility, and rebalancing o the economy. Open discussion on the basis o a sharedevidence base can be constructive whether or not concrete policy agreements emergerom it.

There is a risk o ocusing narrowly on implementation o agreed policy instead o askingdiicult questions about what has been a success and a ailure and learning the appropriatelessons. Being open to external challenge rom policy experts, stakeholders and the public

will act as a corrective.

Any successul mid-term renewal cannot just be a matter o internal discussions within theexecutive. The wider parties must be involved. Failure to engage with backbenchers andactivists will undermine the Coalitions stability as well as shutting off an importantsource of policy ideas.

Renewing while differentiatingMid-term renewal must be approached in a way that allows each party to emphasise itsown achievements and values. This will require the government to strike a careul balancebetween government unity and party identity.

International experience conirms that there are no easy answers in managing this tension.

In general, the pressures are seen as greater on the smaller party, which has ewerresources and must work harder and make more noise to avoid being overshadowed.

Larger parties in Coalitions are oten seen as having an easier ride. But they are typicallyjudged on the overall success o the government, and this can make it more diicult to

dierentiate rom Coalition compromises.

The role o party leaders is crucial. By virtue o holding the position o prime minister, thelarger party is guaranteed a high proile. The role o deputy Coalition leader varies ar more.International observers argue that Nick Cleggs decision not to take a large departmentalportolio has weakened his position and his ability to demonstrate impact.

Similarly, the Liberal Democrats may ind it hard to demonstrate their governingcompetence since all the large public service departments are led by Conservatives. Juniorpartners in Dutch, German or Swedish Coalitions would expect to run more o the bigspending departments.

However, there are options short o a ull Coalition 2.0 agreement. We recommend that:

The Coalition should re-emphasise the importance o the Programme orgovernment by creating a transparent mechanism or monitoring progress. Thisshould be based on existing systems or tracking business plans, with the linkbetween the Programme or government and business plans made clearer.

The Coalition should publish a mid-term progress report, as occurs inIreland, in which it demonstrates what progress has been made in deliveringprogramme for government commitments so far.

The mid-term review should be clearer than the original programme aboutprioritisation, outlining an action plan and timeline for implementingremaining and new pledges.

Prioritisation would also be strengthened by a clearer link between policy andbudget planning as in Germany and the Netherlands. Spending targets andeconomic orecasts underpinning commitments in the renewed policy programmeshould be spelt out.

The Coalition should be open about commitments that have been amended ordropped in response to changing circumstances, new evidence or a political changeo mind. It should also make plain where new priorities, such as promoting growth,have emerged since 2010.

The Coalition could also ollow the approach o the Swedish Coalition, whichdierentiates between those policies to which they are irmly committed, andthose that will be pursued subject to amenable economic and iscal conditions.

The mid-term review should clariy what actions are to be taken on matters wherethe programme or government was vague, or example in the more than 30 policyareas reerred to commissions or policy reviews.

In place of a long undifferentiated list of items, the Coalition should develop a clearer

statement of its overarching strategic objectives and should set out the specific stepsthat will be taken to achieve these core economic and social goals.

The renewal process should seek agreement on some new policy wins for each partyas in the original Coalition talks. This will allow each side to concede to policies it mightotherwise oppose, in exchange or progress in its own priority areas.

But policies agreed through such horse-trading should not undermine the centralshared economic and public service reform agenda.

Government renewal should be perceived as a process not an event. Irrespective o ormaloutputs, there is value in creating a orum or ongoing dialogue between the Coalitionpartners about what still unites them and what they wish to achieve.


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Dutch-style pre-election costing o a range o policy options would help oppositionparties to develop their policy programme, and would increase the chances that any newgovernment comes into oice with a realistic plan or action.

Preparing for next timeIn the latter stages o the parliament, all parties and the Civil Service will need to prepareor the possibility o another hung parliament at the next election.

The parties may choose to drat their maniestos with a view to possible Coalition deals,comparing policy positions in advance. They should also plan their negotiating strategyin greater detail than last time, including thinking more about portolio allocation andmachinery o government issues in a possible uture Coalition.

It is likely that there will be greater pressures or wider party involvement in thenegotiations, and ratiication procedures might be tightened up, reducing the room or

manoeuvre o negotiators.

On the Civil Service side, there should be a greater awareness that improbableCoalitions can be formed if the arithmetic works. Whitehall should prepare morecarefully for all possible outcomes and types of government.

There should also be readiness or a possible longer Coalition ormation process, perhapswith more extensive Civil Service input than last time. The Civil Service should also thinkthrough the issues that might arise in a Coalition o which one party has governmentexperience and the other does not.

Thinking the unthinkableWe make no predictions as to the likely durability o the Coalition. However, contingencyplanning work should be carried out in or on behalf of Whitehall to identify whatwould be the implications of an early Coalition split.

In particular, the Civil Service should dig out its iles on minority government andconidence and supply agreements. The Civil Service might even be called upon to

support a new set o government ormation negotiations in mid-term, and to work with agovernment that had just lost a conidence vote while such talks took place.

Successful differentiation requires careful management. The two sides need to alloweach other space to emphasise their differences, and this requires trust and opennessbetween senior figures.

The parties need also to agree on the limits of differentiation and to create channelsof communication to prevent disagreements getting out of hand, particularly in therun up to the next election.

Towards the next electionIn the last six months to a year beore the election date there is likely to be a loss omomentum, with no big new policies being agreed. The Government will need to ensurethat important initiatives are completed well in advance, though successul mid-termrenewal could help delay the moment at which policy momentum ceases.

At the next election, the two parties will be competing with each other while deending

a shared record o achievement. There will be a temptation for the parties to pointto what they would have done differently had they not been in Coalition. But thisapproach may not be welcomed by voters.

For the most part, both parties will need to stand by compromises made in government,while highlighting their distinct contributions to government and their diering plans orthe uture.

During the election campaign, the Civil Service will be placed in the unamiliar position ohaving to support ministers o two competing parties until polling day (and perhaps aterthat, i there is another extended government ormation period).

One quandary this will pose relates to support or policy development by the parties. TheCivil Service maintains a distinction between government and party business, steering clearo the latter. In practice, however, the line can be somewhat blurred under a single-partygovernment, since advice given to a minister might then eed into party policy documentssuch as the maniesto.

This is more complex under a Coalition since dierent ministers might ask the same

oicials or advice in developing conlicting policies or their respective maniestos. Newprocesses will be required to deal with this, such as the provision in Scotland or eachCoalition party to request conidential advice rom the Civil Service in the pre-electionperiod.

However, supporting the two sides o the Coalition as parties in the election run up raisesthe question o what orms o pre-election contact should be permitted between the CivilService and the opposition, during the 12 months ahead o the election.

Whatever the speciic mechanisms developed, the general principle should be to seeka level playing field between government and opposition, with the Civil Serviceengaging with all parties in a similar way in the pre-election period, listening to anddiscussing post-election policy plans without oering direct advice as is provided toministers in their normal government role.


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As a two-party administration, the Coalition is suering not only rom the commonproblem o mid-term blues, but also rom a more proound quandary. Having pushedthrough much radical legislation in its irst two years, the question the Coalition nowaces is how to maintain unity and a sense o purpose let alone launch into a new phaseo joint endeavour at a time o growing pressures on the leadership o both parties tobecome more assertive in dealing with their partners in government.

