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A coalition forged by a sterling crisis?

Robert Peston | 15:52 UK time, Friday, 7 May 2010

As I have said so often that you're bored with hearing it, investors want a stable government perceived to be tackling the record public-sector deficit in a serious, substantial way.

Pound coinsOnly in those conditions will they continue to lend cheap money to the state.

What investors have heard this afternoon may make them fear that a fiscally credible government is looking a more remote prospect - so I wouldn't be surprised if the price of gilts were to fall further (a fall in the price of gilts or government bonds is the corollary of borrowing becoming more expensive for the government).

Here's the impasse.

The Liberal Democrats hold the balance of power. And senior Lib Dems tell me that there are two non-negotiable conditions for them to prop up a government:

1) There would have to be an unbreakable pledge to hold a referendum on reforming the voting system;

2) Gordon Brown must cease to be prime minister.

The implication of this afternoon's statements by David Cameron and Brown is that only Labour can or will deliver voting reform (Cameron's promise of an enquiry on the issue won't satisfy Lib Dems).

But Brown's colleagues tell me its inconceivable he would give up office as the price of forming a Lib-Lab pact (and anyway, some would say that it would be utterly unacceptable, in a democratic sense, for Labour a second time to pick a prime minister from its own ranks who hadn't led the party though an election).

Or to put it another way, there are reasons why it looks impossible for the Lib Dems to form a coalition or even a loose informal pact with either party.

Of course, where there's a hunger for power, the impossible may suddenly become possible.

Here's the big question.

Will it take a collapse in the price of gilts and the pound - will there need to be almost a full scale sterling crisis - to persuade the party leaders that there's no alternative to some kind of entente that allows the public finances to be fixed?

The smart solution would be to somehow depoliticise what's known as fiscal consolidation, or the process of cutting spending and raising taxes such that the public sector can again live within its means.

Quite how decisions that have a differential impact on different parts of the population can be depoliticised is beyond me.

Which is why senior bankers and investors tell me they fear that the pound and gilts are in for a hairy few days, and possibly something even worse and more enduring.

Comments

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  • Comment number 1.

    A proper voting system is far more important than a temporary blip in our money-system. Forget business, for a minute, and focus on the revolution!

  • Comment number 2.

    There's nothing stopping Cameron offering a referendum on voting reform and then campaigning for the "no" vote and the second condition doesn't affect the Tories. Gordon Brown, on the other hand, may not like the second condition quite so much.

  • Comment number 3.

    for those who wanted a hung parlaimant,well done ,for helping to cause chaos to our economy at it's most fragile time

  • Comment number 4.

    Just because "senior Lib Dems" (why can't they be quoted here?) say that something is non-negotiable, it doesn't mean they actually are. I'd bet my bottom dollar that neither of those conditions are non-negotiable.

  • Comment number 5.

    People disagree, fundamentally, about what direction this country should be going in, and how it should be governed. Maybe it's 4 in 10 wanting the Tory way, maybe 6 in 10 that don't. That's life - and that's a democracy (parliamentary or otherwise). This country doesn't exist simply to allow investors and bond traders a reliable environment in which to function, and like all investors they should know the risks before playing the game. We all know it's the truth when people say "view your house as a home, not a way of making money" - it's the same with our country.

  • Comment number 6.

    I just hope the Conservatives and Liberals get everything sorted quickly. The pound falling through the floor is grim news for those of us with exposure. Equally we need confidence across the markets and we are always vulnerable if potential customers have any reason not to do something.

    I think a Cameron led government with broad backing will bring confidence back. Brown's a decent man but he has simply run out of steam.

  • Comment number 7.

    Why is it unthinkable for the Tories to hold a referendum on PR? It would be the will of the people.

    If a refusal to have a PR referendum means that a Lab-LibDem alliance will implement PR anyway, then it would be lunacy for the Tories to deny the LibDems this. Hopefully DC can coerce any diehards in his party round to this way of thinking. After all, we know that Labour and the Lib-Dems have a history of reneging on manifesto referendum promises.

  • Comment number 8.

    The black hole of debt as a result of CDS's, blatant government overspends, bailing out banks and propping up money markets is just getting pushed around the globe by the traders!!

    Let's just hope the UK is not enveloped when the tide can no longer be stemmed by smokescreen chess amongst the world economies and investment banks!

  • Comment number 9.

    Good grief Robert - we vote for hope but just get more depressing observations from you. Serious as the subject is you know we will get through it and how about giving us a view of the upside! Every cloud and all that....light at the end of the tunnel....come on Robert you know it will make you feel better!

  • Comment number 10.

    It's absolutely essential we have proportional representation in the UK. One reason the outcome of the election is so hard to judge is due to the huge amount of tactical voting in 2010.

    How can any government have any authority when it is impossible to judge what people are voting for.

    Is a vote for Clegg a vote for electoral reform, a vote for the Lib Dems, a vote against Cameron, or a vote against Brown?

  • Comment number 11.

    After 2 hours sleep last night, i am stuggling to get through the day. You do cheer me up!!

    There are so many what ifs, it is quite incredible.

    Who said a hung parliament was a good idea.

    Just imagine if Cam would of got another 10-15 seats. We would of had a new cabinet in place now, dealing with the deficit on Monday.

    Now we have...........nothing, absolutely nothing. Nothing until people have spoken in little rooms and haggled over people, policies and my hard earned money.

    Power is a funny thing. I am going to lie down.

    James

  • Comment number 12.

    So, the party with the support of less than one in five adults demands a new form of vote that will enable them permanently to hold the balance of power with the support of less than one in five adults.

    Democracy?

  • Comment number 13.

    The whole thing is a farce....the idea that Gordon Brown will stay in no.10 will cause national riots

    Gordon Brown was never voted by the voting public and has not won an election, if he is such a good man than do the right thing and stand down

  • Comment number 14.

    "The implication of this afternoon's statements by David Cameron and Brown is that only Labour can or will deliver voting reform"

    That is not the flaming implication. How dare you? Get off this site and off the air if you're not prepared to offer bipartisan news rather than propaganda. What gives you the right to say cameron's proposals won't satisfy libdems, when we KNOW that labour offered a referrendum on PR before to get libdem support and then reneged on it.

