History has not been kind to the Lib/Lab Pact, the sixteen-month constitutional experiment in which David Steel’s Liberals provided Jim Callaghan’s faltering Labour government with a Parliamentary majority in return for certain concessions. It was, judged one academic survey, “seen by some as a missed opportunity, by others as simply a misjudgement, but by few as a triumph”.
Yet the “agreement”, as Steel preferred to call it, lasted from March 1977 until July 1978 and holds a reasonable claim to success, not just in terms of inter-party co-operation, but in stabilising a then volatile economy and, in the longer term, laying the political groundwork for the more formal Conservative/Liberal Democrat Coalition of last May.
The parallels, in some respects, are uncanny. Just as the Lib/Lab Pact largely depended upon the almost avuncular relationship between the Boy David and Sunny Jim, today’s Coalition was forged (if not sustained) amid the personal chemistry of David Cameron and Nick Clegg. In policy terms, too, there are echoes of the past in contemporary coalition politics.
Lib Dems may now regret having drawn up such a binding policy agenda, but they made the same mistake in 1977. Then, a key plank of the Pact was a Parliamentary vote on direct elections to the European Parliament due in 1979. The Liberals wanted these to be conducted under proportional representation, and furthermore wanted Labour to compel its MPs to vote “yes”. When they did not, the fallout risked bringing the Pact to a premature end.
That it did not came down to a similar dynamic as that surrounding May’s referendum on the Alternative Vote. In both cases the dominant partner had stuck to the letter (if not the spirit) of what they had agreed, so for the Liberals/Lib Dems to withdraw would have appeared petulant, as well as baffling to an electorate with little interest in constitutional reform. In late 1977 David Steel urged his MPs to hold firm, albeit with considerable difficulty.
Yet while today’s Liberals have arguably failed to learn the lessons of ’77, the Lib/Lab Pact also offers valuable pointers in how to manage withdrawal from a potentially disastrous Parliamentary relationship with another party. A degree of control was crucial. Yes, the Liberals were “propping up” the Labour government in 1977-78, but because it was a Parliamentary agreement rather than a full coalition, Labour understood that Liberal support could be withdrawn at any time.
By May 1978 Steel realised that his increasingly unhappy colleagues meant the Pact could continue no longer. The Daily Mail summed it up as “a squalid little affair”, while The Times reckoned the Pact had been “a brave attempt to establish the conditions in which minority government can be made to work…the Pact may be dying, but another one may be born again.” Crucially, however, it gave the Liberals breathing space ahead of a general election.
The notion of an early “disengagement” actually came from James Callaghan, who had developed an almost paternal concern for Steel. “He explained that should there be an election that year it would be to the Liberals’ advantage if they detached themselves early and fought as a clearly independent party,” recorded the Labour adviser Bernard Donoughue in his diary, “instead of breaking away at the last moment solely because of the election.” Steel concurred on the understanding that an election would follow in October 1978.
Callaghan, of course, had other ideas, and Britain only went to the polls in May 1979 after his government had fallen on a no-confidence motion. But that period gave Steel almost a year in which to distance his battered party from an equally battered Labour government. Although Steel later conceded that “the failure and unpopularity of the Labour government rubbed off on us”, the electorate had more or less forgotten about the Pact by the time they cast their votes.
The Liberals, meanwhile, naturally talked up their achievements in relation to the Pact, issuing impressive looking lists of the concessions they’d gained. “His [Steel’s] technique was to claim credit for the [Labour] Government’s successes,” judged the commentator Alan Watkins, “such as the diminished rate of inflation, but to disclaim responsibility for the Government’s failures.”
Arguably, this strategy had paid off by election time. In the ten by-elections between the making of the Pact and the announcement of its termination, the Liberal share of the vote dropped by an average of 9.5 per cent. Almost a year later, by contrast, the Liberals snatched Liverpool from Labour in another by-election on the eve of the 1979 general election.
The widespread view that the Liberals would be obliterated in that election was also proved wrong. Although their share of the vote fell from 18.3 to 13.8 per cent – a respectable enough showing in the circumstances – the party lost only two of the 13 seats won in October 1974. Furthermore, David Steel was seen to have fought a good, upbeat campaign, his profile having risen as a result of the Lib/Lab Pact.
Politicians rarely learn from history, but a sensible strategy for today’s Liberal Democrats – if only in terms of damage limitation – would be to “disengage” from the Coalition at some point after the 2014 Budget. This would give Nick Clegg a year to talk up achievements like reduced taxation and (assuming it has) an improved economy. Reasserting his party’s independence at that late stage might not work, but opinion polls suggest the party would have little to lose in trying.