These issues are likely to grow more acute the closer the Coalition gets to the next generalelection, as the incentives will gradually increase or both parties to emphasise partydierence more than government unity, although come the election the two sides will al sobe judged on their shared record in oice.

For these reasons, the second hal o the Coalitions term, and especially the last year or sobeore the election, is likely to pose some unamiliar tests to the political parties and alsoto the Civil Service, which is accustomed to serving ministers who wear the same colour

rosette on polling day (no matter how much they eud behind closed doors).

The risks are that the Coalition will lose ocus and momentum, and will ind it diicult tothink coherently as a government about the challenges acing the country. By the end, theparties and the Civil Service will also need to prepare or the atermath o the next election,which might again require some orm o power-sharing government to be ormed.

In chapter 2, we address the issue o what is distinctive about coalition government. Thisdiscussion then inorms the detailed analysis in chapter 3 o how the Coalition mightapproach the challenge o mid-term policy renewal. In chapter 4, we briely assess theconstraints on the use o other renewal mechanisms, namely reshules and structuralchanges. In chapter 5, we explore how Coalitions can renew as a government while alsopreserving the distinct identities o the component parties. And inally, in chapter 6, wediscuss the issues likely to arise during the pre-election period as the parties disengagerom each other.

1. IntroductionThere is a natural cycle about all governments. They come into oice on a wave oelectoral success and goodwill, ull o ideas and impatience to get on with them, and otenacing little eective opposition. Soon, the real world o government begins to intrude.Policies turn out to be more diicult to implement than expected, compromises must bemade, misjudgements and scandals sully the governments image, and opposition growsmore vocal and eective.

All governments reach this point the current Coalition has certainly done so and atera ew weeks or months o political punishment, minds turn to the question o governmentrenewal: what can an unpopular administration do to regain the initiative and give itsela new sense o momentum? Options typically include reviewing its policy agenda,reassessing priorities, rethinking its political narrative, reshuling the ministerial pack,

revamping the machinery o government and redoubling eorts to implement existingcommitments.

This report is a study o how governments manage this task. More speciically, we analysethe challenges aced by the current Coalition administration as it approaches its hal-waypoint and heads towards the next general election. We consider the options open to andconstraints conronting the Coalition, and set out some recommendations and ideas orhow it might proceed.

Our indings are based on over 60 interviews conducted between February and April 2012.We spoke to 19 senior civil servants (current and recently departed) across 11 Whitehalldepartments and to 15 people rom the two UK Coalition parties (including politicians,advisers and activists). To learn lessons rom elsewhere, we also interviewed 25 oicials,politicians and experts with knowledge o coalition governments in Germany, Sweden, theNetherlands, Ireland, Scotland and Wales. Finally, we spoke to ive people who were part othe Blair-Brown administrations, which struggled with the task o government renewal in aactionalised single-party government.

Contrary to many predictions, or most o its irst two years in oice, the Conservative-

Liberal Democrat Coalition oered stable and united leadership to the country, and madesigniicant progress in implementing a radical policy agenda centred on deicit reductionand public service reorm. In act, given the initial ears o many in the UK that Coalitiongovernment would be weak and ineective, the irony is that the most common accusationlevelled at the government has been that it has moved too ar and too ast.

However, as it approaches hal-time in its planned ive-year term, the Coalition issuering rom a painul combination o political headaches, economic lethargy and sel-inlicted wounds. Speciic ailments include allout rom an ill-received budget, the returnto recession, poor perormance in local elections and the opinion polls, rising tensionsbetween the parties, a drip-eed o bad news rom the Leveson Inquiry, and a series opolicy u-turns.


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that both parties perspectives are taken into account in a way that one could not whenthe very existence o the two competing actions could not explicitly be admitted.

Relecting on this dierence, a director general noted that disagreements in single-partygovernments were oten not thrashed out in as clear a way as they are required to bethrashed out in a ormal Coalition o this sort.7 This can mean that decisions take longer tobe reached, but should also mean that, once reached, they are adhered to. The very processo reaching bipartisan agreement can also improve the quality o the policies eventuallyagreed.8 These actors will be helpul in the event that the Government seeks to undertakea review o its overall programme.

Clearer structures and processesTo guarantee that policies do have the necessary bipartisan support, the Coalition hashad to ensure that the ormal processes o decision-making in Whitehall were up to thetask. As recognised in several past studies,9 and by a number o interviewees, the switchto coalition was accompanied by a revival o the traditional decision-making machineryo cabinet government, with a revamped cabinet committee system and an increasedemphasis on ensuring that all interested parties are given good opportunity to commenton drat policy proposals. As then Cabinet Secretary Sir (now Lord) Gus ODonnell hasexplained: coalition government places a greater emphasis on the machinery to supportcollective decision-making, and ensures that no actions are taken that might deliberatelyor inadvertently erode the trust which is essential to the coalition.10

Learning rom international best practice, the Government also established a dedicateddispute resolution body the Coalition Committee to sit at the apex o the cabinetcommittee system. However, in practice this body has barely met. Nor has the so-calledCoalition Operation and Strategic Planning Group, which was intended to considerand resolve issues relating to the operation o the Coalition Agreement, the longer termstrategic planning o government Business and to report as necessary to the CoalitionCommittee.11 In the event, it was conirmed to us, this body has not held a single meeting.

Instead, it has been the Quad o David Cameron, Nick Clegg, George Osborne and DannyAlexander that has served as the central arena or resolving major inter-party disputes and

setting strategy. This body is not a ormal cabinet committee, but has taken on a semi-institutionalised status at the heart o the Government, with oicials across Whitehallrecognising that the biggest decisions need to be reerred to the Quad or sign-o, or atleast the shadow o a Quad-type discussion it doesnt necessarily go up to that level, butthe act that it might aects the way that people negotiate.12 Some commentators havecriticised the lack o accountability o this body,13 but the visibility o the Quad contrastspositively with the lack o clarity about where key decisions were taken under the Labourregime.

Similarly, the Spending Review o 2010 and subsequent Budget negotiations have beencarried out in a more transparent ashion than was oten the case under Labour, with keydecisions being taken in the Public Expenditure (Star Chamber) Cabinet Committee, by theOsborne-Alexander axis or again in the Quad.

2. Whats dierent about Coalitiongovernment?

All Governments are Coalitions o people with diferent shades oopinion oten quite widely difering shades o opinion, even whenthey are drawn rom the same party. Te Civil Service is used toreconciling loyalty to their departmental minister with loyalty to theGovernment as a whole.1

Look at the Brown-Blair days...efectively in large parts o thegovernment there was open warare.2

A visitor rom the moon wouldnt be able to spot the join [betweenConservative and Liberal Democrat ministers].3

It is a common rerain in British government (particularly among those who held aring-side seat during the Blair-Brown years) that all governments are Coalitions. Theimplication is that the current Coalition government poses no particularly novel challengesin terms o ensuring eective governance.

It is true that every government and party contains a spectrum o opinion, competingwings and individuals. But an actual two-party government diers rom even the mostactionalised single-party administration in several signiicant ways, which have an impacton governments ability to renew themselves and maintain momentum throughout theirterm.

