What happens in a hung parliament?
30 April 2010
With less than a week to go until the UK general election, the polls continue to suggest that the most likely outcome is a hung parliament, with none of the three major parties securing an outright majority in the House of Commons. Given that under the UK political system hung parliaments are rare, with the last one in 1974, this has triggered uncertainty about how exactly a new government would be formed as well as fears about the impact of a coalition government on economic policy in particular. So what exactly are the mechanics if a hung parliament is indeed the result of next Thursday’s election?
How the parties stand*
* Average of the seven polls - ICM, YouGov, Populus, Ipsos-MORI, ComRes, BPIX, Opinium.
Source: Guardian
Is there a rule book?
With a hung parliament having looked a distinct possibility for many months now, preparations for dealing with such an eventuality have been greater than ahead of any previous election. In particular, the Cabinet Office has for the first time published guidance on managing changes in government which sets out what to expect in the event of a hung parliament. In addition, talks have been held with each of the three main parties so that they are prepared to start the negotiations immediately.
Who governs during the negotiations?
If the result is a hung parliament, Gordon Brown remains as Prime Minister, with all the other Ministers retaining their current portfolios. Gordon Brown is not able to resign as Prime Minister until a new government is formed or another election is called.
What are the options?
There are essentially two options to form a government in the event of a hung parliament:
• A formal coalition government – this would entail the formation of a Cabinet made up of ministers from all the coalition parties. It would require policy concessions from both sides.
• A minority government – a single party would form a government, with a smaller party offering to provide support for confidence votes and finance bills. This is the system under which the Scottish Nationalist Party currently operates as the Scottish Government.
How long will it take to form a new government?
Obviously that all depends on the exact number of seats each party has, how much preparatory work has been done, etc. In other countries negotiations can take weeks, while in Scotland governments have taken an average of 10 days to be formed following assembly elections. In 1974 it took four days to resolve the process. Market and media pressure is likely to mean that all parties will be under an intense spotlight to expedite the process. Forming a coalition government, with the need to divvy up ministerial portfolios and agree policy concessions, would likely take longer to agree than a minority government. But it is likely to prove more enduring.
What happens if they can’t agree?
If no party can gain a working majority, a fresh election will be held. This seems an unlikely outcome – if the Liberal Democrats do as well as the polls suggest, they will be keen to agree a deal that would give them a substantive influence in a government for the first time in almost a century.
What is the likely outcome?
Current polls suggest that neither Labour nor the Conservatives are likely to get within touching distance of the 325 seats required for an absolute majority. Nor is either party likely to be in a position to be able to form a minority government, making a coalition government the most likely outcome. Ideologically, the Liberal Democrats sit more comfortably with the Labour Party, not least given the Labour manifesto commitment to holding a referendum on electoral reform, which could transform the Liberal Democrats’ future electoral fortunes. And, in the end, even if Labour wins a smaller share of the vote than the Conservatives, the Liberal Democrats may well decide that Labour is the only party it could work effectively with.
Would a coalition government hamper economic policy?
The fear most often expressed by market participants is that a coalition government will not be able to reduce the deficit as quickly as a single-party government. But this risk may well be exaggerated. For a start, a coalition government enjoying a sizeable parliamentary majority may well be in a better position than a single-party government with a tiny majority to get unpalatable measures through parliament. And with a broad consensus across the electorate that deficit reduction is the number one priority for any new government, any government that did not present credible fiscal consolidation plans may soon find itself suffering in the polls, particularly if the ratings agencies were to threaten the removal of the UK’s AAA status. That is not to say that there are not risks associated with a coalition government – and the history of Westminster politics is not overly encouraging where coalition governments are concerned. But the risks are not necessarily as large as some of the more shrill commentators suggest.
Grant Lewis, Head of Economic Research
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