The path to Con-Dem nation

If Labour and the Liberal Democrats are parties of the centre left, why did they struggle to form

On the morning of Tuesday 11 May, negotiating teams from Labour and the Liberal Democrats met in private in room 319 of Portcullis House, Westminster. On the Labour side of the table sat Andrew Adonis, Peter Mandelson, Ed Miliband, Ed Balls and Harriet Harman. Their plan, in the face of clear signs that Nick Clegg was on the verge of a deal to enter into coalition with the Conservatives, was to try to persuade the Lib Dems to switch sides and form a historic "progressive alliance". This would reunite the Labour and Liberal movements and, in the words of one back-channel source, "smash the Tories into a thousand pieces".

On the Lib Dem side were Danny Alexander, David Laws, Chris Huhne and Andrew Stunell. They had other ideas. As the meeting got under way, Alexander, Clegg's chief of staff and one of the brightest young Lib Dem MPs, stunned the Labour team with an announcement. He said that a planned secret meeting that was to have taken place simultaneously between Vince ­Cable and Alistair Darling, to discuss how the parties might work together on the economy, had been cancelled.

According to Adonis, a former Lib Dem parliamentary candidate and protégé of the late Roy Jenkins, this was the moment when he realised the game was up. "I knew then and there that the Lib Dems were not serious about a deal with us," he tells me. Another Labour negotiator agrees: "The fact that Vince was not at the talks was in itself very telling, but the fact that he was stopped from seeing Alistair made it clear: they had already decided to go in with the Tories."

It is notable, too, that the Lib Dems gave Labour only three hours of their negotiating time, during which no civil servants were present. This contrasts with the 20 hours of talks the Lib Dems had with the Conservatives' negotiating team of George Osborne, William Hague, Oliver Letwin and Ed Llewellyn, David Cameron's influential chief of staff, who worked with Paddy Ashdown in Bosnia. The Liberal-Tory talks went "swimmingly", according to Clegg himself. "There was considerable agreement about the concept of liberalism," says an aide to one of the Tories present at the talks. "The starting point was that the two parties agreed about reducing the role of the state."

The two parties were also agreed on social liberalism. "David [Cameron] is perfectly comfortable describing himself as a liberal Conservative," a Tory aide tells me. Indeed, at the end of the six-hour Tory-Lib Dem talks in the Cabinet Office on Saturday 8 May, and again when Clegg and Cameron met for 45 minutes at Admiralty House that same night, the line was agreed that they would say the talks were ­"positive" and focused on the "national interest" of tackling the deficit crisis.

Clegg mafia

Reflecting on the election and the subsequent talks, Adonis believes that what another angry Labour source calls the "Clegg mafia" had decided to form a coalition with the Tories "very early on". "I think Clegg and Laws, and pro­bably Huhne and Danny [Alexander], formed the view on the Friday morning after polling day," he says.

A separate Labour source believes that a "deal was done" on that Friday, and the rest was all "game-playing". In addition, Mandelson tells me that the Lib Dems were "never really serious" about forming an alliance with Labour. Adonis suggests that Clegg and Cameron, who he says "get on very well", may have discussed the prospect even before polling day, either ­directly or through intermediaries.

It is significant that, midway through the election campaign, Clegg broke his own rule of not talking about alliances with either main party. On 25 April he said in an interview that he would support the party with the greatest "mandate" in terms of votes cast and seats won in the event of a hung parliament, and that he would not allow Gordon Brown to "squat" in Downing Street. This caused some in Labour at the time to think Clegg had made a "tactical error". But in retrospect perhaps he was preparing the ground for a deal with the Tories. To the horror of Labour strategists, Clegg was quick to reiterate his decision to prioritise talks with the party with the biggest "mandate" in his carefully worded statement, made outside Lib Dem headquarters in Cowley Street, Westminster, on the morning of Friday 7 May. To many insiders, Cameron's "big, open and comprehensive offer" to the Lib Dems, made hours later, appeared co-ordinated.

According to one senior Labour strategist, there were two key reasons the Lib Dems sided with the Conservatives. First, Clegg and Cam­eron have a rapport because they are "socially and emotionally, and in class terms, out of the same stable. They are both privately educated, both like head prefects in manner and style. Clegg is not a campaigning politician like Gordon [Brown]."

Second, the new Lib Dem leadership had no emotional or ideological problem with forming a coalition with the Tories. Adonis says the Lib Dems "mistook specific policy offers for underlying philosophical common ground". He believes that both Clegg and Laws, whom George Osborne had previously attempted to persuade to defect from the Lib Dems, and even Huhne, a former Labour Party member during his student days, are naturally closer to the Tories than they are to Labour. "They talk the language of the centre left, but there is lots about them that is centre right." One former SDP figure says that "Roy [Jenkins] would be turning in his grave".

If Clegg is close to Cameron, however, his party is not. Adonis says that in order to "deliver" the Liberal Democrats to the Tories, the party leadership had to "lie" about its motives. The Lib Dems, he says, used two misleading "alibis". First, the media were briefed that the "body language" of the Labour team during the talks, especially that of Ed Balls, was hostile. In addition, Clegg told his MPs after his team reported back to him on the night of Monday 10 May that "I'm afraid the meeting with La-bour was terrible. They had bad body language, bad attitudes."

Adonis not only denies this, but adds that "if they are really saying that style mattered in these historic negotiations, then that is simply trivialisation". Meanwhile, Mandelson, no friend of Balls, has told friends that the former children's secretary, in his view, "behaved fairly" throughout the negotiations.

