U.K. coalition government holds 1st meeting

Britain's first coalition government in seven decades held its inaugural meeting Thursday, with members of the once-rival Conservatives and Liberal Democrats sitting around one cabinet table and signalling their commitment to deficit-slashing by agreeing to an immediate pay cut.

Conservative Prime Minister David Cameron presided over the gathering, sitting across from his deputy, Liberal Democrat Leader Nick Clegg.

There are 18 Conservative ministers and five Liberal Democrats in the new cabinet. The two parties formed a coalition  government -- Britain's first since the Second World War — after last week's national election produced a hung Parliament, in which no party has an overall majority.

The Tories won 306 of the 650 House of Commons seats, the Labour Party 258 and the Lib Dems 57.

Cameron made a slew of junior ministerial appointments Thursday and visited key government departments to speak to civil servants.

"The more I think about this endeavour on which we have embarked, the more excited I become," Cameron told staff at the Department for Business, Innovation and Skills. "Because this coalition government, if we can make it work — and I believe we can — is a five-year government."

Among the first acts of the new cabinet, which has said deficit-cutting is its top priority, was agreeing to take a five per cent pay cut and subsequent five-year salary freeze that the government says will save taxpayers the equivalent of roughly $446,000 Cdn a year.

The move leaves the prime minister's annual salary at 142,000 pounds ($211,000 Cdn) plus 65,000 ($97,000 Cdn) pounds for sitting as a member of Parliament. Other ministers get slightly less.

Most of the new ministers emerged from Thursday morning's meeting at 10 Downing Street smiling.

'It's like we'd been working together for years'

"It went very well," said Education Secretary Michael Gove. "I was delighted by the sense of partnership and common purpose."

Work and Pensions Secretary Iain Duncan Smith echoed those sentiments.

"It's like we'd been working together for years," Smi said.

The right-of-centre Conservatives and the centre-left Lib Dems have hammered out a policy agreement with compromises on both sides.

The third-place Lib Dems get moves toward the electoral reform they have long advocated while the Tories retain key platform planks, including an annual cap on immigration and cuts to public spending to reduce Britain's ballooning deficit.

Duncan Smith said the government's main task was "to get the economy back on track."

A BBC survey of economists who advise the Treasury Department found Thursday that most are predicting that the government will raise sales taxes to slash the record $228 billion Cdn deficit.

Most of those questioned predicted an increase in value added tax from its current 17.5 per cent to 20 per cent before the end of 2011.

Before the election, neither party had refused to rule out tax increases on goods and services.

Brown to stay on as MP

Cameron and Clegg have also pledged sweeping reforms to Parliament, civil liberties laws and ties to Europe.

The Labour Party, relegated to opposition after 13 years in power, is facing a leadership contest following the resignation of former prime minister Gordon Brown. So far, only ex-foreign secretary David Miliband has announced his candidacy but others are expected to follow — including, perhaps, Miliband's younger brother, Ed.

Brown, meanwhile, confirmed Thursday that he will continue to sit in Parliament as a backbencher. His  predecessor, Tony Blair, quit the House of Commons when he stepped down as prime minister in June 2007.

Visiting a college in his home constituency of Kirkcaldy, Scotland, Brown said he hoped to remain in Parliament "for these next few months and years."

"I may have given up one job, but the job that I love in politics is to be your member of Parliament, and I hope we'll be able to work together," he said.