The coalition years: Sean O’Grady imagines the next five years of the Con-Lib government

It's early summer, 2015. The Con-Lib government has lost a war, weathered another financial crisis and is preparing for a second term. What will Britain look like? Sean O'Grady fantasises

It was the most electric moment of the TV coverage of election night 2015, and David Dimbleby captured it with his customary finesse: "Here we see Harriet Harman, gracefully accepting defeat and holding back the tears as she thanks the returning officer, congratulates her Tory opponent, and vows, 'I'll be back'. She has been MP here since 1982 and finds herself now defeated, by just a handful of votes, by Annunziata Rees-Mogg, who fought a controversial campaign from her Bentley convertible. This surprise Conservative gain in Camberwell and Peckham puts David Cameron in Downing Street for the second time. Over to Jeremy now for the state of the parties..."

At the end of the night, Dimbleby declared, "This really is my last election show", and ranked it the most dramatic he had presided over. He was right. They wrote a book afterwards, entitled Did You Stay Up for Harman? Though the re-election of the Cameron government on 10 May 2015 came as no surprise, the scale of it did.

During the previous five turbulent years it had been anything but a foregone conclusion. In the midst of the Great Schools Strike of 2013, for example, when the National Union of Teachers closed every classroom in the country for a month, few would have predicted that the Conservatives would win a second term, let alone be rewarded with a majority of 101 in the new parliament. The resignation of a quarter of the Cabinet by 2012, for various "personal" reasons, added to the instability. When the Argentine government launched its August 2014 invasion of the Falkland Islands, which poignantly coincided with the centenary of the Great War, the sense of national humiliation was palpable. Ultimately, though, it was the economic recovery that won the election for Cameron. He was also aided, of course, by the secession of Scotland from the United Kingdom, and the removal of Labour's overwhelming advantage in Scottish MPs in the Commons.

Commentators had by 2014 started to talk about the Conservatives as the "default party of government", with political change coming only from the shifting moods and personalities among the Tories and the "Coalition Liberals" – now virtually indistinguishable from their Conservative allies. Candidates of both parties started to call themselves "Liberal Conservatives".

It was a sweet moment for the Camerons, who had produced two more babies in Downing Street – Gideon and Gordon. US presidential front- runner Sarah Palin was the first to call to congratulate Cameron on his win. President Strauss-Kahn of France was next, and IMF Managing Director Gordon Brown said he stood ready to help Britain if needed ("I did it before. I can do it again").

Floella Benjamin, Lib Dem mayor of London, said she pledged her support and that of Big Ted, Little Ted, Jemima and Hamble too. Nick Clegg, the Deputy Prime Minister, was appointed Foreign Secretary; but there were few of his colleagues left among the ranks of what had become, to all intents and purposes, a Tory administration. David Miliband led an opposition of 99 Labour MPs, including his brother. Diane Abbott was favourite to succeed him.

Of all the shocks in the first Cameron term, the Second Falklands Conflict was the most traumatic. Though Lady Thatcher was no longer able to give voice to the 'Spirit of the South Atlantic', there were many on the Conservative back benches who demanded that cruise missiles be used to bomb Buenos Aires. Vast oil reserves had made the 2,000 Falklanders the wealthiest people on the planet for a short time, pimping up their Land Rovers.

Billions of pounds in royalties had flowed back to the UK Treasury to dissolve the budget deficit. Unsurprisingly, it was too great a temptation for the Argentinians. The Defence Secretary, Liam Fox, was said to be sympathetic to using the UK's nuclear arsenal, but American diplomatic pressure meant that such massive retaliation was impossible. And there were no longer any Sea Harrier jets to defend the naval taskforce; they had been finally abandoned by the Labour government back in 2006.

The Argentine government had learnt the lessons of the 1982 war, and their soldiers, sailors and airmen were well equipped, well fed and well motivated. Their preparations were painstaking, and though the British garrison fought bravely the threat to civilian life and the sheer odds against them meant capitulation within days was inevitable. The Argentines had chosen the late summer for their attack, knowing that when winter arrived they would gain an invaluable ally.

