THE new Conservative and Liberal Democrat coalition revealed which policy agreements they have reached.

On deficit reduction, they pledged:

A “significantly accelerated reduction” in this parliament, mainly through reduced spending, rather than higher taxes;

An “emergency Budget” within 50 days;

“Modest cuts” of £6bn in 2010-11, to “non-frontline services”;

Reductions to the Child Trust Fund and tax credits for higher earners.

On tax measures, they agreed:

A “substantial increase” in the income tax personal allowance from April, 2011, with a “longer-term” objective to raise it to £10,000;

This will “take priority over other tax cuts”, including cuts to inheritance tax.

On banking reform, they said:

A banking levy will be introduced;

“Robust action” will tackle unacceptable bonuses in financial services;

An independent commission will investigate separating retail and investment banking, to report in one year.

On political reform, they agreed to:

Establish five-year, fixed-term Parliaments, with the next general election held on the first Thursday of May, 2015;

Parliament can be dissolved if 55% or more of MPs vote in favour;

Introduce the alternative vote (AV) system for the Commons – if backed in a referendum – and create fewer, more equal- sized, constituencies.