Labour and Tories continue to woo Clegg
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Labour and the Conservatives are continuing talks with the LibDems today as they both attempt to form a coalition.
Following Prime Minister Gordon Brown’s decision to resign as leader yesterday afternoon, Labour and the LibDems have begun formal discussions about forming a coalition.
Meanwhile, the Conservative Party has offered the LibDems a referendum on Alternative Voting as discussions continue between the two parties.
Speaking outside his London home this morning, LibDem leader Nick Clegg told reporters that discussions “have now reached a critical and final phase”.
This morning the FTSE 100 was down 1 per cent to 5330 by 8.40am as the City had its first chance to react to the latest news. By 11am the FTSE 100 was down 1.8 per cent at 5292.
Speaking last night on Newsnight, Conservative Shadow Secretary of State for Children, Schools and Families Michael Gove said the Tories were moving towards the LibDem’s position on income tax whilst the LibDems were moving towards Tory plans to speed up the deficit reduction.
The LibDems propose increasing the starting rate of income tax to £10,000 as part of a £17bn package to help the less well off. They would pay for this through a package of further tax measures including scrapping higher-rate pension tax relief, a mansion tax on properties over £2m and scrapping child trust funds.
Gove would not answer when pressed on how a ConLib coalition would pay for the income tax cut.
Also speaking on Newsnight, Labour deputy leader Harriet Harman did not rule out income tax concessions to the LibDems if they were to form a coalition.
A Labour/LibDem coalition would still fall short of an overall majority in the House of Commons and may need the support of a number of minority parties including the SNP. The SNP have indicated they would consider playing a role in such a rainbow coalition.
However, speaking this morning on BBC Radio 5, senior LibDem Simon Hughes said he did not expect the SNP to be part of any such coalition. Another option could be LabLib minority Government.
Speaking this morning on BBC Radio Scotland, International Development Secretary Douglas Alexander said he could not “envisage circumstances in which we would enter into agreement with the SNP”.
Also speaking this morning to the BBC, Tory Shadow Chancellor George Osborne ruled out a going it alone in a minority Government. He said: “We can’t just turn up at Buckingham Palace and say we would like to form a minority government. We would need the consent of the Liberal Democrats to form a minority government.”
He said “people should not really see this as a straight choice between two stable governments” as a LabLib coalition would “lack legitimacy and wouldn’t really be stable because it would rely every night on nationalist votes”.
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