The Lib Dems' Chris Huhne is wrong in this article in the FT in suggesting that coalition governments are good for fiscal crises. I have also encountered this argument from the Lib Dems at various constituency hustings. Here are the two examples they most often use to support their case.
The first is Scotland, where the Lib Dems were "in government" in coalition with Labour for many years, and how smoothly this worked, or so they say. Now, I am not an expert in Scottish politics, but my only point is this: the Scottish government's role is principally to manage expenditure in the country. By contrast, the next Government in Westminster will have to manage a difficult interrelated triangle of taxation, expenditure and borrowing. There are no Scottish gilts or other forms of debt. I am not aware of there being siginificant Scottish taxes, except for the ability to vary income tax rates which has never been used. The Scottish government is funded by a block grant, and is charged with spending it. The contrast between the two set-ups is extremely important, especially when we are in a fiscal crisis. It stands to reason that a stable coalition is much more achievable when the authority is only there to spend, not to raise taxes or issue debt as well.
The second example they use is Germany. Huhne is quite wrong to suggest that the CDU-FDP coalition there is working well. Don't take my word for it. Listen to the Germans themselves. Just check the reports from the English pages of Der Spiegel.
The coalition took some weeks to get itself together - despite the fact that the two parties had pledged to work together in advance of, and during, the September 2009 election.
When the coalition was finally formalised in October, Der Spiegel reported that the negotiations had been "marked by chaos and horse-trading." Later the same month, it was even more damning, saying:
"After three weeks of bickering, the new coalition has produced status quo -- just radically more expensive".
The piece was headlined "Is Germany's new Government taking its job seriously?"
In November, the same magazine told us that the coalition was "headed for marriage counselling".
In January, Der Spiegel wrote that:
"Chancellor Angela Merkel's government entered office hoping to end years of political deadlock in Berlin. Instead, her coalition has spent recent weeks bickering about tax cuts, fighting over foreign policy and developing a reputation for incompetence. And it's not likely to get better any time soon."
In February, Der Spiegel told us that "Coalition infighting was leading Merkel to flirt with the Greens" and in a further article that the coalition had been marred by infighting on economic and foreign policy
In March Der Spiegel said:
"Public support for Chancellor Angela Merkel's ruling coalition has continued to slide since last September's general election, reflecting the political partners' failure to agree on key issues like tax reform, adjustments to the overdrawn health care system and Germany's future approach to nuclear energy."
That's quite a lot of disagreement, and that's only the first six months of the new German government!
In conclusion, the German and British political systems and traditions are different. Germany's fiscal crisis is also not nearly as bad as the one Gordon Brown will bequeth. But consider this: in Germany, there is a coalition of two parties who wanted to team up with each other, and had spent years saying as much, and still they haven't yet been able to make it work. Who could say that this form of government is desirable in Britain, with no recent history of coalition governments, and with none of the parties saying that their preference is to work together? With Britain running the largest budget deficit in the G20, is Germany with what is reported to be their "failure to agree", "infighting", "flirting" with parties outside of the coalition, "bickering" and "developing a reputation for incompetence" really what Britain needs?