An explicit CoalitionThe explicit nature o the current Coalition makes it ar easier or civil servants to take

party politics into account when ormulating and presenting policy. During the Blair-Brownperiod, although it was widely acknowledged that policy had to relect a delicate powerbalance between two poles o power, this could not be ormally recognised and Whitehallinstead had to tiptoe careully around the TB-GB issue. Oicials could not openly askquestions such as how will this play with the Brownites?. Partly as a result, renewalinitiatives such as Blairs Pathways to the Future policy review o 2006/07 were atallyundermined rom the start by the ailure to get active support rom Gordon Brown and theTreasury.4

The advent o the Coalition, by contrast, has made it more legitimate or oicials atall levels to think through the politics o an issue.5 For instance, as one senior oicialexplained, when brieing ministers or parliamentary questions, oicials have to recognisethe political nuances and think through how the other party might respond to particularmessages or choices o language.6 And when policy dierences arise, oicials can ensure


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helped Liberal Democrat ministers to play this wider role, though it is still seen as a big askor junior ministers to Coalition proo all policies coming out o their department, giventheir existing heavy workloads.21

A shared policy programmeThe Coalitions shared policy agenda is encompassed in the programme or government,which was published in late May 2010, and built on the earlier short Coalition Agreementdocument, which had resolved the key points o dispute between the parties and enabledthe Coalition to take oice. In a single-party government, the equivalent unction to thato the programme or government would be ulilled in part by the pre-election maniesto.From a Civil Service perspective however, as discussed chapter 3, the programme orgovernment is regarded as providing a more practical plan or action than the averageparty maniesto.

The programme or government also holds a quasi-contractual status in representingthe binding agreement made between the two parties in 2010. Coalitions elsewhere in Scotland, Wales, Germany, the Netherlands or instance have tended to ind thatCoalition agreement documents are vital, but that their binding nature can come to have aconstraining impact on the ability o government to innovate while in oice.

Personal relationships and party politicsMost o the key cross-party personal relationships within the Coalition remain strong and this is clearly conducive to good government. This is the case at the Centre betweenprime minister and deputy prime minister, and the wider Quad and in many o the majorpublic service departments, such as health, work and pensions, and justice.

But relationships can take you only so ar. Beneath the level o ministers, there remaintwo political parties representing distinct traditions and values, and between whomthere is little sense o shared enterprise. Among many backbenchers, and even more soat grassroots level, the Coalition is regarded as a transactional relationship, in which theambition is to secure the best deal or their side in a zero-sum game.

The logic o party politics exerts a growing centriugal pressure on the party leaders over

time, complicating the process o Coalition renewal and orcing ministers to take a moreassertive stance towards their partners. Thereore, even i the visitor rom the moon mightbe unclear about which ministers are rom which party, the ministers themselves and theirparties tend not to orget it.

Overall, many in Whitehall have been impressed at the extent to which ministers rom thetwo parties have been able to have an adult conversation and work together.22 But theapparent surprise that the two sides are not perpetually at each others throats relects pre-2010 claims about the diiculties o making Coalition work. It also, or reasons discussed,relects the act that in the second hal o the parliament, the join in the Coalition is likelyto become increasingly visible.

Resourcing a two-party governmentAnother type o structural change since 2010 relects the recognition that or the Coalitionto operate eectively, each party must be provided with adequate resources to contributeto ongoing policy development. At the Centre, this has led to the strengthening o thedeputy prime ministers oice. The initial vision was that there would be a single uniiedcentre serving both prime minister and deputy prime minister, but, a senior oicialrelected, in practice it emerged that that wasnt working very well, and the LiberalDemocrats were un der-supported.14 The deputy prime ministers oice was expandedin late 2010, ollowing Institute or government recommendations.15 Additional specialadvisers were also appointed in late 2011 and early 2012 to give the Liberal Democratsgreater voice and inluence in departments where their ministerial presence was limited.16

Surprisingly, criticism o the organisation o the Centre o government has increasinglyshited to the issue o whether the Conservative side has suicient clout. Following early

policy controversies, notably over NHS reorm plans, the Downing Street Policy Unit wasstrengthened, with the prime minister himsel admitting that this was something I didntget right irst time round.17 However, the expanded Policy Unit is staed with Civil Servicerather than political appointees so that it can work or both parties so this change hasailed to put to rest the perception that the Conservatives political het is insuicient.18

This is important because as the Coalition moves orward, it is probable that party politicswill increasingly rear its head, as both parties seek to dierentiate and deend their ownproile. Advisers able to move seamlessly between the worlds o policy analysis and partypolitics will be at a premium. In general, special advisers and other similar party politicaligures are oten the oil that lubricates the machine o Coalitions, so the Governmentshould be relaxed about the increase in their number.19

At the departmental level, Whitehall has also been conronted by the question o whatshould be the role o junior ministers who come rom a dierent party to their secretaryo state. In most o the major public service departments including health, education,

justice, work and pensions, the Home Oice there is a Conservative secretary o stateand a single Liberal Democrat junior minister.

In such departments, the Institute or Government has previously argued that additionalresources should be provided to the junior minister to enable them to play a watchdogrole across the ull departmental brie. The extent to which this has happened appears tohave varied, and in some key areas it is the deputy prime minister who has to ulil theCoalition-prooing role or the Liberal Democrats, rather than the junior minister in thedepartment itsel.

In several departments we heard that the single Liberal Democrat was expected to play awider role than their speciic portolio. One oicial told us that a particular minister had avery clear role as Liberal Democrat contact across the whole department; o another, weheard that s/he looks across the whole o the departments business...[and] has a slightwatching brie or the Lib Dems.20 The appointment o the additional special advisers aswell as support rom nominated backbench spokespersons in some cases appears to have


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developed outside o the programme or government are much more likely to leadto riction. As one Liberal Democrat interviewee pointed out: I you look at the biglashpoints there have been, they havent been about the Coalition Agreement itsel. Theyhave been about things that werent in it or about cases where the Government decidednot to ollow it, even on tuition ees where the Liberal Democrats didnt go or themass abstention option - the latter point a reerence to the abandoned plan or LiberalDemocrats to abstain when it came to the votes on tuition ee rises.30

The claim that a particular policy is not in the Coalition Agreement and that MPs, peersor the wider party are thereore not obliged to support it has been heard requently,particularly on the Liberal Democrat side. The initial Liberal Democrat party conerencevotes against the NHS reorm plans cited the act that the plans were not made explicitin the original programme or government.31 Senior Liberal Democrats also respondedangrily to a 2011 speech on immigration by David Cameron, with Lord Oakeshott declaring:When something is not in the Coalition Agreement it does not become Coalition policy

just because David Cameron says so, even i he has shown his speech to Nick Clegg.32Liberal Democrat opponents to Home Oice plans to strengthen state surveillance andinterception o communications powers made a similar point.33

On the Conservative side, as plans proceed to introduce an elected element to the Houseo Lords, critics have pointed to the act that the programme or government only commitsto the Government to establish a committee to bring orward proposals or a wholly ormainly election upper chamber. Consequently, it is argued that Conservative MPs andpeers are not bound to ollow the whip when it comes to helping pass the legislation.34

These examples illustrate the diiculties o developing policy outside the initial CoalitionAgreement. Moving orward into the second hal o the parliament, these diiculties arelikely to grow, potentially limiting the ability o government to ormulate new policy inresponse to events and changing circumstances.