    You need to have a serious think about the way you're approaching this - the climate has changed, this kind of wild propaganda is simply not acceptable from the BBC.

    BBC Mods, keep your filthy hands off this post. Stop, and think.

  • Comment number 15.

    Is it me or does the British electorate look very stupid right at this moment?

  • Comment number 16.

    THIS IS A GENERAL ELECTION!

    Who gives a four X what the bankers thinK

    Gc

  • Comment number 17.

    To be controversial for a minute...
    Would it be possible for Gordon Brown to suggest a Lib-Lab coalition, with a new Labour Leader, but proposing Nick Clegg as the Prime Minister (as he's actually led his party through this election)?

  • Comment number 18.

    If there's potentially going to be an election in a few months time, would any party seriously want to set about enacting full-scale cuts on their own, even the Conservatives?

    By having a coalition you can spread the 'blame' across two or more parties, whilst also looking to the public as though it's not a political thing (favouring the rich over the poor, or vice-versa) but something with cross-party consensus for the good of the country. It wouldn't make sense for the Tories, for their own sake, to plow on ahead on their own, and in fact they've probably been done a favour in not getting a slim majority.

    Does this mean that the Lib Dems have more bargaining power than we think? Would the Tories risk going alone?

  • Comment number 19.

    So the Lib Dems have the chance to really make a difference and they are threating to take their ball and go home with it?

  • Comment number 20.

    Well let's see then on whose career all our fortunes are to be sacrificed?

    I would recommend to all the parties that they look up the word `backlash' in the dictionary.

    This is the one moment in which they could all speak for Britain but what do we get? Nothing more than the same petty whinges as to what is in it for them.

    If we need a government, and to such as I that is a questionable proposition, then surely those who believe in government should be able to make one. I mean, who is stopping them?

    It is time for the Government of National Unity which we should have had last year but for Gordon Brown. He would appear to be setting himself up to be the big loser in all this. If he was the statesman he claims to be then he should resign gracefully and allow us all to get on with the rest of our lives.

    This is not the time for egotism.

  • Comment number 21.

    "Quite how decisions that have a differential impact on different parts of the population can be depoliticised is beyond me."

    Simple - because we would no longer have a vain, incompetent and tribal government.

    I am a highest rate taxpayer (yes 50%) and I would have no trouble in paying more if I thought those in power held the country's interests at heart rather than their own narrow advantage, and if they were competetent. Labour have gerrymandered (Scots votes to control England under their half baked constitutional reforms) and bribed (massive state handouts to 5 million) and they have forfeited the right to govern. They also spent wildly in the boom (and that is before accounting for PFI etc!).

    Con-Libdems together will put my taxes up. But they may also cut some spending, and return to some form of "one nation" government. They will not sell us out to Brussels.

    Finally they may well protect my civil liberties.

    My children might actually have a country to live in. What's not to like?!

  • Comment number 22.

    Robert - I am heartily sick of reading the following
    (and anyway, some would say that it would be utterly unacceptable, in a democratic sense, for Labour a second time to pick a prime minister from its own ranks who hadn't led the party though an election).
    This point has only ever been a cheap debating point by the Tories. We elect Parties, not Prime Ministers and therefore a change does not necessitate a new election. I have always voted Labour even whilst despising Blair and all his works (except for 97 when I was taken in). When Major became PM, there was no clamour for a general election, when Wilson retired there was no need for a General Election and when MacMillan resigned there was no need. The point is ludicrous - if a sitting PM should fall ill and/or die, are you saying we should be plunged into a General Election?
    If Brown's prescence was an obstacle, he would be honourable and make way in the National and Party interest and his successor would have the same mandate as any incoming PM

  • Comment number 23.

    Why can't the "markets" hold off on their selective knicker twisting. I understand that we (the country) have to borrow, and re-borrow a huge amount of money but if the selection of a government for our country is rushed because of some of the same weak-kneed financiers who got us into some of these problems then that is pretty poor for democracy. Never mind the concerns of the 60% of us who voted, what to the overpaid bankers think...

  • Comment number 24.

    What ever happened to the old phrase ''you don't get nowt for finishing second.'' Obviously doesn't apply to the Labour party and it's unelected[by the people twice] Prime Minister.

  • Comment number 25.

    If Labour and the Liberal Democrats form a coalition, they still won't have a majority in the Commons. Even taking into account the MPs who can't (or don't) vote, a Conservative/Lib Dem alliance would still be the strongest coalition. I express no preference - it's just that the mathematics don't add up!

  • Comment number 26.

    Same old same old. We won two World Wars with a National Government e.g. an all party coalition. Our "enemy" this time is the economy. For once, let the nation get what it has voted for from its politicians, a coalition government as our enemy waits for no man!

  • Comment number 27.

    Reforming the electoral system is a recipe for ensuring we have long term crises for the markets.... If our current system throws up a hung parliament once every 35 years or so, PR is certain to ensure we have hung parliaments and resultant economic damage at every election.

    How can 'reforming' the system possibly be synonomous with ensuring we get decisive results at the election - surely FPTP is the only route to make sure we get a winner - well normally get a winner!

    More important reform is surely scrutinising the imbalance that we have in the number of electors required to return an MP. Under the current boundries and seat distribution this is heavily favouring Labour, especially in Scotland, Wales and the North West.

  • Comment number 28.

    So the banks and banking activities in general call the shots after all.
    Makes you wonder why we had an election.
    Oh silly me, of course it was to elect someone who can be trusted to bail the banks out.
    With our money.

  • Comment number 29.

    But Brown's colleagues tell me its inconceivable he would give up office as the price of forming a Lib-Lab pact (and anyway, some would say that it would be utterly unacceptable, in a democratic sense, for Labour a second time to pick a prime minister from its own ranks who hadn't led the party though an election).
    ---
    No More or less democratic than a guy who's party 60%+ of the electorate voted against becoming PM - But I guess that covers all the leaders.

  • Comment number 30.

