UK ELECTION RESULTS 2010: Gordon Brown and Clegg in talks as Tory Lib Dem deal nears | Mail Online
In the wake of David Cameron's offer of a 'big, open and comprehensive' partnership with the LibDems, strategists from the two parties spent the weekend locked in detailed talks.
But there remain significant hurdles to thrashing out even an informal partnership arrangement - let alone a formal coalition, in which LibDems get Cabinet posts.
• VOTING REFORM
What the LibDems want: 'Single transferable vote' proportional representation, where the number of votes cast translates directly into seats. Cut number of MPs by 150 and lower voting age to 16. Elected Upper Chamber.
What the Tories could swallow: Significant cut in number of MPs, and reform of Lords. Offering an initial committee of inquiry into PR. In extremis, could offer referendum on 'alternative vote system', where candidates are ranked in order of preference and losing votes are reallocated until one candidate has more than 50 per cent.
Verdict: Issue on which talks are most likely to collapse. LibDem supporters see this as a unique chance for electoral reform. Tory MPs and grassroots fiercely opposed PR because it could leave UK permanently governed by a centre-Left alliance. A referendum on even watered-down forms of PR would see LibDems and Tories on fiercely opposing sides - risking the coalition.
• TAXES
What LibDems want?: Take poorest out of tax system by raising personal allowance to £10,000. Wait until recovery is secure before scrapping NI rise.
What the Tories could swallow: Broad commitment to reducing tax burden on the poor, working towards the £10,000 threshold. Re-think of flagship policy on stopping 'NI jobs tax' would be a humiliating U-turn.
Verdict: Grounds for common agreement over personal allowance plan - but not over how it would be paid for. LibDem plans for mansion tax, changes to capital gains tax and a new raid on pension funds unpalatable. Clashes also likely over Tory plan to recognise marriage in tax system, which Mr Clegg has called unfair.
• ECONOMY
What LibDems want: Agreement to least halve the deficit by 2014 - but wait until 2011-12 to reduce public spending. Cap public sector pay. Split banks to insulate retail banking from investment risks.
What Tories could swallow: Most of the above, but want to make at least modest cuts in spending this year to reassure the markets they are serious about debt reduction.
Verdict: Shared ground on deficit reduction most likely basis for agreement. Locking LibDems into a partnership would help Mr Cameron, by silencing a respected opponent in Vince Cable. If coalition talks collapse, LibDems could agree to support Tory cuts package in informal 'confidence and supply' arrangement.
• CABINET POSTS
What LibDems want: As many as possible. Eyeing Treasury, Home Office, Education and Leader of Commons posts among others. At the least, want jobs for Mr Clegg, Mr Cable and former leadership contender Chris Huhne.
What Tories could swallow: Prepared to let key figures join cabinet. Schools spokesman Michael Gove yesterday said he would give up his own post to a LibDem. Could hand Mr Cable a key role on a financial stability committee if not a Treasury job.
Verdict: A formal coalition demands ministerial roles - but Mr Cameron's red-line policy issues on immigration, Trident and the EU make a LibDem in the Foreign Office, MoD or Home Office an unthinkable prospect. Lib-Dems could also refuse to work with Shadow Chancellor George Osborne, Mr Cameron's closest political ally.
• EDUCATION
What LibDems want: 'Pupil premium' giving schools extra funding for teaching children from disadvantaged backgrounds. Scale back tests at age 11. Scrap top-up fees
What Tories could swallow: Agree with pupil premium policy. Stop short of scrapping SATs tests but could agree to greater internal assessment instead of formal end-of-year exam.
Verdict: Along with economy, greatest scope for a deal. Tories would face struggle to convince LibDems of merits of allowing parents to establish own 'free' schools. Clashes also likely on top-up fees, which Tories may even allow to increase. Outside of a coalition, LibDems could agree to back a Tory Education Bill.
The bulging in-tray facing the new government
The political horse-trading in the wake of the hung Parliament election result takes place against a backdrop of economic crisis, war and warnings of industrial strife.
Here the Daily Mail examines the groaning in-tray of urgent problems that will face the incoming government.
ECONOMY
Alistair Darling was thrust into talks yesterday that could see taxpayers forced to pump in billions to prop up the euro in the wake of the crisis in Greece.
Sterling and the stock market took a battering on Friday as it became clear that the election had produced a hung Parliament and could tumble further unless there are clear signs of a strong government emerging that is able to take the tough decisions needed to bring Britain's vast budget deficit under control.
EDUCATION
Tens of thousands of primary school children will miss key Sats tests today as teachers at more than 1,000 schools stage a boycott in protest at the content of the curriculum.
STRIKES
British Airways cabin crew have already indicated they may stage a summer of strikes after rejecting the latest peace deal from management.
But this is set to be dwarfed by disputes in the public sector as spending cuts designed to ease the budget crisis take hold.
Unions have already warned of a Greek-style 'fightback on a massive scale' over cuts that could affect jobs, pay and pensions in the public sector.
DEFENCE
More than 10,000 British troops are facing daily peril while fighting the Taliban in Afghanistan.
Numerous key defence decisions on issues like the new aircraft carriers are also on hold pending the start of a strategic defence review promised by all three parties.
ENERGY
Key decisions on the construction of nuclear power stations and renewable energy facilities needed to prevent energy blackouts within a few years are on hold.
NORTHERN IRELAND
The new government will have to act quickly to steady potential instability in Ulster following the shock defeat of First Minister Peter Robinson in last week's election.
The defeat came against rising evidence of terrorist activity by dissident Republicans.
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