Civil service perspectivesThe programme or government was generally welcomed by the Civil Service. For anorganisation prone to over-literal reading o party maniestos,35 having a clear statement

o government plans that superseded pre-election political statements was a useulinnovation. More than one interviewee argued that it would be worth developing aprogramme or government in a uture single-party UK government, with one oicialarguing that the value o the programme or government was that it was more practicaland pragmatic than a maniesto and less about selling an ideology.36 Another toldus that because the programme or government was written ater the election by civilservants it has a legitimacy and civil servants eel able to point to it in a way that we neverdid with maniesto pledges, which are inherently political.37

For most departments, the programme or government was a central reerence point inthe early days o the new administration. This was, perhaps inevitably, particularly the casewhere there were underlying tensions between the parties, such as over Europe, where theprogramme or government helped to clariy what was the compromise position the twoparties had reached.38

3. Mid-term policy renewal: optionsand constraintsThe UK Coalitions shared policy agenda is set out in the programme or government,which contains some 400 pledges across 31 policy areas. According to the prime ministerand deputy prime minister at the time, the Programme or government was to be orive years o partnership government driven by the values o reedom, airness andresponsibility.23 Yet in practice, despite the rhetoric o a ive-year deal, thoughts turnedwithin months to the question o whether new programme or Coalition 2.0 agreementwould be necessary.24 A ull revision o the programme now appears unlikely, but thereremains a good case or a more limited mid-term policy renewal exercise.

Below we make the case or renewal, discuss the lessons to be learnt rom six international

case studies, and then set out 20 suggestions or how the UK Coalition should proceed.

Political party perspectivesThe programme or government has been helpul in creating a clear ramework orpolicy discussions within and between the Coalition parties. Having been ratiied by bothparliamentary parties, as well as a Liberal Democrat special conerence, the Coalitiondeal is seen as binding on both sides.25 There is recognition in each party that elements othe programme with which they disagree are there as a quid pro quo or their own policypriorities.

According to one Conservative MP, the programme is the strategic document guidingwhat we are going to do and ... is an arbiter o any dierences o opinion between the twoparties.26 On the Liberal Democrat side, we were told: People are quite happy to use it asa yardstick to say, well we have to concede X, Y and Z to the other party in the Coalition,because thats whats agreed in the Coalition Agreement.27

Reerence to the programme or government has helped to push through policies aboutwhich MPs rom one party the other side have qualms. There have been a large numbero backbench rebellions against the Government, but these have mostly been on a smallscale.28 And votes on policies clearly contained in the original government programme havenot been seriously threatened by back-bench revolts. For instance, only six Conservativesopposed the Fixed-Term Parliaments Bill at third reading, and only 13 voted against thebill legislating or the Al ternative Vote reerendum, though in that case o course the pillhad been sweetened by the incorporation o constituency boundary changes in the samelegislation. The vast majority o Liberal Democrat MPs have exercised similar disciplinein voting or Conservative policies in the programme or government such as police andcrime commissioners, reerendums on elected city mayors and the expansion o academyschools, not to mention sticking to the accelerated deicit reduction schedule that rancounter to the partys pre-election position.

One Conservative MP stressed that the programme or government should be seen asbinding but not limiting, implying that the Coalition was able to develop new policyas it went along.29 However, the Coalition has already ound that contentious policies


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clearer accountability or progress in delivering the Governments objectives. On the otherhand, oicials criticised business plans or being too processy and bureaucratic, and orreinorcing silo culture at the expense o joined-up working, which remains a lacuna inthe Governments strategy.48

As the Institute or Government has previously noted, the link between business planobjectives and policy commitments in the programme or government is oten unclear.49The business plans are also rereshed annually, in response to changing priorities andcircumstances or instance, economic growth has come to take on a more prominentposition in many departments plans. This means that the business plans are likely to edgegradually away rom the original programme commitments on which they were based.

As a central statement o coalition purpose, the programme or government has alsobeen superseded by the iscal consolidation plan set out in the 2010 spending review. Thepriority given to deicit reduction is in act made plain in the programme or government,

which states on its inal page that the deicit reduction programme takes precedenceover any o the other measures in this agreement, and the speed o implementation o anymeasures that have a cost to the public inances will depend on decisions to be made in theComprehensive Spending Review.50

With the ocus having shited to business plans and spending review obligations, directtracking o the programme or government pledges has been ar less systematic andpublic. To mark the irst anniversary o the Coalition in May 2011, a summary o progressagainst programme or government objectives was published ( with little anare) onthe Number 10 website. This stated that the Government has completed a quarter othe commitments made in its ive-year Coalition Agreement and is well on the way tocompleting two-thirds o the total.51

Subsequently, in early 2012, new cabinet secretary Sir Jeremy Heywood announced thatthe Coalition had completed 37% o 399 tracked Coalition pledges; meanwhile, virtually allo the remainder (62%) were classed as under way, though that broad category coveredpolicies at very dierent stages o progress, including some that were eectively at astandstill but had not been ormally abandoned.52 As with the one-year report, there wasno publication or explanation o the data underlying the headline claim.

Analysis by the Institute or Government has ound that over 80% o the actions set outin the original suite o business plans were scheduled to have been completed by May2012.53 This is partly because early priorities were sub-divided into smaller actions, whileprojects or the second hal o the Parliament were sketched out in less detail. Over time,these later actions will themselves be expanded out into sub-parts. But it also relects adeliberate rontloading o the Governments agenda, with many o the headline legislativecommitments in the programme or government including the reorms to the NHS,schools, police accountability, and welare passed in the long irst session up to 2012. Asone Liberal Democrat adviser put it: You go through each o the major departments and

you can see there has been the heavy-liting up ront.54 A Conservative source conirmsthat it was always the plan to go [...] into the irst session with a real sense o urgencyabout trying to get some o the more tricky and politically controversial reorms.55

Interviewees reerred to the programme or government as absolutely indispensableto start with, as providing the core programme and the authoritative statement othe direction the Government was headed.39 In some cases, what oicials ound mostuseul was less the actual policy detail and more the expression o the political valuesunderpinning the Coalition, as expressed in the short introductory paragraphs at the starto each section o the programme, and in the preace written by the prime minister anddeputy prime minister or instance on the expression o commitment to the Big Society.40

In some departments, the programme or government was less important, oten becausethe programme or government was largely derived rom the Conservative maniesto, orwhose implementation the Civil Service had prepared in the pre-election period.41 Majorreorm initiatives such as the DWP Work Programme and the ree schools policy all intothis category.

There were some critical voices. In one case, an oicial expressed concern that despite

initial high hopes or the programme or government, there were areas where a majorault-line was glossed over in the agreement, and that has led to a dierent sort ochallenge or civil servants.42 The Department o Health (DH) appears to be one casewhere the programme or government was deemed actively unhelpul. Pledging not toimpose top-down reorganisations on the NHS even while DH was planning the massivereorms embodied in the health white paper produced a ew months later was nutsaccording to one oicial.43 Similarly, the programme or governments commitments tointroduce elections to primary care trusts (PCTs) (a Liberal Democrat policy) but also toshit the primary care trusts central commissioning role to GPs (the core o the Tory plans)relected a horse-trading approach that led to an internally inconsistent policy package, asdiscussed in detail in a orthcoming Institute or Government study o the health reorms.44

Beyond the programme for government?The programme or government appears to have declined in importance since 2010.Revealingly, several senior policy oicials we spoke to had to look at our copy o theprogramme or government to reresh their memories about the contents o theirsection o the programme.