The second "alibi" was that the arithmetic would prevent a "progressive alliance" of Lab­our, the Lib Dems and assorted others from working together. This "myth" was, sadly for Labour's negotiating team, repeated by several Labour MPs on Tuesday 11 May. The MPs were an odd alliance of left and right, ranging from Diane Abbott to John Reid. "These people want to go into fucking opposition," said one senior New Labour figure who was acting as an intermediary with the Lib Dems.

If there were private doubts in cabinet, they were not expressed in Downing Street when ministers gathered on the evening of Monday 10 May. Earlier that day, at 5pm, Brown had surprised all but those closest to him by announcing he would step down as Labour leader by the time of the party's annual conference in the autumn. His move led some in the cabinet to believe that there was still hope that Labour could retain office in coalition with the Lib Dems. Ministers sat in silence as the prime minister outlined how the numbers could add up in the Commons.

He told the meeting that the Queen's Speech could be passed under a Labour-Liberal coalition. This was because the Scottish Nationalists and Plaid Cymru had made it clear they would not side with the Tories, while the Democratic Unionist Party would abstain. There were also the independent and Green MPs, Sylvia Hermon and Caroline Lucas respectively, who could be brought onside. Brown calculated that he could expect a majority of "20-plus" for the new government's first Queen's Speech.

Before the emergency cabinet meeting, Adonis and Alastair Campbell had visited the media marquees on College Green across the road from the Houses of Parliament to promote the plan. After the cabinet meeting, Adonis headed for the first of what Brown called "formal" talks with the Lib Dems. Informally, according to a well-placed insider, "Labour people had been talking to Lib Dem friends for weeks".

Campbell had discussed the parties' similarities with Charles Kennedy, the Lib Dem leader from 1999 to 2006, while the two were staying in the Scottish Highlands before the election. And there were the old friendships among the likes of Mandelson, Cable, Menzies Campbell, Brown and Huhne.

Paddy power

Overnight, the momentum appeared to be in favour of a Labour-Lib Dem deal. On the morning of Tuesday 11 May, the former Lib Dem leader Paddy Ashdown put in a strong and ­significant performance on the BBC's Today programme, arguing that Labour and the Lib Dems could form a de facto minority government and "dare" the smaller parties to vote them down.

Now it appears he was going further than his leader and protégé, Clegg. When it came to the formal talks, it was clear the Lib Dems were playing, in the words of one of the Labour negotiators, a "Dutch auction" in an attempt to improve the Tories' offer. One senior Lib Dem, now in the cabinet, emphatically denies this. He says his party leadership treated both camps fairly and had no contact with the Tories before 7 May.

If this was a "Dutch auction", however, it worked, with Cameron forcing his MPs - around half of whom were new to the Commons - to accept a referendum on the Alternative Vote on the basis that the Tories would campaign against any change to the first-past-the-post voting system. At first, a rebellion on the Tory right appeared likely over any concessions on electoral reform. But once Brown had gone public with his decision to step down as Labour leader, says a well-placed Tory source, Conservative backbenchers became much more pliant. Cameron was cheered loudly when his party met at the Commons on the evening of 10 May, as he explained how a compromise on an AV referendum was necessary in order to secure power. "The sense of relief was palpable," one Tory strategist says. "For a minute it had looked like we were out of the game and there was panic at the top."

No referendum

Labour had conceded ground on what nego­tiators accepted was "legitimate" Lib Dem opposition to ID cards and the third runway at Heathrow, though the Lib Dems deny movement on the latter. But the Lib Dems still wanted what one member of the Labour negotiating team called a "down-payment" of immediate legislation to introduce the Alternative Vote electoral system without holding a referendum.

To the surprise of the Labour side, the Lib Dems had changed their position on how best to reduce the Budget deficit: like the Tories, they wanted immediate cuts of £6bn. The Lib Dems have yet to explain why they changed, but it is believed the decision was born out of persuasion by the Tories about the urgency of the need for cuts.

According to one source, during the intense period in which he had to make a decision, Clegg came under pressure from "establishment figures" to ally with the Tories and back "cuts now". My source says that "someone, such as Mervyn King", governor of the Bank of England, may have been involved, though the Bank denies this.

Either way, by now even Adonis was finding the Lib Dem demands "unacceptable". However, Vince Cable still attempted to find a compromise on the economy; he spoke to Brown repeatedly from the morning of Sunday 9 May. But by the afternoon of 11 May, Brown had had enough. Within hours of what one supporter of a Lab-Lib alliance described as "feelings of euphoria", the dream of a progressive realignment on the left had died.

Lib Dems in power

Nick Clegg: Deputy Prime Minister
MP for Sheffield Hallam | Age: 43

Vince Cable: Secretary of State for Business, Innovation and Skills
MP for Twickenham | Age: 67

Chris Huhne: Secretary of State for Energy and Climate Change
MP for Eastleigh | Age: 55

Danny Alexander: Secretary of State for Scotland
MP for Inverness, Nairn, Badenoch and Strathspey | Age: 38

David Laws: Chief Secretary to the Treasury
MP for Yeovil | Age: 44

Lord McNally: Minister of state for justice
Age: 67

Sarah Teather: Minister of state for education
MP for Brent Central | Age: 35

Steve Webb: Minister of state for pensions
MP for Thornbury and Yate | Age: 44

James Macintyre is political correspondent for the New Statesman.

This article appears in the 24 May 2010 issue of the New Statesman, Greece now, Britain next