How Labour is preparing the ground for a coalition with the Lib Dems

Ed Miliband's PPS John Denham warns Labour not to assume it will be able to govern alone after the next election.

One reason why the Lib Dems are less despondent than their poll ratings would suggest is that the party could still hold the balance of power after the next election. The Conservatives will struggle to win the majority they failed to secure in 2010 - no governing party has increased its share of the vote since 1974 - but the party's existing support could prove sufficiently resilient to prevent Labour getting over the winning line of 326 seats. For this reason, the Lib Dems, who expect many of their sitting MPs to defy the national swing, believe that Ed Miliband's party could be forced to turn to them for assistance in another hung parliament.

There are now signs that Labour is acknowledging as much. Yesterday on The Staggers, former cabinet minister John Denham, previewing the launch of a new group called Labour for Democracy, wrote that "rather than Labour re-establishing itself as the sole party of choice for progressive voters, it's more likely that the progressive vote will be split as it has now been for decades." In other words, the Lib Dem vote will prove more durable than many in Labour currently assume. It is a message reinforced by Labour for Democracy, which states on its website: "All Labour members will work hard for every Labour vote.  But whether we win the outright Labour majority we all seek, or end up with a less conclusive result, the change Britain needs will require the support of all who share our values."

Though the words "tactical voting" do not appear in Denham's piece, his prediction that the progressive vote "will be split" is a reminder that it could play an important role at the next election. The Conservatives are in second place in 38 of the Lib Dems' 57 seats and half of those on its target list are held by Clegg's party. If Labour is to prevent the Tories from decapitating scores of Lib Dems, it will need to consider whether to advise its supporters to cast tactical votes (as Peter Hain and Ed Balls came close to doing at the last election).

Denham goes on to note that "despite the failures of the coalition, the public still generally want politicians to work together when they can, rather than exaggerate their differences." What makes his intervention particularly significant is that he is now PPS to Miliband (he was one of the Labour leader's early shadow cabinet supporters), suggesting that he is acting with the approval of the leadership. He concluded:

It is tempting to see pluralism as a sign of weakness, a lack of confidence; even an unwanted attempt to give Nick Clegg a permanent and undeserved place in government.

But we must be bigger than that. Tribal differences have obstructed progressive change in the past. Voter allegiances to the major parties are declining as fast as the icecaps are melting. There are even signs that the ‘progressive majority’ that split its vote in the 1980s is itself shrinking in the face of recession and insecurity.  If we want to change Britain in a progressive direction, Labour must show it is willing to work with, not just lead, everyone who will support all or part of that change.

So, while Clegg's head remains the price of a Labour-Lib Dem coalition (indeed, Denham was one of the first senior Labour figures to state as much), Labour is increasingly clear that it may not be possible for it govern alone after the next election. Expect Denham's article to mark the beginning of a prolonged rapprochement.

Labour leader Ed Miliband's PPS John Denham called for Labour to work with other progressive parties. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Will Euroscepticism prove an unbeatable advantage in the Conservative leadership race?

Conservative members who are eager for Brexit are still searching for a heavyweight champion - and they could yet inherit the earth.

Put your money on Liam Fox? The former Defence Secretary has been given a boost by the news that ConservativeHome’s rolling survey of party members preferences for the next Conservative leader. Jeremy Wilson at BusinessInsider and James Millar at the Sunday Post have both tipped Fox for the top job.

Are they right? The expectation among Conservative MPs is that there will be several candidates from the Tory right: Dominic Raab, Priti Patel and potentially Owen Paterson could all be candidates, while Boris Johnson, in the words of one: “rides both horses – is he the candidate of the left, of the right, or both?”

MPs will whittle down the field of candidates to a top two, who will then be voted on by the membership.  (As Graham Brady, chair of the 1922 Committee, notes in his interview with my colleague George Eaton, Conservative MPs could choose to offer a wider field if they so desired, but would be unlikely to surrender more power to party activists.)

The extreme likelihood is that that contest will be between two candidates: George Osborne and not-George Osborne.  “We know that the Chancellor has a bye to the final,” one minister observes, “But once you’re in the final – well, then it’s anyone’s game.”

Could “not-George Osborne” be Liam Fox? Well, the difficulty, as one MP observes, is we don’t really know what the Conservative leadership election is about:

“We don’t even know what the questions are to which the candidates will attempt to present themselves as the answer. Usually, that question would be: who can win us the election? But now that Labour have Corbyn, that question is taken care of.”

So what’s the question that MPs will be asking? We simply don’t know – and it may be that they come to a very different conclusion to their members, just as in 2001, when Ken Clarke won among MPs – before being defeated in a landslide by Conservative activists.

Much depends not only on the outcome of the European referendum, but also on its conduct. If the contest is particularly bruising, it may be that MPs are looking for a candidate who will “heal and settle”, in the words of one. That would disadvantage Fox, who will likely be a combative presence in the European referendum, and could benefit Boris Johnson, who, as one MP put it, “rides both horses” and will be less intimately linked with the referendum and its outcome than Osborne.

But equally, it could be that Euroscepticism proves to be a less powerful card than we currently expect. Ignoring the not inconsiderable organisational hurdles that have to be cleared to beat Theresa May, Boris Johnson, and potentially any or all of the “next generation” of Sajid Javid, Nicky Morgan or Stephen Crabb, we simply don’t know what the reaction of Conservative members to the In-Out referendum will be.

Firstly, there’s a non-trivial possibility that Leave could still win, despite its difficulties at centre-forward. The incentive to “reward” an Outer will be smaller. But if Britain votes to Remain – and if that vote is seen by Conservative members as the result of “dirty tricks” by the Conservative leadership – it could be that many members, far from sticking around for another three to four years to vote in the election, simply decide to leave. The last time that Cameron went against the dearest instincts of many of his party grassroots, the result was victory for the Prime Minister – and an activist base that, as the result of defections to Ukip and cancelled membership fees, is more socially liberal and more sympathetic to Cameron than it was before. Don’t forget that, for all the worry about “entryism” in the Labour leadership, it was “exitism” – of Labour members who supported David Miliband and liked the New Labour years  - that shifted that party towards Jeremy Corbyn.

It could be that if – as Brady predicts in this week’s New Statesman – the final two is an Inner and an Outer, the Eurosceptic candidate finds that the members who might have backed them are simply no longer around.

It comes back to the biggest known unknown in the race to succeed Cameron: Conservative members. For the first time in British political history, a Prime Minister will be chosen, not by MPs with an electoral mandate of their own or by voters at a general election but by an entirelyself-selecting group: party members. And we simply don't know enough about what they feel - yet. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.