ref="http://www.cityam.com/people/david-cameron">DAVID CAMERON seized the reins of power last night, becoming the first Tory Prime Minister to cross the threshold of Number 10 in thirteen years.
Flanked by wife Samantha outside Downing Street, Cameron addressed the country and announced he was inviting the Liberal Democrats into a “full and proper” coalition government.
There were none of the jubilant scenes that accompanied Tony Blair’s ascent to power in 1997 – a stark reminder of the huge challenges facing Cameron, the youngest British leader since 1812.
“This is going to be hard and difficult work,” Cameron said, pointing to “deep and pressing problems, a huge deficit, deep social problems and a political system in need of reform.”
After four days of intense negotiations, Cameron finally confirmed he was bringing the Liberals out of 65 years in the political wilderness by offering them seats at the cabinet table.
Nick Clegg will become deputy prime minister, while four other Lib Dems will join him in cabinet. Last night, his chief adviser Danny Alexander was confirmed as secretary of state for Scotland.
The two great offices of state will be held by the Tories, with George Osborne becoming chancellor and William Hague taking the top job at the Foreign Office.
In a bid to quell growing dissent on the Tory backbenches, Cameron appointed veteran right winger Liam Fox as his secretary of state for defence.
Last night, Vince Cable – a vociferous critic of Osborne’s for the last five years – was being lined up for a big job at the Treasury, with responsibility for business and banks.
Yesterday, he told City A.M. that he had dropped his opposition to Tory plans to start spending cuts in 2010-11 – a policy he previously described as “economic masochism”.
“We’ve got to be guided by economic sensibilities. Growing worries about sovereign debt mean the UK must now be more decisive than it would have had to be two or three weeks ago. I hear the arguments that there may be an argument for moving faster,” he said.
In total, over 20 Lib Dems will join government in middle-ranking and junior roles, in an attempt to stop rebellious MPs on the left of the party.
The Tories and the Lib Dems have been working flat out since Friday, trying to thrash out a programme for government that pleases both sets of MPs and party activists.
It is understood that the Tories have agreed to Lib Dem plans to hike capital gains tax, although there will be some concessions for businesses and entrepreneurs.
The two parties are also in broad agreement on Liberal plans to raise the personal tax-free allowance to £10,000, bringing the very low paid out of tax altogether, a policy that also appeals to the Tory base.
But the Lib Dems have agreed to forego their mansion tax on homes worth over £2m and will drop their opposition to tax breaks for married couples, a cap on immigration, and the trident nuclear deterrent. The Liberals are likely to abstain on commons votes in some of these areas instead of proactively backing the Tories.
As expected, the Tories will agree to table a referendum on the alternative vote electoral system, which would have boosted the number of Lib Dem seats from 57 to 79 at the general election.
Cameron’s arrival at Downing Street capped off a day of high drama in Westminster, which saw Gordon Brown close the curtain on his 27-years in politics.
In an emotional resignation statement, the outgoing Prime Minister said he wished his successor “well as he makes the important choices for the future”.
He added: “I love the job, not for its prestige titles and ceremony – that, I do not love at all – but for its potential to make this country more fair, more green, more democratic.”
Brown is also standing down as leader of the Labour party. Deputy Harriet Harman is stepping in until a permanent successor can be found.