In the aftermath and in the official Hutton Report, many blamed the mixed signals that had emerged from the Strategic Defence Review of 2010 and occasional hints from British Liberal Democrat ministers that, while sovereignty was non-negotiable, they sought a "constructive long-term relationship" with Argentina. President Obama was unwilling to countenance covert support for what was privately called "a colonial throwback". Hillary Clinton's lack of personal chemistry with William Hague – or "that weird baldy guy", as she called him – was also a negative factor. Even the efforts of Lord Mandelson, British ambassador in Washington since January 2012, were to little avail. Meanwhile Argentina joined Opec.

And yet in the opinion polls the Government's ratings were scarcely affected. Of far more interest to the electorate was the surprisingly strong economic recovery, especially as the banking crisis of 2011 had seemed to threaten the very solvency of the nation. By election day in 2015 the UK still owed the IMF a small amount of money for the special bailout provided when the Bank of England and the Treasury ran out of money with which to rescue the Nationwide Building Society, Barclays and the new Virgin Bank.

The failure to anticipate a second banking crash, and the fact that some cash machines had actually refused to dispense money to customers, led to the resignation of George Osborne as Chancellor and Mervyn King as Governor of the Bank of England. But by 2014, and more happily for the new Chancellor David Laws, previously nationalised banks such as Royal Bank of Scotland and Lloyds had recovered sufficiently for them to be offered for sale to the public. A national advertising campaign – "Don't Tell Fred" – was highly successful. Sterling strengthened, and unemployment and interest rates fell. Inflation came back under control under the new Governor of the Bank, Adair Turner (the first outside appointment for many years).

So the Cameron-Clegg government's slogan almost wrote itself: "You're better off under the Coalition: Let us Finish the Job". A political broadcast starring Michael, now Lord, Caine called "The Downing Street Job" was praised. VAT was cut to 10 per cent and the 50p top rate of tax was abolished.

The nation seemed relieved that the curtain had fallen on Britain's half-a-millennium long role on the world stage. It learnt, too, to live with more national assets being taken over by foreigners. BMW bought Rolls-Royce, the jewel of British manufacturing; Abu Dhabi interests made an offer for Marks and Spencer that the shareholders couldn't refuse; the Chinese bought British Airways; the Koreans took over the Ordnance Survey.

An even larger loss was Scotland, but few south of the border seemed inclined to do much about it. The Scottish referendum on independence, held soon after the SNP won an overall majority in the Scottish parliament, was bitterly and occasionally violently fought there. The 58 per cent vote in favour followed a vicious attack by the London Treasury on Scotland's funding, and a boycott of "all things English" – highlighted by the refusal of Mr Salmond to take phone calls from David Cameron. Yet the English appeared as indifferent to the loss of their northern partner in the union as they had been to the loss of colonial possessions in Africa in the 1960s.

The Sun headline on Scottish Independence Day, "Sod Off Jocks", was a crude and insulting last word, and echoed what many thought. Indeed a maverick 'SNP English Chapter' sprang up, allegedly with the tacit backing of William Hague. It supported the exit of Scotland from the union purely on the grounds that it would save the English taxpayer money and keep the Tories in power.

After the referendum, the Scottish Prime Minister, Alex Salmond, described the English living in Scotland as "honoured guests" and offered them a form of citizenship, but without the full rights enjoyed by "oor native Scottish folk". The monarchy was retained and Scotland applied for membership of the "new euro", the single currency used by Germany and a few others such as Austria and Finland. The Scottish High Commission in London, the Scottish Broadcasting Corporation and the Scottish Armed Forces were novelties, as were border posts on the A1 and M6. Berwick-on-Tweed announced its own plebiscite over which side of the border it wished to be on.

