Department by department, what the new Government plans to do

<i>Independent</i> writers explain who came out on top in the policy wrangles

Tax and spending: Personal allowances to be increased

What they say

Cancelling planned national insurance rise for employers – but not employees. Personal allowances for income tax to be increased for lower and middle income earners from April 2011. Longer-term objective of increasing the personal allowance to £10,000. This will take priority over other tax cuts, including inheritance tax reductions. Liberal Democrat MPs to abstain on Budget resolutions to introduce transferable tax allowances for married couples. Full Spending Review to report in the autumn. However, real-term NHS spending increases ring-fenced, along with overseas aid budget. Money for the pupil premium will come from outside the schools budget by reductions in spending elsewhere. The parties will establish an independent commission to review the long-term affordability of public sector pensions, while protecting accrued rights. Earnings link for the basic state pension restored from April 2011 with a "triple guarantee" that pensions are raised by the higher of earnings, prices or 2.5 per cent, as proposed by the Liberal Democrats.

What they mean

The proposed tax cuts have grim implications for public spending. The coalition has retained the Liberal Democrats' commitment to take people on less than £10,000 out of income tax, but without the compensating mansion tax, while cancelling most of next year's rise in employers' national insurance contribution will also cost much-needed revenues. The Tories are still unwilling to face the fact that the nation cannot afford a Trident replacement, hence their fudge on this issue. Overall, the two are left with a "black hole" of undisclosed spending cuts of about £50bn a year. The ring-fencing of NHS spending (a Tory idea) and commitments to overseas development (joint) and uprating pensions (more or less joint) means deep cuts in areas such as transport and housing.

Verdict Score draw

Education: Schools given curriculum breaks

What they say

New providers to be able to enter the state school system in response to parental demand with schools to be given greater freedom over curriculum. Higher education policies to be put off until Lord Browne's review reports. Its proposals will be judged against the need to: increase social mobility; take into account the impact on student debt; ensure a properly funded university sector; improve the quality of teaching; advance scholarship; and attract a higher proportion of students from disadvantaged backgrounds.

If the response of the Government to Lord Browne's report is one that Liberal Democrats cannot accept, then arrangements will be made to enable Liberal Democrat MPs to abstain in any vote.

What they mean

Michael Gove, the Education Secretary, has the green light for his plans to introduce Swedish-style independent "free" schools run by parent and teachers' groups. However, the Liberal Democrats won safeguards over the project. Originally, Mr Gove planned to allow the "free" schools freedom from the national curriculum while introducing a traditional curriculum for others. Now all schools will gain these freedoms. In addition, they will all be held accountable by bodies like Ofsted, the education standards watchdog.

On student fees, both have agreed to await the outcome of a review on funding before deciding whether to raise fees above their present ceiling of £3,240 a year.

The Liberal Democrats, who pledged they would scrap fees within six years, have been allowed to abstain in a Commons vote if the inquiry makes recommendations they cannot accept. However, university vice-chancellors claimed this would merely help the Conservatives introduce higher fees.

The Liberal Democrats' main election pledge – to introduce a "pupil premium" giving schools more cash for taking on disadvantaged pupils – will go ahead.

Verdict score draw

Deficit: Emergency Budget in 50 days

What they say

The main burden of deficit reduction will be borne by reduced spending rather than increased taxes. The parties agree that a plan for deficit reduction should be set out in an emergency Budget within 50 days. New forecasts of growth and borrowing should be made by an independent Office for Budget Responsibility for this emergency Budget.

The parties agree that cuts of £6bn to non-frontline services can be made within this financial year, subject to advice from the Treasury and the Bank of England. The parties agree that reductions can be made to the child trust fund and tax credits for higher earners.

What they mean

On the face of it the Tories have the better of this particular tussle. Throughout the election campaign Vince Cable stressed time and again that to take £6bn out of the economy was pretty much as nutty as the Tories' extremist allies in the European Parliament. Now there is a fundamental agreement to introduce a policy that Mr Cable and Alistair Darling had agreed was a "risk to recovery" in their chancellors' television debate.

But the parties are still not quite at one on this issue and they have said that the policy is actually subject to advice on its wisdom from Treasury civil servants and the Bank of England. Despite Governor Mervyn King's encouraging words, the Bank may not welcome this invitation to join the coalition.

Longer term, there is still little specific on precisely how far and how quickly the new Government wants to go in cutting the deficit compared to Labour's plans.

Verdict On balance, a Tory win

Political reform: Five-year fixed term parliaments

What they say

Establishment of five-year fixed-term parliaments. Parliament can be dissolved if 55 per cent of MPs vote in favour. The parties will bring forward a Referendum Bill on electoral reform, which includes provision for the introduction of the alternative vote in the event of a positive result in the referendum, as well as for the creation of fewer and more equal-sized constituencies. Both parties to whip their parliamentary parties in both Houses to support a simple majority referendum on the alternative vote, without prejudice to the positions parties will take during such a referendum.

