We have a new system of rule in Britain: Quad government. The coalition has not, as is often claimed, restored Cabinet government after 30 years of personality-charged premierships. But the Quad, which consists of the Prime Minister, the Deputy Prime Minister, the Chancellor and the Chief Secretary to the Treasury, plays the Cabinet’s traditional role. It decides all major matters of policy, inviting other ministers along where necessary.
The Quad will determine the contents of the Budget. It has already met twice to discuss its priorities for the statement on 21 March. As its members will proudly tell you, the Quad doesn’t have its meetings in the Prime Minister’s den. This is not, they stress, sofa government. When it meets officially, its members are each chaperoned not only by a political adviser, but by a civil servant. But not all Quad meetings are official. On Monday night, the four men dined together informally in David Cameron’s Downing Street flat. There is a belief that the system functions best when as few people as possible are present, and discussions can be frank.
Deciphering the workings of the Quad is perhaps the best way to understand the coalition. The first thing to say is that, at least at the very top of government, the division of power is surprisingly equal. The Tories make up more than 80 per cent of the coalition’s parliamentary strength and occupy 18 of the 23 seats in the Cabinet, but the Quad is evenly split between the parties. There is a logic to this: after all, without Liberal Democrat votes, David Cameron can’t be confident of getting anything through the Commons. But the way the logic plays out might seem paradoxical. As one Cabinet minister observes, ‘In coalition, you’re strongest when you are weakest.’ It is when the Liberal Democrats are faring particularly poorly in the polls or their MPs and activists are in despair that Nick Clegg and Danny Alexander have the best chance of getting their way with Cameron and Osborne. Their humiliation in the electoral reform referendum, for example, was followed by a series of Liberal Democrat ‘wins’.
Looking at the Quad also reveals the strength of the Treasury. With its ministers accounting for half of the administration’s key decision-making group, and deficit reduction being the administration’s founding principle, the Treasury is an even greater force in the land than it was in Gordon Brown’s day. This is partly accidental: a result of the resignation of David Laws, which meant that Danny Alexander — initially Scottish Secretary, but already the minister who advised Clegg on policy — became a Treasury man. But however it came into being, the significance of the new balance of power is hard to overestimate. The Treasury fought for decades to get a second Cabinet post, finally succeeding in 1961, and even then remained vastly outnumbered in Cabinet by ministers from spending departments. Now it has half the people in the room whenever a major decision is taken.
What’s more, coalition relations remain stronger in the Treasury than anywhere else. Unlike in the rest of Whitehall, the Lib Dem contingent there still operates a ‘no surprises’ policy with its Tory counterparts, and the relationship between the Chancellor and the Chief Secretary is one of the strongest in government. Alexander is happily acting as Osborne’s gillie as the coalition tries to outwit Alex Salmond and the SNP.
The extent of the Treasury’s power excites mixed feelings in the rest of government. Some, even in the offices of the other Quad members, complain that it leads to an overly staid view of economic policy. After one Quad meeting, Clegg was heard to complain that Alexander’s brain had been taken over by Treasury officials.
But tension between representatives of the same party in the Quad is the exception, not the rule. The group’s other defining feature is that it is made up of the two party leaders and their two closest electoral strategists. The discussions it is now having about the Budget are about political economy in every sense of the phrase. The centrality of party politics to Quad discussions means that it also acts as a barometer of the state of the coalition. For the first nine months, this was the one meeting that never leaked. In the words of a Downing Street insider, ‘It was where the adults came together to sort out the things that the children couldn’t.’ There was a give and take and an appreciation of each other’s political needs that testified to the strong relations at the top of government.
Over time, however, as relations became less cordial and the cast list for the Quad’s meetings grew, the confidentiality of its discussions ceased to be inviolable. ‘At first it was a very small meeting,’ one insider recalls, ‘but then it got to the stage where you’d look up and see a Lib Dem spin doctor taking a note during it.’ When the Quad agreed to increase out-of-work benefits, against the Tories’ wishes, the news leaked out almost immediately. There’s now been a conscious decision to limit attendance at official Quad meetings to no more than a dozen people.
Ahead of this Budget, in a sign of the times for the coalition, the Lib Dems decided to state their negotiating position publicly. In January, the Deputy Prime Minister made a speech declaring that his party’s main priority was to raise the threshold at which individuals begin to pay income tax. This is currently at about £7,500 a year, and due to go to £8,105 from April. The Liberal Democrats, Clegg announced, would bring it as close as possible to £10,000. His office has now produced a paper on how to cover the cost; the suggestions are to clamp down on tax avoidance and to eliminate allowances mainly used by higher-rate taxpayers.
Negotiating via the media like this makes the Tory side of the coalition nervous. They fear that when the Quad process plays out in public, parties feel forced to take positions from which they can’t pull back, and policy-making becomes a zero sum game.
The question now is whether the coalition can rise above this political point-scoring and rediscover some of its initial radicalism in time for the Budget. Whether it does so or not will be up to the Quad’s four members.