    So... Nick Clegg for PM!! Sounds unlikely? Labour almost certainly want shot of Brown (and maybe he wants out himself), but constitutionally he can't resign without ceding power to the Tories. If he resigns as Lab leader, he also resigns as PM, and Cameron is then asked to form the goverment. Obviously they don't want that.

    So it would actually suit them to offer the Lib Dems a coalition with Clegg as PM, & maybe Brown as temporary deputy PM. Once that goverment is in place Brown can resign/get pushed as Lab leader, Milliband takes over, and there's fresh elections in 6 months time.

  • Comment number 31.

    It seems to me Clegg has made a big tactical error by making Brown's resignation a precondition of talks with Labour. Why on earth did he make the Lib Dems a hostage to fortune in this way? It must have been obvious that Brown wasn't going to go unless he had to and he's certainly not going to because Clegg demands it. Now we're in a situation where Clegg seems to have ruled himself out for Lib-Lab coalition, which would have been by far the best outcome for desperately needed progressive change and , above all else, PR

  • Comment number 32.

    So its up to Cameron to show sound leadership and put the electorates verdict before his own dislike of proportional Representation. The electorate have clearly demonstrated that they don't want a dominant major party in power during the economic crisis by voting a hung parliament.
    Cameron must act in respect of this desire or face judgement from the electorate if he breaks his mandate to govern and forces another election which he may lose!

  • Comment number 33.

    One idea would be a con-lib pact for 1-2 years which focussed on the deficit and this only (ie.forget about parents taking over schools etc!!)

    One of the key lessons Sweden learnt from reducing the deficit was that it was the focus for the government and there was a consensus on what needed to be done. It was also really important that it was seen as fait with everyone having to take some pain ie. public service cuts which effect the poorest (eg. reduce tax credits) along with tax rises for the richest (eg. mansion tax, CGT in line with income tax).

    The Lib Dem idea of getting some financial stability council is a good one.

    Maybe David Cameron for PM with Vince Cable as Chancellor

    Some of the policies could be...

    Tax changes:
    # Raise income tax to 22% (from 20%) and 44% (from 40%) - fairer than VAT which effects poorest disproprtionately). Could leave 50% rate as it is for the moment.
    # First £8k tax free (rising to £10k if conditions allow) - some of the tax loss would be offset by the rise to 22%.
    # Cut tax credits (would be offset for poorest due to higher 8k personal allowance)
    # Min wage to £7 - would save on means tested benefits.
    # Bring Capital Gains tax % in line with income tax (18% CGT rate needs to rise)
    # Reduce tax deductability of debt interest for Corp tax purposes (will have to do this gradually!)
    # Possible VAT or new sales tax - if this is presented as possibility it will mean consumers bring spending forward to get economy moving.
    # 0% Corp tax on Renewable energy companies and research etc.

    Spending cuts
    # 4 day weeks or 9 day fortnight for much of civil service (reduce costs without increasing unemployment)
    # Pay freezes or £400
    # 60% tax on all public sector workers with pay over £60k - includes any banks which have a government guarantee (explicit or implicit). If they don't like it they can go it alone - don't think many customers would risk it with them though!!!!

    After 2 years of supporting Cons with focus on economy Lib Dems could demand referendum on electoral reform. If it was not given - they could force a new election to be called and force the issue.

  • Comment number 34.

    If the Conservatives deny the basic right of a referendum for political reform they don't deserve to win any democratic election.

  • Comment number 35.

    The Lib Dems wanted a "Council for Financial Stability", consisting of party representatives plus Bank of England and The FSA. This must be an open goal now, since what alternative arrangement could possibly work?

  • Comment number 36.

    Parties that ask the people to bring in constitutional reforms during times of austerity get a No from an electorate keen to kick back at the Government. The Lib Dems best chance of voting reform is to get a cross-party or non-party commission to recommend it. So maybe they will see the political sense in accepting Cameron's offer, if he goes the crucial step further of agreeing to put this group's recommendations to the people.

  • Comment number 37.

    The public have had their say.

    I cannot think of an option that could not happen at this moment, and more importantly be positivly argued.

  • Comment number 38.

    There's a much better solution for the Lib Dems. Accept that reform of First Past the Post for Westminster is not available for now. Instead insist on proper reform of all our other electoral systems: councils, European, mayors, Scotland, Wales, to a single acceptable system.

    Extract as much other policy as possible - eg abolish ID cards, get the pupil premium, proper action on climate change etc etc. Prevent one or two of the more loony Tory ideas like elected policemen. Have a "standstill" position on Europe - no more, no less.

    Do this quickly so as to show the country that hung parliaments are not the great bogey the Tories pretend they are.

    Get rid of Gordon Brown.

    That's not a bad solution for this Lib Dem.

  • Comment number 39.

    Robert, it is possible to depoliticise the process but as always there has to be a will to do so. We meet in Brighton last year at an event where many of the organisations are only in existance because that depoliticised approach has been adopted by them and implemenmtned by us. The politicians need to take control quickly before the situation takes control of them and this country. Regards.

  • Comment number 40.

    It would beggar belief if this outcome had not been discussed thoroughly and a resolution found months before the election.

    1) The polls have shown for the last month that we would have a hung Parliament.

    2) The pound and the economy have been lurching towards a crisis.

    Uncertainty resulting from 1) was always going to result in the situation in 2) reaching crisis point without early agreement.

    If nothing has been agreed in advance then nobody deserves to be in power and we should join the Greeks on the streets.

  • Comment number 41.

    I hope that the politicians do not form an entente "that allows the public finances to be fixed".

    One thing that Gordon Brown did get right was that to do this before the recovery is firmly established, and before private credit is able fill the gap left by reducing government borrowing, would be disastrous.

    Fortunately, any entente that attempted immediate serious fiscal reform, is likely to be very short lived, because of the temptation to jump ship when it became obvious that the reform was failing.

  • Comment number 42.