Voters will be able to force a by-election where an MP was found to have engaged in serious wrongdoing by a petition calling for a by-election signed by 10 per cent of constituents.

Establish a committee to bring forward proposals for a wholly or mainly elected upper chamber on the basis of proportional representation (PR) with draft motions by December 2010. Commission to consider the "West Lothian question".

What they mean

There is a proposal to require 55 per cent of MPs to vote for a dissolution of Parliament to trigger a general election (rather than the present 50 per cent). This moving of the goalposts is designed to stop either party walking out on the agreement – as is the commitment to fixed five-year parliaments.

The Tories have given significant ground, speeding up plans to bring in an elected House of Lords which would not be a priority if they governed alone and allowing the second chamber to be elected by PR.

Mr Cameron will whip his MPs to force through a referendum on the alternative vote for elections to the Commons, allowing people to rank candidates in order of preference. But this is not what it seems: Mr Cameron has assured his Shadow Cabinet the Tories will campaign for a No vote in the referendum. Equalising the number of voters in each constituency will boost Tory prospects and harm Labour.

Verdict Lib Dem gain

Europe: Sovereignty transfers halted

What they say

No further transfer of sovereignty or powers over the next parliament and work to limit the application of the Working Time Directive in the UK.

Amend the 1972 European Communities Act so any proposed future treaty that transferred areas of power, or competences, would be subject to a referendum. Examine the case for a UK Sovereignty Bill to make it clear that ultimate authority remains with Parliament and agreement that Britain will not join or prepare to join the euro in this parliament.

What they mean

Much of this section parrots broadly consensual sections of the Conservative election manifesto: no increase in EU powers; no British membership of the euro; a referendum on future EU treaties; Britain will be a "positive participant" in the EU. But what is not here? There is no reference to the Conservative manifesto's rhetorical desire to unravel half a century of European politics and reduce the EU to a simple "association of its member states". And three specific Tory Euro-sceptic shibboleths are abandoned.

There is no promise to renegotiate with other EU governments to repatriate "powers" surrendered under the Charter of Fundamental Rights, criminal justice and social and employment legislation.

The Con-Lib document even says the Cameron government accepts – on a case by case basis – that NEW European legislation on criminal justice might be in Britain's best interest.

In other words, this is a restatement of the traditional British posture in Europe: non-enthusiastic but pragmatic. Our EU partners will be relieved. Diehard Europhobes on the Tory back benches will be disgusted. Mr Cameron will avoid adamaging punch-up with the EU and can blame his alliance with the Liberal Democrats.

Verdict Lib Dem victory

Civil liberty: ID cards scrapped, libel law review

What they say

They plan to scrap the ID card scheme, the National Identity Register, the next generation of biometric passports and the Contact Point Database. Fingerprinting of children at school without parental permission will be outlawed. A review of libel laws will protect freedom of speech. CCTV will be further regulated.

What they mean

Protecting the fundamental right to trial by jury, restricting the use of Big Brother databases and extending the Freedom of Information Act – what's not to like about the Con-Lib civil liberties agenda? The new Government claims that the package of 12 reforms amounts to a rolling back of 13 years of Labour erosion of private freedoms.

But the promise to end plans for the unnecessary storage of internet and email records was announced last year by Jacqui Smith when she was Home Secretary. And a review of the defamation laws was underway when Gordon Brown called the general election last month.

Other policies may prove meaningless. A new mechanism to prevent the proliferation of unnecessary new criminal laws sounds nebulous. Isn't one of the key functions of Parliament to stop governments introducing daft laws? The bulk of the other proposals, including curbs on the misuse of CCTV, restoring the full right to protest and the end of the fingerprinting of children at school, could have been copied and pasted out of the Liberal Democrat manifesto.

Like all of the policies in this joint declaration, the devil is in the many omissions. For instance there is no mention of the Conservatives' big idea for a Bill of Rights to replace the Human Rights Act nor anything on the Liberal Democrat manifesto pledge to end the unfair extradition treaty with the US. And what happened to the Conservative and Liberal Democrat pre-election promise to set up an inquiry into Britain's alleged role in complicity in torture. The way to approach the Con-Lib policy agreement is to assume policies not on the list are not getting in.

Verdict Lib Dem win

Immigration: New limits on non-EU migrants

What they say

There will be an annual limit on the number of non-EU economic migrants admitted to the UK. A mechanism will be established to set and enforce the limit. Plan to end the detention of children for immigration purposes.

What they mean

Immigration will have to be handled sensitively if it does not expose a major fault line between the two power-sharing parties. It proved a flashpoint during the television debates when Cameron and Clegg baited each other over this issue.

On the face of it the Conservatives appear to have won the argument, forcing the Liberal Democrats to abandon their idea of an amnesty for 60,000 illegal immigrants. Instead there will be a cap on all non-EU economic migrants to this country. The Conservatives have been careful not to say exactly what the limit will be but any attempt to use it to block legitimate asylum-seeking families from securing sanctuary in this country will be strongly resisted by their new partners.

