Tories, Liberal Democrats in hard bargaining over coalition formation

The Tories and Liberal Democrats worked overtime to reach consensus on thorny issues blocking the formation of the first coalition government in Britain
since World War II, with the hard bargain over make or break issues running into the third day.

Negotiators for the Conservatives and Liberal Democrats will meet again later today for a crunch meeting to spell out their demands and a clearer picture is expected to emerge only tomorrow.

Conservative emerged as the second largest party with 306 seats in the 650-member House of Commons in the General Election which has thrown up a hung parliament.

Tory and Lib Dem leaders David Cameron and Nick Clegg spent 70 minutes last night in face-to-face talks on the neutral ground of Admiralty House in Whitehall, the seat of the Government here, with both sides describing the encounter as "constructive and amicable".

Clegg also spoke to prime minister Gordon Brown on phone at the request of the prime minister in a conversation which the Lib Dems again described as "amicable".

Brown has offered to talk to the Lib Dems talks if no deal is reached with the Conservatives.

A spokesperson for the Lib Dem leader indicated that Brown's overture would not deflect Clegg from pursuing his strategy of talking to the Tories first on a possible solution to the impasse caused by Thursday's general election.

"The Liberal Democrats will continue with the approach which Nick Clegg has set out and which was endorsed today by the parliamentary party and the party's federal executive," said the spokesperson.

Tory sources said no conclusion to talks is expected until Monday at the earliest, but today's meeting at the Cabinet Office will bring a sharper focus on the issues that may make or break a Tory/Lib Dem deal.

Cameron made clear he is willing to seek consensus with Lib Dems over issues like education, the green economy and taxation. But doubts remain over whether any agreement can be found on the thorny questions of Europe and electoral reform.

Polls suggest widespread public support for a fairer voting system following an election in which Lib Dems won fewer than one-tenth of seats after securing almost a quarter of votes and Conservatives were denied a majority despite taking a greater proportion of votes than Labour in 2005.

Some 62% of people questioned for the Sunday Times, 60% in the Mail on Sunday, 59% for The People and 48% in the Sunday Telegraph backed proportional representation for Westminster elections.

Speaking outside his London home, Clegg said: "Everyone is trying to be constructive for the good of the country".

"I'm very keen that the Liberal Democrats should play a constructive role at a time of great economic uncertainty to provide a good government that this country deserve.

"Throughout that we will continue to be guided by the big changes we want - tax reform, improving education for all children, sorting out the banks and building a new economy from the rubble of the old, and extensive fundamental political reform," he said.

In a message to Conservative supporters, Cameron reiterated that he would "stand firm" on issues relating to immigration, defence, and the handover of further powers to the EU. Conservatives want a cap to be put on immigration.

If formed, this would be Britain's first coalition government since World War II, and Cameron would be the first prime minister since Winston Churchill to lead a coalition government.

Churchill had led a war-time coalition from 1940 to 1945, before being defeated in the 1945 general election by the Winston Churchill led Labour party.

For the record, interlocutors of both parties maintained that the talks were continuing in a spirit of goodwill and respect for each others' positions.

Liberal Democrats leader Clegg said "everyone was being constructive", but maintained that he would be guided in the talks by his party's key demands on electoral reform and taxation.

There was talk in Westminster village that the negotiations included the Conservative team offering some key portfolios - such as Home and Transport - to the Liberal Democrats.

Clegg's negotiating team includes Danny Alexander, home affairs spokesman Chris Huhne, and Andrew Stunnell.

They have been meeting the Conservative team including Shadow Foreign Secretary William Hague, Shadow Chancellor George Osborne, policy chief Oliver Letwin and chief of staff Ed Llewellyn.

In an e-mail to labour party members, Brown said: "The past few days have seen us enter a political landscape not considered possible a few short weeks ago - with the outcome of the election leading to no single party able to form a majority government".

He added: "My duty as prime minister has been to seek to resolve this situation... My resolve has not, and will not, change".

 "I pledged to do everything in my power to fight for the people of this country - to secure the recovery, to protect their livelihoods and to continue to fight for a
future fair for all," he said.