May 12, 2010 / 4:48 AM / 9 years ago

Factbox: Polices agreed by UK's new coalition government

LONDON (Reuters) - Here are some of the policies in a coalition agreement between Britain’s Conservative Party and the Liberal Democrats.

The agreement calls for:


— LibDems get five cabinet positions. Their leader Nick Clegg becomes deputy prime minister and treasury spokesman Vince Cable becomes business secretary.


— A significantly accelerated reduction in the structural budget deficit in the next five years, the main burden to be borne by reduced spending rather than increased taxes.

— The Conservative Party will keep its plans to cut 6 billion pounds from non-frontline services this financial year, subject to advice from the Treasury and Bank of England.

— In the run-up to Thursday’s election, the LibDems rubbished these planned cuts, accusing the Conservatives of failing to give details of where and how the savings could be made and of risking the fragile economic recovery.

— Partially reverse Labour’s planned increase in payroll tax. Both sides of the coalition had opposed the tax rise.

— Create independent Office for Budget Responsibility.


— The Conservatives agreed to scrap their commitment to raise the death tax threshold to 1 million pounds ($1.48 million) over the next parliament. The LibDems opposed that plan because they said it would benefit only the very richest.

— Instead the two parties have agreed to adopt the Lib Dem policy of raising the personal tax allowance to 10,000 pounds as a long-term goal, with a promise to take “real terms steps each year toward this objective.”

— The parties did not agree to a Lib Dem call for a “mansion tax” on high-value properties or to stop tax relief for higher rate pensioners.

— The parties agreed to a substantial increase in the personal income tax allowance from April 2011, with the benefits focused on the lower and middle classes.

— This will be funded by dropping plans to increase the employee threshold for the national insurance payroll tax and by raising capital gains tax for non-business assets so it is closer to the level of income tax.

— The LibDems agreed not to oppose the Conservatives’ planned marriage tax allowance but do not have to vote for it.


— The two parties agreed to introduce a banking levy, to tackle bonuses and to create a more competitive banking industry. Both sides supported such a levy during the election campaign.

— They committed to get more credit flowing to smaller and medium-sized businesses. The government will look at the Conservative proposal for a loan guarantee scheme and the Lib Dem proposal for net lending targets for nationalized banks and decide which is the best one.

— Set up an independent commission to investigate whether to separate retail banking from investment banking. Its interim report is due within a year.

— They will make proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation


— Five-year fixed-term parliaments introduced, including the current parliament, with the next general election to be held on the first Thursday of May 2015. Cameron had previously only said he would consider such a change, while the LibDems had campaigned for it.

— Legislation introducing fixed-term parliaments would also provide for dissolution if 55 percent or more of the House votes in favor.

— A referendum on the alternative vote (AV) system. This is a major concession by the Conservatives, who had opposed electoral reform on this scale. Both parties will expect their parties to vote in favors of a bill calling for the referendum “without prejudice to the positions parties will take during such a referendum.”

- AV falls short of the LibDems’ preferred option: proportional representation, a system that more closely links the number of votes cast with the number of parliamentary seats a party wins.

— A wholly or mainly elected House of Lords, likely to involve long single terms of office. The LibDems had campaigned for an elected upper House, while the Conservatives had said they would “work to build consensus” for the reform.


— The agreement commits the government to keeping Britain’s nuclear weapons, a submarine-launched missile system called Trident. The renewal of Trident, due by 2024, should be scrutinized to ensure value for money.

The Conservatives support the full renewal of Trident, while the LibDems said during the election that a like-for-like replacement would be unaffordable. Instead, the LibDems wanted a review to find an alternative, as yet unspecified, way to defend Britain. It supports long-term multilateral nuclear disarmament.

- The LibDems will be allowed to opt out of any vote on the issue.


— The LibDems oppose building any new nuclear power stations.

— They will maintain their opposition, while allowing the government to bring forward the national planning statement for ratification by parliament so that new nuclear construction becomes possible.


— The new government will not join the euro or propose to join the euro.

— It does not propose to transfer any new powers to the European Union. It will legislate for a referendum lock that requires any government proposals to transfer new powers to the EU to be put to a referendum.

— The Conservatives oppose joining the euro, while the LibDems want to adopt the currency when the economic conditions are right. Clegg, seen as strongly pro-European, says now is not the right time.


— In what is being seen as a major concession to Cameron, the LibDems have agreed to an annual cap on non-EU immigration.

— An end to child detention in immigration centres.


— The Conservatives’ welfare reform program to be implemented in full.


— The Conservatives’ plans for schools reform can go ahead, provided all schools are held properly accountable.

— Additional funding for the pupil premium, as called for by the LibDems, which would raise school funding for poor children.


— The parties agreed on a major program of civil liberties, including a “Freedom” bill. They would scrap planned identity cards, the national identity register and the next generation of biometric passports.

— They would extend the scope of the Freedom of Information Act, review libel laws to protect freedom of speech and further regulate closed-circuit television cameras.


— They back a major environmental program to encourage a low-carbon, eco-friendly economy, including a green investment bank and a smart electricity grid.


— Agreement to scrao a third runway at Heathrow airport and to refuse additional runways at Gatwick and Stansted;

— Air passenger duty replaced with a per flight duty;

— High speed rail plans established.

Additional reporting by Peter Griffiths; Editing by Keith Weir

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