One reason or the declining importance o the programme or government is that its rolehas been overtaken by departmental business plans, which operationalised programmeor government commitments, and have become a much more regular touch-point.45These documents, planned by the Conservatives while in opposition, set out the speciicactions that departments should take in order to ulil their policy and structural reormobjectives. Unlike the programme itsel, the business plans set out speciic timelines or theachievement o most actions, and thereore gave an indication o prioritisation, which theprogramme itsel is weak on, according to some interviewees.46

Monitoring o business plans is the responsibility o a team in the Cabinet Oice, andregularly published progress reports give a clear indication o how each department isperorming. We heard that the business plans had more bite than the previous publicservice agreements (PSAs) due to their ocus on input or process targets rather than thehigh-level outcome objectives ound in PSAs.47 They were thereore seen as acilitating


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legislation on the banking sector, labour market policy, state pensions, energy strategy,adult social care and amilies and children policy. Shortly ollowing the Queens Speech, awide-ranging review o anti-social behaviour legislation was also announced.65

Meanwhile, the Government is developing policy on reorm o the higher education sector,party unding and lobbying. Legislation on media regulation, ollowing the conclusion othe Leveson Inquiry, is also possible. In addition, designing a meaningul growth strategyrepresents a major government-wide task, as does the development o a coherent pre-Union case, possibly including a devolution plus constitutional package, in the ace o thethreat o Scottish independence. By 2015, the prime minister and deputy prime ministerwill also wish to be able to report progress in achieving their personal priorities o tacklingsocial breakdown and improving social mobility. Last but not least, there is expectedto be a second spending review in 2013 or 2014, setting out urther detail on how theGovernment plans to eliminate the structural deicit.

Overall, the idea that the Government will spend the second hal o its term purelyimplementing and tending its 2010-12 reorms thereore seems slightly naive. On thecontrary, there is a large inbox o issues or the Coalition to deal with. The question isnot whether the Government recognises the need or action in many o these areas, butwhether the two halves o the Coalition will be able to agree upon a shared way orward inmany o these contentious areas.

The risk, as illustrated by clashes over the Beecrot proposals to liberalise employmentlaw,66 is that the two sides will cancel each other out, vetoing each others initiatives, andresulting in deadlock and drit. A cross-government review and renegotiation o the policyagenda would oer one potential way out o this trap, since the two parties could placeall the big issues onto the negotiating table as in May 2010 allowing or a shared newagenda to be hammered out. But is this realistic?

A Coalition Agreement 2.0?Early in the lie o the Coalition there was talk o a ull reresh o the Coalitionsprogramme. We were told that the two parties policy heads Oliver Letwin and DannyAlexander had been put in charge o thinking through the possibility o a second Coalition

agreement, but according to interviewees and media reports the impetus towards thishas aded.67 One interviewee rom a policy department conirmed that ministers hadbeen asked by the Centre to work up possible contributions or a 2.0 agreement, but thatnothing urther was heard subsequently.68 A number o senior oicials we spoke to thoughtthat there would be merit in trying to ormulate a new agreement o this kind, but therewas generally a resigned sense that political considerations would render this impossible.

The main hurdle in und ertaking a complete renegotiation o the programme is the risk oailure. To many interviewees, this diiculty overrides the potential beneits o a secondprogramme or government: Theres just something in me that says it would be morehassle than its worth...Why should we have a row? said one Liberal Democrat minister.69Whether the parties could recreate the original spirit o co-operation that was present inMay 2010 is doubtul. And without the pressure to produce a Coalition agreement thatexisted in the days ater the election, it is harder to see the parties agreeing so readily

As o mid-2012, the overall status o the programme or government is thereoresomewhat unclear. It is still requently invoked as the deinitive statement o thepolicy programme o the government. But within the executive, its initial role in drivinggovernment activity has aded. The Coalition will naturally need to review its policyprogramme over time, and will relect this in business plan updates. But policy agreedoutside the programme or government in this way is more likely to all oul o oppositionwithin the parties, potentially limiting the Coalitions ability to respond eectively to newchallenges and circumstances.

An implementation phase?When asked what the strategy should be or mid-term policy renewal, one commonresponse by those close to the Coalition leadership in the next phase o the Government,the ocus should shit rom new policy development and legislation, to implementation oreorms already passed.56

Having legislated or NHS reorm, an expansion o academy schools, and the creation opolice and crime commissioners or instance, the view is that the priority or governmentshould now be to encourage local communities, public service providers and others toseize the opportunities devolved downwards by these reorms. This process, part o the BigSociety vision, has been dubbed a phase o policy animation by Sir Bob Kerslake, the heado the Civil Service.57

The Coalition is keen to avoid the perceived mistakes o the past. One Conservative MPreerred to the sort o Blair condition o a Criminal Justice Bill every bloody year,58 anda Liberal Democrat adviser cautioned against just assuming that way to solve everyproblem is to have a whole blizzard o laws and regulations and new things.59 The primeministers ormer director o strategy Steve Hilton even amously stated that he wanted tohave a Queens Speech that introduced no new legislation at all.60

It is sensible to ensure that suicient time and energy is devoted to the successulimplementation o the major legislative reorms passed to date. In passing, however, it isworth highlighting that on an annualised basis the 2010-12 session actually saw ewer billspassed than in any comparable period during the Labour years, albeit that some o these

were airly sizeable.61

And in any case, government will naturally need to continue to develop new policies andlegislation in response to events and political demand. As one civil servant pointed out tous: There are questions over whether a programme or government could ever take youthrough ive years, or whether ive years is a long enough time with the sort o granulardetail you have to get into to have an eective programme or government.62 Thiscorresponds with the notion that Coalition agreements are incomplete contracts, unableto anticipate all the signiicant events likely to ace a government over its lietime.63

In the event, the 2012 Queens Speech contained no ewer than 25 bills, including theheadline Lords Reorm Bill that is expected to dominate the session. We were also toldby insiders that some departmental bids or bills had to be pushed back to later sessionsdue to lack o time.64 Among those items that did make it into the speech were plans or


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When Henry McLeish became irst minister in 2000, he was keen to put his stamp onthe Government by developing a revised agreement. The Liberal Democrats, however,responded somewhat negatively to this initiative, viewing it as an attempt by the incominghead o government to renegotiate some essentials o the deal struck with McLeishs latepredecessor Donald Dewar, leading to a ew days o inter-party tension.75

Consequently, the plans had to be scaled back somewhat. The new policy programmeeventually published, in January 2001, was less a wholly new Coalition agreement, andmore o a progress report on existing pledges, as well as a mechanism or updatingand providing urther detail on the Governments plans across 14 policy areas, in somecases relecting announcements made since the initial Coalition agreement.76 But therewas some room to add a ew new policy commitments. Notably, ollowing some tensenegotiations between the parties, and between Edinburgh and Westminster, the revisedprogramme included a pledge to introduce ree personal care or the elderly.

When the Scottish Coalition was reormed ater the 2003 election, the two partiesproduced a much more detailed programme than our years earlier, with the Civil Serviceheavily involved in its production.77 This document was subsequently elt to be restrictiveo innovation, due to the high level o policy detail agreed up ront. The ormer Scottishgovernment permanent secretary has been especially critical, describing the list o 460commitments with no agreed prioritisation between them as a sel-imposed straitjacketor the parties.78 Interviewees conirm that it was diicult to develop new policies outsideo the agreement, partly because the extensive programme was more than enough to illthe time o civil servants and Parliament, and partly due to the need to meet the provisionin the Coalition Agreement that matters o new executive policy outside this agreementmust be agreed by both partnership parties, meaning the parliamentary groups.