    Voting reform is needed , the first past the post system is a joke.
    You have no democracy until the votes cast in total determine who governs!
    England, Scotland, Wales need electoral reform to reflect each region.
    1) The Tories always look after business peoples interests largely by hammering working people with higher taxes.
    2) Labor looks after the poor and down trodden and yes the benefit fiddlers too.
    But who really looks after the interests of the ordinary working people that pay the majority of the taxes to support the other two groups?
    Simple answer is nobody and that's the flaw in the first past the post system.
    Strangely enough Clegg is now in a position of power to force the other two to change the system, if they do not then neither has the right to run the country!
    So for the first time the ordinary working person has the power!
    May be just may be we will now see some change to the corrupt system.
    If they don't change it vote with your feet ordinary people leave the UK!

  • Comment number 43.

    politics is a dirty game at best, .................now!!!!!
    It will said anything done and a deal done behind closed doors that it was for the good of the country.
    More like power .....
    Mr cynical is still here and a vote waiting for next time, which will not be a long time coming by todays speeches

  • Comment number 44.

    "Gordon Brown must cease to be prime minister."
    - does it matter? He isn't the President, he is only the PM. First amongst equals. Meaningless posture.

    "But Brown's colleagues tell me its inconceivable he would give up office as the price of forming a Lib-Lab pact (and anyway, some would say that it would be utterly unacceptable, in a democratic sense, for Labour a second time to pick a prime minister from its own ranks who hadn't led the party though an election)."
    Come on Robert, surely you aren't falling for this Murdoch-line are you? We elect a party, NOT the prime minister. If this crisis is as serious as you say then Brown goes, like chamberlain went, and is replaced, just like Churchill or Macdonald. We don't hear Cameron complaining about Major from 90-92, either change the law to say that you have to have an election, or drop the whole 'leading at an election' thing.

  • Comment number 45.

    What a crock Robert.

    Most of our main economic competitors run minority / coalition governments, including Germany. Why should it be good for them and bad for us?

    It wouldn't matter whether we had a single party with a mandate or not as through the course of the election, none of the main parties have shown any desire to properly grasp the nettle of our indebtedness & Borrowing.

    Halving the amount we're borrowing in 5 years isn't exactly a big thing to aspire to...

  • Comment number 46.

    Its ironic that this situation has happened at the best possible time!
    The two big extreme powers have been out maneuvered by the ordinary person in the street!
    At last we may have an opportunity for electoral reform and get rid of this out of date first past the post system! Which leads to swings from left to right boom to bust and has basically ran the UK economy in to the gutter.

  • Comment number 47.

    For the most part, this was a vote for change, and change is certainly what the UK got.
    To tell you the truth, I don’t care about investors, especially bank investors who speculate. I have to wonder how much speculation is going on right now: Will the UK sovereign Government succeed? Will the UK sovereign Government fail? You can bet, there’s a whole lot of speculation that the UK Government will go belly up.
    The days of cheap money to the state are over, unless suddenly, unexpectantly stability can be injected into the UK Government. How can you do that – short of a new election?
    A LibDem + Labour coaltion is dead in the water because Gordon Brown will not cease to be prime minister. Personally, I think this is wise, but the LibDems couldn’t possibly swallow that much crow.
    There’s always a hunger for power, but the real question is what combination of political power can feed a fearful, anxious public.
    I just can’t see the answer – not even if there occurs a full scale sterling crisis.
    Depoliticisation sounds like a good word, but how will the UK Government climb over the world to make it happen?
    Now that the public has had its trial run, maybe the only way towards stability is a new election.

  • Comment number 48.

    Clegg's hatred of Brown is so petty. Would he really risk the economy over a personal grudge?

  • Comment number 49.

    Hang on a minute. It was the LibDems that did worst in this election. Maybe if Clegg won't deal with Brown, then Brown should insist the price of a deal would be for the LibDems to choose a new leader?

  • Comment number 50.

    Since the banking system is now a state controlled enterprise funded by taxpayers, are we now in a position to buy and sell gilts from and to ourselves at prices we find agreeable?

  • Comment number 51.

    Don't assume in all of this that all the voters are either little Liberals or little Conservatives. Most of us like some of the things in one party's programme and other things offered by another party; we chose one of the parties because that's the way voting works. For example, I think Cameron is right on the economy and Europe but Clegg is right on immigration and Trident. Many of us might like the compromise programme agreed by the parties better than we like either programme on its own. Or not, as the case may be.

  • Comment number 52.

    9. At 4:31pm on 07 May 2010, David from Solihull wrote:

    "Good grief Robert - we vote for hope but just get more depressing observations from you. Serious as the subject is you know we will get through it and how about giving us a view of the upside! Every cloud and all that....light at the end of the tunnel....come on Robert you know it will make you feel better!"

    Delusion is no sanctuary for the mind.

  • Comment number 53.

    22. At 4:36pm on 07 May 2010, HarrysDisciple wrote:

    Indeed, but it was worth saying again. We don't elect party leaders we elect MPs. GBs position is entirely legitimate, for now.

    All the nonsense about share of the vote belongs in the same place (and is fairly easy to understand of you make some effort).

  • Comment number 54.

    If Liberal Democrat policy prevails and a system of Proportional Representation is introduced as a result of the present impasse,can we expect a repetition of the prevailing political uncertainty every five years?

  • Comment number 55.

    I said this would happen if we got a hung parliment.

    The electorate will get the blame for the market reaction - but it's a LIE.

    We were already in crisis - the markets were just looking for a reasonable excuse to pull the plug....and now the politicans can absolve themselves of blame and put the onus back on YOU

    Well a hung parliment is good - it's going to get dismantled soon anyway, so it's better to weaken it first.

    Yesterday I voted for Anarchy - it looks like I was the only person who voted for the winning ideology, the rest of the country voted for hope which cannot be delivered.

    Robert is merely dishing out the reality of the situation - and want to know the scary part? - this is the 'birghtside' version of events

    If you were me, you would be glad you bought Gold.

    Watch and learn.

    http://www.youtube.com/watch?v=tdxgWQWqsS4

  • Comment number 56.

    If investors are so concerned about stable governments than why did they create the bubble that has made so many unstable? There is nothing that says that a coalition goverment has to be unstable. People and agencies make predictions based on myths. Because the markets want conservative governments, and the US had a convservative government that exercised no oversight of the banks and markets that have caused all of this, does not mean that a conservative government will necessarily be best for the people. The markets want to be unregulated again. Many will not find a lot of comfort in that.