It was not the only schism in the former United Kingdom. Bob Crow, leader of the RMT union, said he "didn't know what David Cameron means with his Big Society, but if he wants a Big Punch Up with me, he can have it". Given Mr Crow's track record, the Cameron government was probably wise not to pick a fight with him and his members over pay; it offered tube drivers a 12 per cent pay deal. Sporadic disputes in the Post Office, the hospitals and in Whitehall were often settled by messy compromise.

Pushed by the impeccably polite, but stubborn, Michael Gove, the Government did decide to resist the National Union of Teachers and its allies when they said they would "shut every school" in the Great Schools Strike of 2013. An upsurge in petty crime and vandalism was reported in the autumn of that year, as schoolchildren were left to wander the streets and pickets closed school gates. Yet the teaching unions seemed even more determined to resist cuts to their pensions, longer working hours and – more than anything – what they derided as "yummy-mummy schools", the new institutions Mr Gove promised could be set up by groups of parents. Sources claimed the Prince of Wales was "simply appalled" by the fighting outside schools and the sacking of thousands of teachers.

After a four-week dispute, the two sides settled on a deal that made the expansion of Mr Gove's new independent schools dependent on local ballots and NUT co-operation. The collapse of a few early experiments, including one run by a cult where the classics, veganism and meditation were compulsory, did Mr Gove's cause little good. The secession of Scotland from the union raised questions about his political future in the new, England-dominated UK. Mr Gove and Mr Fox played up their respective links to Surrey and Somerset.

The biggest casualty of the great coalition experiment was the Liberal Democrats. Individually, many prospered as they turned out to be outstandingly able ministers; by the end of the first term it had become apparent that the Cameron government had found itself a welcome infusion of talent. Lord Mandelson's role in Washington, and Alastair Campbell's new job as an EU Commissioner, also suggested that the coalition government was becoming more "national" in tone. But in by-election after by-election the Liberal Democrats suffered, as disillusioned voters turned to the Greens – the new kids on the political block, appealing for "a new politics", unsullied by power. The Greens' leader, Caroline Lucas, managed to persuade the broadcasters that the 27 per cent vote that the party gained in the European elections of 2014 entitled her to an appearance in a special four-way prime- ministerial TV debate. "I agree with Caroline" became a new catchphrase, made more comical when Sky, the BBC and ITV made Cameron and Clegg share a podium. Yet in the general election the Greens could only up their parliamentary representation to three seats. Cameron and Clegg pledged to continue the coalition into a second term even if the Tories won an outright majority. A breakaway Council of Liberal Democracy, led by Charles Kennedy, was quickly dubbed the "wee frees". Plaid Cymru polled strongly, and independence for Wales was being taken more seriously.

It was quite a transformation. In 1997 the Tory Party had seemed smashed, having gone down to its worst defeat since the Great Reform Act of 1832. What was dubbed "the Second Great Reform Act", passed 180 years later, introduced the alternative vote (confirmed in a referendum), fixed-term parliaments and stringent limits on political funding which slashed the cash the unions could give the Labour Party.

Against all the early punditry, by 2015 the Conservatives once again dominated the political landscape, even though it was littered with the charnel and debris of conflict. People shut themselves away from the gangs, muggers, foreign wars and industrial unrest. They spent more time at home enjoying the latest electronic marvels and their gardens, and less in the sorts of communal pursuits they had once so much enjoyed – going to the pub, the football, the restaurant, the cinema. Voting turnout fell back.

By 2015 we had become a more introverted nation, content with the cap on immigration and a European Union that had retreated into being a mere free-trade zone. The Queen's Diamond Jubilee in 2012, and the England team's win in the 2014 World Cup in Brazil, were welcome distractions. So too was the surprise marriage of Prince William to Amy Winehouse, and the elevation of her father, Mitch Winehouse, to the peerage. Grazia called it an alliance of two great dynasties.

But the main interest the English had was in their own homes and families; "abroad" was an export market or holiday destination. The Scots, the yobs, the Falklanders, the Welsh, the Europeans and the rest could go hang: Not so much Big Society as Little England.