The Clameron Coalition: A Fairer System?

After days of uncertainness about the future of Britain’s politics, the coalition that was formed in the end is the one which is most likely to succeed. It may seem that as the Conservatives have far greater seats and votes, 47% and 40% of the total respectively, they would be in command in terms of the policies that are implemented in Britain over the coming years. However, the coalition was formed after extensive compromising and policy adjustments by both parties and one of the major breakthroughs that the Lib-Dems were able to make was on the issue of Proportional Representation. David Cameron has promised that there will be a referendum on whether the electoral system should be changed to the AV system.

PR, as an idea, aims to secure a close match between the percentage of votes that groups of candidates obtain in elections, and the percentage of seats they receive. The Lib-Dems would especially feel that this idea has been missing from the UK general elections so far, which is the reason why even after getting a significant number of votes, they have not been able to attain as many seats in Parliament. The first-past-the-post system has resulted in disproportionate results especially for the Lib-Dems, whom, in the latest election got 9% of the seats after getting 23% of the general public’s votes.

Thus, it’s obvious why they are pushing for a different, more representative voting system such as the Alternative Voting (AV) system. Under this, voters have to list candidates in order of preference, and after the first preference count, if any candidate is unable to gain 50% of the votes, the bottom candidate is eliminated, and the second preferences from his/her votes are added to the totals for the other candidates in line with those preferences. The process is repeated until one candidate gets an absolute majority. This process would particularly be useful for the Lib-Dems because many voters who vote for the two main parties have Lib-Dems as their second preferences. As there are many constituencies where no candidate receives an outright majority, this would ensure that in any future elections, the Lib-Dems gain a lot more fairer and proportionate amount of seats.

This sytem can potentially have a great impact on the whole system as currently, too many votes are effectively wasted in safe seats where either Labour or Conservatives have large, in-built majorities, and this depresses turnout. As well as this, many MPs are elected on a minority of the overall vote in their constituency. Under the AV system, MPs could not be elected without the backing of at least 50% of voters in a constituency. This would increase the legitimacy of MPs, as well as giving more opportunities to smaller parties. Even though the Electoral Reform society has argued that if the AV system is applied to the recent election, Lib-Dems would only see an increase of 22 seats, this is based on statistics taken from a few of the electorate. In order to see the full effect of the new system, we will have to wait until the next election, given that it is actually adopted.

Hung Economy?

In the aftermath of the election which has produced no clear winner and left quite a lot of power on the table to be negotiated with, it was certainly not good news for the UK’s economy. The road to recovery after the recession has been a slow and bumpy one with the Greek crisis already creating uncertainty in people’s minds, putting the Euro in danger. Investors all around the world had been hoping for a decisive winner in the election; however, after the Tories were unable to secure an outright majority in the House of Commons, the lack of a decisive winner will almost certainly hit investor confidence, at least in the short term. We have already seen the beginnings of it, as political uncertainty saw the pound fall against the euro to 1.15 and to a year-low 1.447 against the dollar.

What are the reasons for this? Why does a hung parliament spell out danger for an economy, especially as fragile as the UK? Almost all economists agree that for a strong economy, a strong and stable government is needed. However, with a hung parliament, there are fears that there would be insufficient agreements to make the tough political choices necessary to cut the public spending, when UK’s budget deficit has hit a record £152 billion, which is 11% of the GDP. Therefore, investors will be worried that a weak government will be unable to force through measures to reduce the UK's high borrowing levels. The longer the current uncertainty continues regarding whether we see a Conservative-Lib Dem coalition or a Labour-Lib Dem coalition, the longer the delay will be in the recovery process which can greatly jeopardise the future of the UK economy.

Furthermore, the weakness of the pound has sparked inflation fears, as well as factory gate prices rising at their fastest pace for 18 months. The situation is not helped by the fact that all three parties have differing views over how to tackle the biggest problems of it all: the Budget Deficit. Whilst the Conservatives plan on cutting borrowing this year, the Liberal Democrats say that cutting borrowing now would slow down the economic recovery, and want extra resources for the treasury by putting tax rises in place.

Nevertheless, it is likely that there will be some sort of decision by Monday as to which side the Liberal Democrats will be joining, which will come as welcome news for the investors and the markets. But for now, the markets remain anxious, eagerly awaiting the definitive attitude needed to put our recovery back on track.