  • Comment number 57.

    If Clegg accepts the Cameron "deal", which gives away absolutely nothing of consequence, but denies the British people the chance of a just electoral system, then it will be a tragedy.
    He will have betrayed long held liberal ideals, betrayed the liberal supporters who have waited many years for this opportunity, betrayed the young voters who saw an honest politician and will have personally put the final nail in the Lib.Dem coffin.
    Was the last month all hot air?
    Please No !

  • Comment number 58.

    The result in England..........................

    CON 39.6% 291 seats LAB 28.1% 191 seats LD 24.2% 43 seats

  • Comment number 59.

    #12 "So, the party with the support of less than one in five adults demands a new form of vote that will enable them permanently to hold the balance of power with the support of less than one in five adults."

    I think you misunderstand how PR works. The main reason there are two bigger parties and one smaller one is that the electoral system demands it.
    Not only does the parliament not reflect the votes, the votes themselves do not reflect what people really want, because logic demands that you do not vote for candidates that do not stand a chance to get a seat.

    With PR, instead of "front-benchers" and "back-benchers" you get parties that cooperate on certain issues and not on others. Instead of lumping together a bunch of pet causes under one banner such as "Labour" or "Conservatives" - pet causes that are now so incoherent that parties can't even come up with a short description of what they stand for - you get *more* parties, each which focuses on a range of causes and at the same time signal what their view is on the main issues such as the economy, where they will need to align with partners.

    The inescapable conclusion for labour and the conservatives is fragmentation, which is why they oppose it. But it is not in defence of democracy, it is in defence of their own power base.

    Unfortunately this requires grown-up politics, not the football-match style tribal politics we currently have in the UK, which is why it will probably never happen. It is (and wants to be) a class based society, not one based around values on multiple dimensions.



  • Comment number 60.

    I'm amused that the answer to this once-in-a-generation mess is, supposedly, a system which will give us such a botched result every election.

  • Comment number 61.

    @W Phillips

    How can 'reforming' the system possibly be synonomous with ensuring we get decisive results at the election - surely FPTP is the only route to make sure we get a winner - well normally get a winner!


    I don't want to live in the travesty of a democracy that you describe. I don't want a Government that gained just over one third of the vote being able to rule absolutely. I want a Government where in order to pass a law, it has to win the argument, not just whip the vote.
  • Comment number 62.

    I think the fact that Brown was re-elected in his own constituency shows that people were not voting away from him, but simply the party.

    It is completely unfair for Clegg to suggest that Labour put a(nother) candidate in power that we did not vote for, without a referenda. I don't know what he is playing at, he has jumped on the Brown-bashing bandwagon, and my opinion of him has dropped through the floor, I wish I had chosen to 'stick with what I knew' when I voted. He is playing power games with the future of this country.

  • Comment number 63.

    Vince Cable as chancellor seems like an excellent idea. Knowledgeable with skills to communicate with the public, excellent pair of hands for difficult times

  • Comment number 64.

    There are two big issues in politics and economics that the politicians like to confuse - the extent of the debt crisis and who pays. I'm with the tories on the need to pay down the UK's debts so our children aren't paying for decades to come. But I'm with the lib dems on the need to ensure that the burden of this falls on those who can afford it - cuts in income tax for the low paid not cuts in inheritance tax for the Etonocracy. As for New Labour, they have printed money and trashed our savings and the biggest beneficiaries have been the obscenely rich, just check out the Times Rich List for how they have profited over the last two years at ordinary people's expense - thanks Gordon! We need major political reform and real democracy in this country.

  • Comment number 65.

    From the figures - Conservative 306, Labour 258, Libdems 57, other parties 19, undeclared 1. - only a Conservative / Liberal alliance could command a working majority in the House.

    In my opinion this alliance will not be stable under pressure and any other would be worse.

    I would suggest that the biggest problem will be that campaigning for the next General Election will start from day one, if it has not started already.

    This is the last thing the British people need at the present time!

  • Comment number 66.

    Does anyone believe that a different system will get us better leaders. We need better leaders to pick from and informed people to pick them and hold them to account monthly not over 5 years.

  • Comment number 67.

    I think we get too locked up with the markets, which are short term and driven by speculators. Money doesn't have a fixed value neither to what it can buy nor it's exchange rate with other currencies. The value of a currency is determined by the underlying economy. if one economy raises productivity compared to a neighbour it will have lower product costs which will make them attractive to the neighbour. However if the neighbour buys with it's currency the money wont be as valuable to the first economy because ultimately money from one economy can only be spent in that economy and since the prices are higher they wont be attractive. The solution is for the more productive economy to revalue it's currency to keep balance. The value of our money is determined by our economy and hence is overvalued compared to say China.

  • Comment number 68.

    As the dominoes of state sovereign debt tumble (and kicking them into the distance with massive loans only puts off the problem whilst creating more unwanted side efects)the current parties show how inept and ill prepared they are to stand up to the forces about to be unleashed. The markets want strong leadership only so that they can be confident that the tax payer will continue to pick up the bills of the failing financial system. They are wrong of course. The tax payer has had enough and the clearer the tax payer becomes about just how massive a debt they have already been burdened with then the greater the unrest will be. At present the party leaders look more and more like the three stooges of the financial elite rather that suitable leaders of our country. God knows where the real talent is these days but its not to be found in the political classes anymore.

  • Comment number 69.

    I do not agree with PR, mostly because I want to retain local MPs not party lists, but as a democrat I can not object to a referendum on voting reform.

    Cameron can agree to a referendum but campaign against. I would imagine that Clegg would accept that as a principle.

    #42 I guess you do not remember the 1960s and 70s. Labour believes in higher taxes for all, rich and poor alike. You forget the raid on pensions which effects those who try to save even a little bit (rich barely noticed and most were on money purchase schemes), you forget that Gordon has made fiscal drag (so that more and more people were brought into the higher rate tax band) a normal part of deception. All you can say is that he has not raised VAT - although I suspect any govt will need to do that shortly.