To sugar this bitter pill the new Government has promised to end the detention of child refugees. There is no mention of the huge asylum backlog or the Liberal Democrats' plan for a regional immigration employment policy.

The Tories will want to continue with the points-based entry controls, apply restrictions when new countries join Europe and crack down on abuse of the student visa system. But if Mr Cameron is going to convince the right wing of his party that he has scored a success he will have to prove immigration is reduced from hundreds of thousands to tens of thousands as he promised it would be on the campaign trail.

Verdict Tory win

Environment: Third Heathrown runway cancelled

What they say

Cancel the third runway at Heathrow and refuse additional runways at Gatwick and Stansted. Establish high-speed rail network. Passenger duty to be levied on a per-plane, rather than per-passenger basis with any increased revenues used to fund increases in the personal allowance.

Liberal Democrats to maintain opposition to nuclear power while permitting the Government to bring forward a national planning statement for ratification by Parliament, so new nuclear construction becomes possible.

The full establishment of feed-in tariff systems for electricity and provision of home energy improvement paid for by savings from lower energy bills. Measures to promote a huge increase in energy from waste and creation of green investment bank.

Establish an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped to meet the emissions performance standard.

What they mean

There are a couple of measures here, such as the promotion of anaerobic digesters to create energy from organic waste and the creation of new targets to generate energy from renewable sources, that were clearly inspired by the Liberal Democrats.

Big ideological differences still exist between the two parties on nuclear power, with the Conservatives in favour of new stations being built with private financing and the Liberal Democrats opposed to any new build. The deal is designed to let the Liberal Democrats avoid the internal fallout from backing nuclear power while letting it still go ahead.

But perhaps the greatest omission from the statement is any mention of what the coalition believes should be the 2020 target for reducing carbon emissions in order to combat climate change. Friends of the Earth said that without such a target, low-carbon policies are pretty meaningless.

Verdict Lib Dem win

Welfare: Date set for raising retirement age

What they say

Default retirement age phased out with a review to set the date at which the state pension age starts to rise to 66 by 2016 for men and 2020 for women. Agree to end rules requiring compulsory annuitisation at 75.

All existing welfare to work programmes to be replaced by a single welfare to work programme to help the unemployed get back into work. The parties state that receipt of benefits for those able to work should be conditional on the willingness to work.

In a specific move they agree to implement the Parliamentary and Health Ombudsman's recommendation to make payments to Equitable Life policy-holders who lost money when the insurer collapsed.

What they mean

The proposal to increase the state pension age was announced by George Osborne at last October's Tory party conference and raising it by a year for both men and women could bring savings of £13bn a year. But pressure groups fear it will hit women and poorer workers the hardest and disrupt their retirement plans.

The language on making state benefits conditional on willingness to work is strong and gives the Tories the green light for a crackdown on the so-called workshy, especially among under-25s.

The decision to phase out the default retirement age is closer to the Tory manifesto pledge to look at how to abolish it than the Liberal Democrats' promise to scrap it.

The vexed question of social care for the elderly is conspicuous by its absence and will have to be thrashed out before a final agreement between the two parties is published.

Verdict Tory win

Defence: Trident plans to be scrutinised

What they say

The government will be committed to the maintenance of Britain's nuclear deterrent, but the renewal of Trident should be "scrutinised to ensure value for money". Liberal Democrats will "continue to make the case for alternatives". Afghanistan is not mentioned.

What they mean

The Conservatives have won on their insistence that the Trident programme should be renewed. Trident was never going to be a dealbreaker but a large number of Liberal Democrat members are against nuclear weapons and are likely to be unhappy about Nick Clegg effectively giving in to the Tories on the issue.

Afghanistan did not feature in the "pre-nuptial agreement" but it is the most pressing and difficult foreign policy issue facing Britain today and the two parties have not sung from the same hymn sheet on the conflict in the past.

Despite the accusations over how much Gordon Brown had given to the armed forces at what time, the policies of Labour and the Conservatives did not differ in the stance of "seeing it out" in the war. It is the Liberal Democrats who have questioned keeping UK forces in the conflict and several leading figures in the party have called for a pullout.

The anti-war stance is strong among the rank-and-file Liberal Democrat membership, many of whom see the West's involvement in the Afghan conflict as an extension of the neo-Con "war on terror" which Britain should shun.

However, as with broadly the rest of the population, Liberal Democrats do not feel the sense of outrage over Afghanistan that they felt about Iraq and the issue is unlikely to lead to schism with the Tories.

Many senior military officers and diplomats feel the Liberal Democrat hierarchy have a somewhat loose grasp on what is going on in Afghanistan, among a number of other foreign policy issues, and getting into power will help to concentrate their minds.

Verdict Tory win