Hal-way through the term, the two party leaders discussed the possibility o revising thisdocument as they reached the middle o the term, as the Government had begun to runout o reshness.79 In the event, there was no ormal revision o the document, partlybecause this period coincided with a change o leadership on the Liberal Democrat side.However, there were a series o high-level political conversations between the two partiesabout the uture priorities o the Government that served a useul unction in their ownright.

In addition, even while the Civil Service machine was ocused almost exclusively onimplementation o the agreed programme, a separate programme o work withingovernment was set up to assess the nature o longer-term policy challenges acing thenation. This strategic policy review, which involved around 60 senior oicials, did notseek to review existing policies, but instead to carry out horizon scanning and scenarioplanning work and to build a consensus on big cross-cutting issues. Ultimately thisreview had little impact on policy under the Labour-Liberal Democrat Coalition, but didprove inluential ollowing the switch to single-party SNP rule in 2007, when there was adeliberate shit to a more joined-up and strategic approach to government.

to compromises. A Conservative MP close to the leadership conirms that the earlyenthusiasm or a second agreement waned amid political realisation that coming up witha whole new slew o policies on which both Coalition parties can agree is going to be much,much more challenging than trying to work on getting existing policies to deliver.70

Further, as Liberal Democrat thinker Tim Leunig put it, seeking to renegotiate the CoalitionAgreement would be very risky or both sides because i they couldnt come up witha Coalition agreement, what would they do? ... A serious negotiation has to have analternative, and in this case the alternative is the end o the government.71 Neither sidewould avour such an outcome, but particularly i conducted in the public spotlight, aailed attempt to agree on a new policy programme might well raise questions about thesustainability o the Coalition.

The Government might seek to conduct its negotiations in private the limited movesdown this path so ar have been kept beneath the radar. But the likelihood o leaks would

be high. And pressure would also mount or wider party involvement in the negotiationprocess, reducing the room or manoeuvre o the negotiators. The Liberal Democratshave already passed a conerence motion calling or the programme o the Coalitiongovernment in the second hal o the parliament .. . to be agreed by the Federal Executiveand Federal Policy Committee.72

Meanwhile, a serious attempt to thrash out a new Coalition programme could beportrayed by the Coalitions critics as an admission o ailure, suggesting that the originalprogramme or government and the Coalitions agreed direction were deective. Whethersuccessul or not, negotiations or a new programme could be seen as a sign o weaknessand o a shit to Plan B.

For these reasons a ull programme renegotiation seems unlikely. However, internationalexperience shows that there is a range o approaches to mid-term renewal rom which the

UK Coalition could learn useul lessons.

Lessons from elsewhereCoalition agreements have become more common over time across the democratic

world,73

relecting the desire o parties to clariy up ront what they will achieve romentering Coalition, and the utility o having a contractual document to resolve disputes.Not inrequently, however, Coalitions ind that new circumstances or challenges requirea change o course in mid-stream. Reopening the initial deal oten proves tricky, as theollowing examples illustrate. Nonetheless, some positive examples o renewal can beound.

Scotland

The partnership agreement published by the irst Labour-Liberal Democrat Coalition inScotland in 1999 was a rather loose document, characterised by one aide as in manycases an agreement to agree, with relatively ew detailed policy commitments. While thisincreased the Governments lexibility, it also ensured that there had to be considerablenegotiation between the parties on detailed aspects o policy.74


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and involves 130 experts divided into 18 groups, and also incorporates a large publicconsultation exercise with members o the public invited to submit policy ideas and thetop 10 being invited to meet the Chancellor.87

Sweden

The programme agreed by the parties in Swedens ruling Alliance Coalition (in powersince 2006, in a minority since 2010) was developed in advance o each election as theshared maniesto o the our Coalition parties. Instead o setting out a programme or theull parliamentary term, the Government set out two categories o pledge: promises othings they would do and ambitions or things they hoped to do. The 2010 programmeincluded irm pledges to cutting taxes or pensioners and increasing subsidies or locally-provided education, health and welare services. In addition, the document set out reormambitions, including in-work tax credits and a rise in the income tax personal allowance,which were explicitly made subject to iscal circumstances.88 The latter category o

policies is dependent on suicient money being available. As a result, the Governmentsprogramme is renewed regularly, as the parties negotiate which policies to prioritise eachinancial year in light o available unds.89

Policy renewal within the Swedish Coalition also relects the act that the Alliance expectsto stand again on a joint platorm at the next election. In preparation or that, the ourCoalition parties have already commenced the long process o agreeing on their sharedpolicy programme or the 2014 poll. An oicial in Stockholm described how this beginswith the establishment o a number o separate working groups that eed back ideas to theleadership.90 All policy proposals are ully costed, and negotiation between the parties thenleads to the agreement o a single policy platorm or the election.

In addition, another adviser reerred us to the recently established Commission on theFuture o Sweden, which was set up to tackle the question o how to be visionaryater several years in government.91 This body involves a wide range o experts as well aspolitical igures and members o the public. The Commission is carrying out our uture-oriented inquiries into big challenges such as demographic change, social integrationand sustainable growth and its conclusions will then eed into the parties own policydevelopment processes.92

Ireland

Like those in Sweden and Germany, Irish programmes or government are made on thebasis o speciic economic and iscal orecasts; they are also generally reviewed midwaythrough the parliament. Noel Dempsey, a minister in several Coalitions in Dublin, conirmsthat the mid-term renewal has become a regular part o the cycle o coalition government,allowing ministers and civil servants to assess progress against their original programme,look at the state o the economy, and set out what they can realistically hope to achieve intheir remaining time.93

One ormer senior oicial spoke o the utility o the mid-term review, describing it as anopportunity or a sensible conversation between the parties and also with the Civil Service,who can use the process to tell their ministers this is whats realistic and whats not.94

Germany

In Germany, the Coalition Treaty is taken very seriously, and negotiated over a periodo months, with detailed spending plans built in to the initial agreement. The 2009agreement, the 189-page Growth Education Unity, continued plans or billions o Euros ospeciied tax cuts, or instance, as well as a commitment to achieving a balanced budget.80These commitments have since proved mutually incompatible.

Coalition agreements orm an important reerence point or departments on an ongoingbasis. The ederal chancellery keeps track o progress and publishes headline igures orit around the mid-term point.81 The Coalition Committee, whose membership comprisessenior igures rom both executive and legislature, meets every week that parliament is insession, and plays an important role in keeping an overview o the agreement and resolvingday-to-day policy disputes.

There is some capacity to develop new policies and change direction, however. AngelaMerkel, Christian Democrat (CDU) leader, has changed government policy on a number oissues since orming the current Coalition with the liberal Free Democrats (FDP). Notably,she abandoned most o the planned tax cuts in the light o the inancial crisis, and reversedher governments policy on nuclear power ollowing the Fukushima episode.82 Anotherexample o major mid-term policy change is Gerhard Schrders Agenda 2010 labourmarket reorms in 2003-05, and in particular the Hartz IV welare reorms, designed totackle Germanys then high unemployment rate.

