Andrew Grice: An unhappy Coalition may not make it to 2015

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The Independent Online

Before this month's elections and AV referendum, the Chancellor was "George" in the Liberal Democrats' internal discussions. Now he is "Osborne" or "the Chancellor".

Sometimes, little things tell us something big. The atmosphere inside the Coalition is suddenly tribal and formal. It's business, not personal. As the Tories' chief strategist, Mr Osborne is blamed by the Lib Dems for authorising the No campaign's wounding personal attacks on Nick Clegg in the referendum.

Today, the Lib Dems talk privately about "identity issues" where they diverge from the Tories to remind voters they are a separate party, and "unity issues" on which they strongly support their Coalition partner. The Government's health reforms are an "identity" issue, while spending cuts are the most important "unity" issue. If the Lib Dems played games on the deficit-reduction programme, it would undermine their hopes of showing that "coalition works" and getting any credit for the economic medicine if it succeeds.

Mr Clegg has wisely put the NHS at the top of his shopping list. As he demands that the Health Secretary Andrew Lansley's plans are watered down, he holds the whip hand – literally. Mr Cameron needs the 57 Lib Dem MPs to get the NHS and Social Care Bill through Parliament.

Tory backbenchers are seething. Why, they ask, is Mr Cameron diluting the Tories' radical reform agenda for a small party that has just suffered a crushing double defeat? Revealingly, the Lib Dems welcome the row and trial of strength because the public will see them on the right side of the argument. Mr Cameron's nightmare is that, if he backs Mr Lansley and his own MPs by rejecting Lib Dem demands, the public will view him as being on the wrong side.

Holding the Coalition together is suddenly much harder work. The Tory backbench rumour mill suggests that Sir Gus O'Donnell, the Cabinet Secretary, is dusting down the rules about how a "confidence and supply" arrangement would work. Lib Dem ministers would leave the Government but the party would support the Tories in crucial Commons votes. Ending the Coalition would not mean an immediate general election. A Bill going through Parliament should ensure it takes place in May 2015, which suits both parties.

The Tory grapevine suggests the Coalition could be scaled down to a "confidence and supply" deal a year or even 18 months before the election. Lib Dem strategists, who had drafted a "confidence and supply" agreement for either Labour or the Tories before last year's election, admit the idea could be revived for the "decoupling phase" ahead of the next one.

For now, Mr Cameron and Mr Clegg have their hands full making sure uncontrolled explosions do not blow the Coalition off the road. But there are growing signs it might end before 2015.