    #33 that is an interesting set of tax proposals. There is much to like in the list but...there is a major problem with all tax raising suggestions put forward by the political parties. If you look at tax take as a %age of GDP over the last 50 years in the UK there seems to be massive resistance once govt takes more than about 37% of GDP in tax. Other countries raise more but each country seems to have a "pain" threshhold beyond which the electorate objects. Govt is already taking 39% of GDP in tax this year which is beyond the pain threshold. Now admittedly part of the reason the tax take is so high is that GDP has gone down so simply leaving tax at the same level would naturally increase the tax take as a percentage of GDP, but the sad truth is that even before the credit crunch the govt was already taxing us at the limit the UK electorate has traditionally been willing to accept. Now it may be that the UK electorate will be willing to accept higher taxes for a short period of a year or two but after that there is a major problem for govt. It is not that we need to raise taxes but that we need a credible plan to cut around £120-140bn off public spending.

    One possible plus point for a coalition govt is that some months ago Vince Cable did suggest that cuts of around £120bn were needed. If Con and Libs were willing to work together to devise a plan that involved this level of cuts over 5 years it would probably be a better plan than if only one party tried to do it

  • Comment number 70.

    At 5:40pm on 07 May 2010, lisabisa wrote:

    If Clegg accepts the Cameron "deal", which gives away absolutely nothing of consequence, but denies the British people the chance of a just electoral system, then it will be a tragedy.

    - Cameron is just hustling. He wants to blame Clegg and hold another election in the hope his presshounds can get him in this time. The only possible deal is Lib-Lab, unfortunately the nationalists may break the chance of reform. 65% against the Tories, 52% for Labour and LD, this is a farce.

  • Comment number 71.

    55 WOTW If you were me, you would be glad you bought Gold.

    Yes, I did - did you buy enough to make a difference to you though or just a token amount?

  • Comment number 72.

    55 WOTW If you were me, you would be glad you bought Gold.

    Should have added - by buying gold you are obviously trying to preserve your wealth? How does that fit with your Marxist/anarchist ideology. Sounds very capitalist/tory/middle class to me??

  • Comment number 73.

    11. At 4:32pm on 07 May 2010, James wrote:
    Just imagine if Cam would of got another 10-15 seats. We would of had a new cabinet in place now, dealing with the deficit on Monday.

    Now we have...........nothing, absolutely nothing. Nothing until people have spoken in little rooms and haggled over people, policies and my hard earned money.

    ----------------------------------------------
    Just imagine if people had voted not to give Cameron 10-15 seats ? (Just imagine it).

    Perhaps people didn't want him 'dealing with the deficit on Monday'. Perhaps they're realising that irrespective of who they voted for, the economic situation is not so black and white as you portray ?

    That's Democracy for you.

  • Comment number 74.

    55. At 5:32pm on 07 May 2010, writingsonthewall wrote:

    If you were me, you would be glad you bought Gold.

    ----------------------------------------------------

    Buy silver instead. Smaller denominations are much more useful and they hold their value just as well :)

  • Comment number 75.

    12. At 4:32pm on 07 May 2010, In Vitrio wrote:

    So, the party with the support of less than one in five adults demands a new form of vote that will enable them permanently to hold the balance of power with the support of less than one in five adults.

    Democracy?

    ---------------------------

    And the party with 23% of the vote has got less than 10% of the seats.

    Democracy indeed...

    If its 'strong' government that really matters then we may as well do away with voting altogether. In fact, why we're at it why don't we just ask the city for their choice of dictator so we don't upset the markets?

  • Comment number 76.

    60. At 5:52pm on 07 May 2010, RevolutionBlues wrote:

    I'm amused that the answer to this once-in-a-generation mess is, supposedly, a system which will give us such a botched result every election.
    ---------------------------------------------------------

    I would read post #59 which does a sterling (sorry) job of expressing that many people do not understand how PR would actually develop the political system. It undermines the 2-3 party system (2 of which are riven by internal fighting) and creates 'parties' based around commonly held core ideals that differentiate them. It would not be unusual for example for Europhiles from Labour and the Tories amalgamating into a single group.

    PR means that the current 2-3 party system will disintegrate and each MP will know that they must reach consensus on crucial issues, whilst allowing them to debate rigorously those ideals which they hold dear.

  • Comment number 77.

    The visceral contempt displayed by Cecil Parkinson on PM tonight toward a) the Tories being put in a position to negotiate b) the Tories moving anywhere near a voting system other than FPTP came across like a blast from a very bad past. Cameron would be better keeping these dinosaurs off the airwaves.A deal will be done in the national interest, not in the interest of bond investors. Ken Clarke could barely disguise his hatred of PR/voting reform. They cant bring themselves to face a new world where inheriting power is not their minority right.

  • Comment number 78.

    No-one won this election.

    No party got 326 seats.

    No party got anywhere near 50% of the electorate. (Not even close to 40%!)

    Time for a National Coalition made up of ALL the parties!





  • Comment number 79.

    78 No party got anywhere near 50% of the electorate. (Not even close to 40%!)

    Con got virtually 40% of the vote and 56% of the seats in England.

    A con-lib alliance would equate to 2/3 of the vote in England

  • Comment number 80.

    Another blow for the soothsayers so much speculation and not just the dolts in the City who got us into this mess !!!

    This is now AL [After Lehman] everything has changed, most people are still in BL [Before Lehman] thinking -including my own friend Ruth Lea who worked for Lehman - there's a story !!!

  • Comment number 81.

    Hang on a sec:
    12. At 4:32pm on 07 May 2010, In Vitrio wrote:
    So, the party with the support of less than one in five adults demands a new form of vote that will enable them permanently to hold the balance of power with the support of less than one in five adults.

    Democracy?
    ------------------------------------------------------------------------
    So, you'd prefer the party that 75% of those eligable to vote didn't vote for to have absolute power???

    Democracy?!?

  • Comment number 82.

    What we all want to know is whether George "Breeches" Osborne would allow Prudential to land itself, and us, into all kinds of trouble by buying AIA.
    Just how much are the banks going to make as commission?
    And then walk away.