In all these cases, the policy changes were the personal initiative o the chancellor, whohas more leeway to set new policy directions, as established by the German constitutionalprinciple o richtlinienkompetenz. Yet all were controversial, illustrating the politicaldiiculty o moving away rom a Coalition agreement even in response to serious externalchallenges. Schrders reorms led to bitter internal battles within his own party, whileMerkels policy changes were perceived as a direct snub to the FDP and urther underminedthe unity o the Coalition.83

In general, changes to the treaty itsel are rare, due to the high transaction costs involvedin agreeing them. Under the previous Grand Coalition o the Christian Democrats (CDU and

CSU) and Social Democrats (SPD), agreement on ar-reaching health reorms was achievedin a summit between the party leaders that lasted seven hours.84 Also during the GrandCoalition, the whole Cabinet went or occasional weekends away together to develop newprojects and policies in response to new pressures. The result o these Cabinet retreatswas a series o addendums to the Coalition Agreement.85 For instance, in January 2006,the Cabinet spent two days at the Genshagen Castle hammering out agreement on a 25billion growth and jobs package among other things, while eectively agreeing to disagreeon health reorm.86

An attempt to start a much longer-term renewal process, moving well beyond theconstraints o the current Coalition Agreement was recently launched by the GermanChancellor. This initiative, the Future Dialogue, was set up to address long-termchallenges to do with social cohesion, the economy and learning and education,


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at the start o the parliament to back the governments budget plans. The PVV reused togo along with the proposed programme revision however, triggering early elections due inSeptember 2012.

Martijn van der Steen o the Netherlands School o Government argues that the ailureo these talks exempliies the diiculty o renegotiating in mid-term. He points outthat most recent Dutch Coalitions have allen early due to the diiculty o keeping allCoalition partners happy in the context o political ragmentation, with eight parties nowrepresented in parliament and each needing to work hard to maintain their distinctiveproile.106

Wales

In Wales, interviewees told us that the two Coalition Agreements (o 2000 and 2007)sometimes acted as a constraint on the Governments agility and capacity to innovate. A

ormer senior oicial rom Cardi told us that the Welsh Coalition agreement o 2007 wasa long shopping list o items, and that having been ormed at a time o plenty it wasdiicult to change course when the economy deteriorated.107

Paul Griiths, a Labour adviser conceded that thinking outside the agreement wasnot necessarily normal practice and that ministers disinclined to be innovative oundsuccour in the Coalition Agreement, avoiding the diicult negotiations that new policydevelopment would require.108 Another ex-adviser recognises that I it was in theagreement, it had to happen. I it wasnt, it wasnt part o the programme, but also recallsthat some big policy decisions, such a change on university tuition ees policy, were takenoutside the agreement, though these required extensive negotiation.109

The Blair government

Another relevant case is that o the Blair government, which sought ater the 2005 electionvictory to conduct a detailed policy review to set out a new course or the government.The political context was the knowledge that Tony Blair would shortly be departing. ThisPathways to the Future policy review consisted o six policy review groups staed bycabinet ministers and outside experts. These worked under the deliberately cross-cutting

headings o public services, crime and justice, the role o the state, environment andenergy, Britain and the world and economic dynamism (the latter chaired by GordonBrown, the remainder by Blair). Supported by the Prime Ministers Strategy Unit, theproject involved 20 Cabinet-level meetings, 62 policy papers, 16 sessions with non-cabinetministers, and ive regional orums with members o the public.110

Those involved on both the political and the Civil Service sides tell us that the underlyinganalytical work conducted or this process was useul and well thought through,but that the process was undermined rom the start by the act that Gordon Brown shortly to become prime minister showed little interest in, or support or, theinitiative. Consequently, this renewal process had little purchase on actual uture policydevelopment.

In addition, by the two-year mark the Government might be in a better position to makemore detailed commitments, or instance in the area o capital inrastructure investment,since the thinking would have developed by this stage ollowing preparatory work in theinterim.95 In general, however, the programme review is generally more about scalingdown than about a lot o bright new ideas.96

This was the case during the last programme renewal exercise, carried out in 2009 by theFianna Fail-Green Coalition. Their programme or government had been agreed in 2007,beore the inancial crisis had struck, and was based on a predicted average GDP growthrate o 4.5%.97 By October 2009 the Irish economy had plunged into recession renderingmuch o the programme unachievable. In addition, inter-party tensions relating to theGovernments response to the crisis had put the survival o the Coalition in question, withthe smaller Green Party threatening to pull out. The review also came in the wake o localelections at which Fianna Fail (FF) suered their worst ever results, seen as a judgement otheir perormance in Coalition with the Greens at the national level.98 In this context, the

decision was taken to renegotiate the deal.99 Following what were described as exhaustingand tortuous negotiations100 between a small group o ministers rom each party, a newdocument was agreed, setting out a programme designed to sustain the Coalition up till2012.

Noel Dempsey recalls that the typical pattern in programme renewal exercises is orthe smaller party to lex their muscles, using the threat o withdrawal to gain policyconcessions rom the larger partner. Nonetheless the larger FF ound the exercise a useulway to reocus the government, 101 and to tie in the junior party. A source rom FF wasquoted at the time saying I hope they [the Greens] realise they are in or the two and ahal years; youre in and you stay in.102 From the smaller party perspective, a ormer Greenminister argues that the 2009 renewal provided a useul opportunity to make the case thatok were making cuts, but were protecting education, enterprise etc.103 In other words,the renewal process was a way to reairm and emphasise the Coalitions top priorities.

The Netherlands

The Dutch government also sets out its programme on the basis o speciic economic andiscal orecasts. The agreement is expected to incorporate all o the Governments majorpolicy and spending allocation decisions or the ull parliamentary term. Renegotiation inmid-term has occurred a ew times, but only in response to economic deterioration.104

Most recently, in April 2012, the Coalition in The Hague sought to agree a new set oausterity measures outside o the original Coalition Agreement, in order to comply withthe budget deicit limits prescribed by the EU Fiscal Pact and the revised Stability andGrowth Pact.105 Ater over six weeks o negotiations, these talks ailed even though the twoCoalition parties (the Liberal VVD and Christian Democrat CDA) themselves came to anagreement to bring down the deicit to 3%.

The reason or the ailure o this renewal initiative was that the Coalition lacked a majorityand relied upon the support o the rightwing populist PVV party, which had committed


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3. Drawing on data rom the above, the Coalition should publish a formal mid-term progress report or stocktake in which it demonstrates what progress hasbeen made in delivering programme or government commitments. This might bepublished in autumn 2012, which will mark the hal-way point o the Coalitionsplanned ive-year term o oice. Aside rom symmetry, another good reason toconduct a renewal exercise at the mid-point is emphasised by Sir John Elvidge:assuming its going reasonably well, youve got the point o maximum trustbetween the Coalition parties, beore electoral concerns start to dominate.116

The mid-term stocktake should report on what has been achieved and what needsto be done to meet the ambitions set out in May 2010.117 It should combine ageneral review o developments and progress on the Coalitions core mission withan update on what has been done to meet the pledges set out in the programmeor government. People close to the Coalition conirmed that something alongthese lines was being planned or mid to late 2012, though the inal decision

appears not to have been taken.

4. The Coalition might also move to a model of producing annual progressreports on its programme. The Fianna Fail-Progressive Democrat governmentin power in Ireland rom 1997-2007 provides an example o how this could bedone. The original programmes or government were published at the start o eachparliament (1997 and 2002) and progress reports produced each year until thenext election. The Northern Ireland executive al so produces an annual progressreport, recording the status o its targets and priorities.118 An additional part o thisprocess would be to outline an agreed plan or implementing the remainder o theprogramme or government. This would entail an articulation o the steps requiredto carry out the unulilled or incomplete pledges rom 2010.

