The Conservatives have prevailed over the Liberal Democrats on the economic issues and immigration in the new coalition deal thrashed out between the two negotiating teams over five days after the general election returned a hung Parliament.
The coalition partners agreed to immediately work to reduce deficit by reduced spending. They agreed to an emergency budget within 50 days and gave their nod to £6 billion spending cuts in 2010. A drastic change of policy for the Liberal Democrats, who advocated going slow on spending cuts in agreement with the Labour Party in its manifesto.
The biggest Liberal Democrat policy setback has been its decision to agree to the Tory cap on immigration from outside the European Union. Mr Cameron has all along advocated introducing an annual net cap to control net immigration and this was vehemently criticised by Mr Clegg during the television debates. The cap, for which no details have been provided in the joint document, will affect entry of long-term migrants into Britain from countries like India.
“We will consider jointly the mechanism for implementing the limit,” the parties said. However, in a small boost, the LibDems got the Tories to agree to “end the detention of children for immigration purposes.”
The Liberal Democrats also had to give up their policy of offering amnesty to illegal immigrants.
However, foreign, defence and domestic policy issues have not been covered in the coalition agreement reached between the two parties. They expect a final Coalition Agreement, which will cover the full range of policy issues, to be issued in due course.
The Tories have prevailed with their policy of maintaining Britain’s nuclear deterrent.
The renewal of Trident should be scrutinised to ensure value for money, the parties said, adding that the LibDems will continue to make the case for alternatives.
The Liberal Democrats have prevailed on their tax measures as the Tories agreed that the personal allowance for income-tax should be increased in order to help lower and middle income earners. They agreed to key LibDem promise of increasing personal allowance to £10,000 for tax purposes.
The Tories agreed to put their inheritance tax cuts on hold.
The two parties also “agreed that provision will be made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to this coalition agreement,” a victory for the Tories.
The two parties agree that aviation passenger duty must be switched to per-plane tax, a major victory for the LibDems.
The Europe-sceptic Tories prevailed on the Europe policy over pro-EU LibDems: They agreed that no “further powers would be ceded to EU without referendum.” The UK will not join euro in lifetime of Parliament.
Political reform is where the LibDems scored their major victory: The two parties agreed to five-year fixed-term Parliaments and dissolution of House will only be if 55 per cent or more of the House votes in favour. They will offer a referendum on electoral reform, which includes provision for the introduction of the alternative vote.
They have agreed to make the House of Lords an elected chamber on the basis of proportional representation.