  • Comment number 83.

    79. At 8:41pm on 07 May 2010, StartAgain wrote:

    78 No party got anywhere near 50% of the electorate. (Not even close to 40%!)

    Con got virtually 40% of the vote and 56% of the seats in England.

    A con-lib alliance would equate to 2/3 of the vote in England
    -------------------------------------------------------------

    The election is for the United Kingdom, not just England.

    Until that changes, that is the democratic system.

    I've rarely seen such inelegance in defeat. What next, stamping of feet and refusing to play ? The voters of this country (the United Kingdom) have voted. Accept it.

    If one narrows and excludes elements of the country that do not vote in the way one sees fit, then the end point is that each voter is an island, one in which only their personal vote counts and be damned those who disagree. I find that attitude rather inidicative of what the Tories represent and it seems so do many other voters.

    If one would like to exclude the members of the Union from having a say in English affairs, there was a party standing on that platform. (It was not the Tories).

  • Comment number 84.

    Meanwhile - up here in the Stalinist Scottish Republic where brother Brown resides the proletariat are wondering what they've done.

    They voted Labour in yesterday to prevent a Cameron Govt and really annoyed the majority S of the border in Englandshire in the process.

    Then they all downed a bottle or five of Buckfast and went to bed happy they'd succeeded and the great leader would be so grateful he'd shower Scotland with gifts such as better benefit payments. Now though and despite the hangover they are now a bitty worried that in reality they could end up with the Tory chap and his band of pillagers who once ensconced in No10 will proceed to shut Scotland down by cutting off the great Barnett life line.

    Laugh.... Well you have to don't you. If Scotland had just done what it should have done and voted SNP then Labour would have had far less seats and Scotland could now be negotiating its independence deal.

    So we'd have had a grateful England on two counts.

  • Comment number 85.

    The groups that you can set up on Facebook, LinkedIn and the other social networks are great enablers. They bring together people who care about pushing the barriers on topics including educational reform, reducing unemployment, the pensions black hole.
    I recently attended a "Group Organisers" group meeting chaired by the CEO of one of the big social networks that was an amazing evening of great ideas that had been distilled from 1,000's of individuals. One solution then, which may allow the public's opinion to be heard - continuously - whatever happens after the hung parliment stays or goes could be a web site or mobile phone app that aggregates content from all of the social networks, quantatively, so peoples collective opinions can be seen by government and any other enabling body.
    Even better, if it then (1) allowed the relevant government minister to comment and act on very popular suggestions (2) allowed all of us to monitor what had been done to deliver on promises...
    This one DOES NOT need the government to make it happen...just a few web entrepreneurs committed to democracy.
    Any takers?

  • Comment number 86.

    55. At 5:32pm on 07 May 2010, writingsonthewall wrote:

    "If you were me, you would be glad you bought Gold."

    Yup, I'm with you there, I'm glad I followed your lead on that before the country went to the polls.

  • Comment number 87.

    So, of the three major parties, the smallest holds the most power.
    It is inconceivable that such a party should demand the resignation of a prime minister. But that's politics, and democracy apparently.
    Libdems are not only small, they got fewer seats so they're unpopular. But the voters' message says "a plague on all your houses".
    No wonder the market is nervous. Who knows what these politicians will get up to? The one thing we do know is it won't be what they have promised.
    Does it matter? YES.
    UK plc is well on the way to going bust. We don't have to go that way but there's a lot of fiddling while London burns. Without confidence in the UK we'll all pay a lot more in interest on our borrowing to finance all the hardworking pen pushers.

  • Comment number 88.

    WOTW

    So after Obama mentioned Dave the Cad was a 'lightweight', we'll be able to blame him for the approaching mess just like the Republicans are trying to blame Obama!

    Good. Hope Boy George has finished his Economics for Dummies and moved onto more advanced tomes. He'll need to have finished Vol III by Monday morning as the markets open! I just don't think he's got the intellect for it. Krugman would find it funny I'm sure, if it wasn't so terrifying!

  • Comment number 89.

    The (New) Labour and the Tories could agree on many points. They should form a coalition to keep LibDems out. No PR, no euro, yes to Trident, NI goes up 0.5%. With the support of over 65% of the electorate, roll up your sleeves and deal with the deficit.

    P.S. I would suggest Blair as PM - it was Labour's big mistake to boot him out.

  • Comment number 90.

    # 3. At 4:26pm on 07 May 2010, michaelb wrote:

    > for those who wanted a hung parlaimant,well done ,
    > for helping to cause chaos to our economy at it's
    > most fragile time

    Thanks, but it was quite difficult to vote for a
    hung "house of cretins". Real people only got to vote
    for "cretin candidates".

    But worry not, michaelb, Britian is quite capable of
    making headway without thier help. Those bunch of knuckleheads
    always think they are important, but we won't care about
    _any_ of this in 6 months. Sorry, make that 3 months.

  • Comment number 91.

    # 13. At 4:32pm on 07 May 2010, Skatingsnapper wrote:

    > The whole thing is a farce....the idea that Gordon Brown
    > will stay in no.10 will cause national riots

    Yes! I can just see the fox hunters chasing
    socialists through the streets! Get real!

  • Comment number 92.

    # 69. At 6:37pm on 07 May 2010, Justin150 wrote:

    > I do not agree with PR, mostly because I want to retain local MPs.

    The trouble is that those "local MPs" join those idiotic
    "national parties".

  • Comment number 93.

    Who cares what the bankers think? People hoping to borrow large sums of money.

  • Comment number 94.

    4. At 4:27pm on 07 May 2010, charlesbear wrote:
    Just because "senior Lib Dems" (why can't they be quoted here?) say that something is non-negotiable, it doesn't mean they actually are. I'd bet my bottom dollar that neither of those conditions are non-negotiable.

    ===========

    Welcome to PR Politics in a FPTP world!

    I believe the loss of 5 lib dem seats makes it more likely that they are non-negotiable, as the 'tide in the affairs of men' is at the flood as far as the lib-Dems are concerned, miss it, and they'll be back to the shallows, come on, how many times has a Lib_Dem leader been wooed so courteously by BOTH Labour and Tory ( well it was around the last time we had a hung Parliament, and even then not so obviously!) - the current financial climate possibly means they get only ONE chance , AND

    1) PR is vital or else they will be back to the shallows for certain.