5. The production o these progress reports should just be a technocratic exercise,used only as a monitoring tool within the executive. Instead, the mid-term reviewshould be used as an opportunity for cross-party political reflection onwhat has worked so far and what the Coalition should focus on next. FormerCabinet Oice minister Pat McFadden argues that all renewal exercises should

begin with ... an honest stocktake internally o what worked and what didnt. Thenan assessment o where thats taken you, so Where are we now?... And thenits Where do you want to go? and that requires a real understanding o yourdirection o travel in any particular area.119

6. The mid-term review should be clearer than the original programme forgovernment about prioritisation. There should be greater clarity about thetop priorities are or the next two to three years, and the proposed timetableor implementation. Prioritisation is a matter o allocating scarce inancialresources as well as a matter o timetabling. At present, unlike in Germany andthe Netherlands, or instance, the UK Coalitions policy programme is not clearlylinked to the detailed spending plans, with the programme or government andspending review negotiated and monitored separately rom one another. The initialseparation was probably inevitable, given the time pressures the parties were

Pat McFadden MP, who was also involved, tells us: Ultimately what that came down towas whether Gordon Brown wanted to carry on in a similar direction in terms o policyreorm to Tony Blair or not, and his decision was not.111 The lesson to be drawn, accordingto another ormer senior adviser, is that your renewal ... has got to take account o thepolitics and that looking at the problems in an abstract McKinseyish way will notwork.112

Renewal options for the UK CoalitionRenewal can be in part a presentational exercise. The joint speeches by David Cameron andNick Clegg in Basildon on 8 May 2012 were widely seen as an attempt to reresh the imageo the Government ollowing poor local election results or both parties. The emphasis wason economic recovery and growth.113 The ollowing day, the introduction to the QueensSpeech by the two party leaders also reairmed their shared ocus on the Coalitionsmost urgent task ... to tackle the nations record debts and oster growth, and underlinedthe Coalitions shared (i uncontroversial) values o opportunity (which seems to havereplaced reedom since 2010), airness and responsibility.114

Joint statements and appearances can provide a useul symbolic demonstration o theongoing commitment o the party leaders to the Coalition. However, the lasting impacto such initiatives will be minimal i unaccompanied by the development o a clear sharedpolicy agenda or the second hal o the term. Substantive renewal is also needed.

1. The central objective of mid-term renewal should be for the two Coalitionparties to reaffirm their commitment to working together to tackle speciiedeconomic, social and institutional problems acing the country, while keepingon track to eliminate the Governments structural deicit. The survival o theCoalition depends on the two parties ongoing ability to negotiate in good aith,to compromise, and also to maintain a shared understanding o what are thepriorities or action. At present, tensions over economic policy and public servicereorm threaten the stability o the Coalition. The two sides should get together toreorge their partnership and to secure the viability o the Government.

2. As a irst step, the government should create a clear and transparent

reporting mechanism for progress against the programme for governmentto make clear where it is up to in delivering on its shared agenda. As noted,the Government has conducted an assessment o programme or governmentcompletion rates but has not made this data public, other than in occasionalreerences to the headline igure. In regular reporting o progress in completingbusiness plan actions, the Coalition has lived up to its commitment to increasingtransparency in government. But the programme or government enjoys a greaterstanding in both parties and among the wider public, so a similar standard oopenness should be applied to monitoring its progress to re-emphasise theimportance o the programme. The most logical way to accomplish this isnot to create an entirely separate monitoring mechanism but to ensure thatthere is a clearer link between business plans and programme or governmentcommitments, as the Institute or Government has previously recommended.115


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10. Importantly, the mid-term renewal process could offer an opportunityto place the Coalitions policy commitments within a broader strategicframework. In place o a long undierentiated list o items, there should be anattempt to develop a clearer statement o the Coalitions overarching objectivesor the next two to three years and o how the speciic planned policies will help toachieve them. PASC recently made a similar proposal, expressing little conidencethat policies are inormed by a clear, coherent strategic approach, inormed byan assessment o the publics aspirations and their perceptions o the nationalinterest.124

As part o this, the mid-term review should make plain where new joint prioritieshave emerged, such as promoting growth, rebalancing the economy or deendingthe Union against the threat o Scottish independence, and should establish thesteps that will be taken in these areas. Particular emphasis should be placed onresolving dierences in areas o major ideological dissonance, such as the tension

between liberty and security in counter-terrorism policy.

11. At the same time, the renewal process should seek agreement on a fewidentifiable policy wins for each party. As discussed above, the beneit oa government-wide programme rethink is that trade-os can be made acrossdierent policy sectors as occurred in the original Coalition negotiations. Thisshould create room or the two parties to concede to policies they might otherwiseoppose, on the understanding that they receive something in return. O course,it is crucial that policies agreed through this type o horse-trading process do notconlict with one another nor undermine the core shared economic and publicservice reorm agenda. The Irish programme review o 2010 oers an example o amid-term renewal that gave both parties a reason to stay in government together,while binding the two sides together around the core deicit reduction agenda.

12. A recognition of the issues where the parties cannot reach agreementshould also be sought. In some cases the Coalition parties might simplyneed to state that consensus is not possible, and to shit these issues into themaniesto development process. The German cabinet retreats show how a divided

government, comprising parties open about their preerence or alternativepartners, was able both to reach agreement in mid-term on a set o signiicantnew policies, and also to agree to disagree in other areas without undermining thestability o the Coalition.

13. Crucially, the Coalition should avoid focusing too narrowly on planning how itwill implement existing policies at the expense of fresh thinking. As discussed,this can be a particular weakness o coalition governments, where havingundergone a tough initial policy negotiation process, the parties have no desire toreopen the issue in the light o new evidence. One senior igure questioned the UKCoalitions desire to hear unpleasant truths about its policies, stating I dont knowwhether this is a learning government.125 He emphasised the need or governmentto listen to external views and to have a process or stepping back and assessingwhat was going well and badly.

under in May 2010. However, the result has been to undermine the centrality othe programme or government, while departments are orced to report separatelyto the Treasury on their implementation o spending cuts and to the Cabinet Oiceon progress against business plan and structural reorm actions (in turn derivedloosely rom the programme or government). The departmental ive-year planspublished under Labour in 2003-04 were similarly undermined by their weakconnection with spending review commitments monitored by the Treasury.120

7. The Coalition should therefore develop a clearer link between policycommitments in the programme for government and fiscal plans as agreedthrough the spending review and budget processes. This change would be inline with the recommendation o the House o Commons Public AdministrationSelect Committee (PASC) to develop clearer links between long-term objectivesand speciic budgetary measures.121 As in Sweden, the Coalition might also use thereview to explicitly dierentiate between those policies they are irmly committed

to, and those that will be pursued subject to amenable economic and iscalconditions.

8. As part of the mid-term review, the Coalition should allow for opennessabout those policy commitments that have been amended or dropped since2010 in response to changing circumstances, new evidence or a change o mindor political reasons. Sir John Elvidge argues that in a mid-term review, governmentmust ind a way to identiy activity which seemed appropriate at the time o theprogramme or government, but which no longer seems appropriate.122

In Ireland, mid-term reviews have served the

Documents

A Game of Two Halves - Institute for Government