    2) Propping up Brown will be tantamount to political suicide as it would almost certainly mean that any PR referendum is easily sunk by the Tories pointing out that what we have now is what PR will deliver forever more, deals behind closed doors in smoke free rooms AND it was the Lib-Dems 'Who done it' , because if there is but ONE thing this election has done, it has rejected Brown, but he won't see it and as I mentioned some time ago, this is his Waterloo, and his Old Guard, like Napoleon's will remain on the field denying the defeat until they too are wiped out, and I reckon that may take a week. (Although as this is a 'Political Waterloo' within weeks his old Guard will be supporting MIlliband or whoever and rewriting history to say they always did so. )

    Still, it may be that the Lib-Dems don't get the chance, IF it becomes clear they can't deal with the Tories, Labour have already offered PR ( a clever ploy that, but will it pressure the Tories? Not if they have any sense, if the talks fail, as long as they can blame Clegg, why would they want to Govern in this scenario?) , and although that was Brown, it means Labour, as I've no doubt they will sacrifice Brown although being a minority coalition, the Tories could probably scupper the lot anyway, hence Clegg talking with the Tories. Whatever the vote, it would seem that PR is NOT the issue with the majority of the electorate, only a vocal minority it would appear.

    The Tory stance strikes me as the one to watch, if, as I think, Clegg won't formally deal with the Tories, will they offer PR regardless, for informal support? IF NOT, and Labour ditch Brown (they will, they know Clegg can't deal with Brown, even if he had a mind to do so, Labour may be many things, but stupid they ain't, so IF they really want to try and run a Government, they'll get Brown to retire) and a Lib-Dem/Lab Coalition is formed, will the Tories sit still and wait for it to implode or will they strike quickly? Personally, that is their dilemma, too quick and they take the blame, too slow and the Country suffers.

    Anyone taking bets on when we are asked to do it all again?



    (Ed Milliband was touting for Apparatchik votes as he was talking to Paxman last night, supposedly supporting Brown - and Blunkett was conceding defeat and undermining any Labour response with only 17 or so seats declared! Personally, I bet the phone lines are red hot with labour internal politicking - never mind Cameron and Clegg! Brown to last the week? I doubt it) In fact it may be an idea to invest in Telecomms companies over the next year!

  • Comment number 95.

    If the markets force the issue, The Lib Dems have a fall back position which is to allow a minority Tory government, abstain on the Queens Speech, after that, act according to their manifesto on every vote, the public would probably respect them for it.
    The markets believe they are all powerful but the level of public outrage that major market interference in the democratic process could invoke might just lead to a few surprises.

  • Comment number 96.

    #87 "Libdems are not only small, they got fewer seats so they're unpopular. But the voters' message says "a plague on all your houses"."

    They had 23% of the vote, compared to the Tories 37%, I would hardly call them small or unpopular! This is also ignoring the fact that many people vote Labour or Tory out of habit or ignorance, or because they insist on voting for the winning party - like voting is a bet?!

    The fact they have so few seats just shows how badly FPTP represents the overall vote. I find it amusing how the Tories talk about their share of the vote now, when it suits them.... The sooner we have PR and get rid of party politics the better!

  • Comment number 97.

    It's hard to really understand some of the one-eyed Tory views expressed on here.......especially all this rubbish about Brown never being elected..........not much point in having a party system, if everyone gets too hung up about who is actually the leader after a party has legitimately won an election. It seems to me that they do this just because it's much easier (and lazier) to have a personal target to attack, rather than debate the rights or wrongs of a party's policies ....that they (mostly) don't appear to understand. I sometimes think these people actually believe everything they read in the Daily Mail. Let's hope that the hung parliament issues go some way to moving us away from this unhelpful ancient tribalism that appears to affect at least 90% of all voters ....... especially the Tories!!

  • Comment number 98.

    There are two options available for electoral reform and they both offer a fairer conversion of votes to seats than the current first past the post system. Proportional representation is the first and is the most likely to slice up vote share in to nearly equivalent seat numbers. This may be undesirable in the current political environment since a minority government is assured nearly every election on current vote shares. The second is preferential voting where the candidate with the least number of votes gets eliminated and the voters second preference gets re-allocated. This tends to be much more decisive in that the will of the people is still reflected in the outcome. It is used in Australia for lower house voting with great success and usually ends up with a party with a parliamentary majority - I recommend this as a way to break the systems current deadlock.

  • Comment number 99.

    This is what we get with a "first past the post" system:

    Conservative
    306 100 3 +97 10,706,647 36.1%
    Labour
    258 3 94 -91 8,604,358 29.0%
    Liberal Democrat
    57 8 13 -5 6,827,938 23.0%

    Despite garnering 6.8 million votes, the Lib Dems only have 1/6th of the seats as compared with the Tories.

  • Comment number 100.

    Lots of people don't get it. The issue is not 'which electoral system should we have?' That is for a later date. The issue is 'should we have the opprtunity to decide how our government is selected?'

    There should be an all party electoral commission with membership based on number of votes gained on Thursday. It should offer the nation two alternatives: The first would be the present system (with modification if there is a 2/3 majority in the commission). The second would be some form of PR, It may not be the full PR that the LibDems want, but one of the many variations (preferably one that has been shown to work well in other countries). The date of the referendum should be set now for May 2012. On this basis the country would have a Con/LibDem coalition on their agreed programme for two years providing the stability that is needed.

    Another idea is to move out of the present House of Commons chamber. It's very design perpetuates confrontation rather than consensus politics and possibly contributes to instability.

    If my recipe is followed the country gets the stability we need. The money markets (which I don't like, but recognise are beyond our control) are kept happy. If Cameron can offer that to the LibDems he will have delivered an opportunity for real change and not the minor details he is describing as change. In the end the country might want to keep 'first past the post' and then the LibDems would have to accept that and have PR as an aspiration, but not as a line in the sand.

 

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