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Clarke hints Tories could drop immediate cuts

By Penny Ayres

Updated on 07 May 2010

Shadow business secretary Ken Clarke tells Channel 4 News any Tory-Lib Dem deal should last up to three years. He goes on to suggest the Conservatives might postpone spending cuts planned for this financial year, and hints that Vince Cable might be awarded a Cabinet position - possibly chief secretary to the Treasury.

Former Conservative chancellor Ken Clarke, interviewed by Jon Snow, issued a series of hints as to the shape of any future coalition between the Tories and the Lib Dems.

He said any programme between his party and the Liberal Democrats should stretch over the next two or three years – "the minimum amount of time it would take to steer this country out of danger and get us back to normal levels of growth".

Mr Clarke thought that "Cabinet seats will undoubtedly be on the table" as part of any discussions between his party and the Liberal Democrats.

And he appeared to hint at a Treasury position for Lib Dem Treasury spokesman Vince Cable when he said: "There are two Cabinet ministers in the Treasury. I’m not sure whether anybody’s going to look at that or not. That’s not a matter for me."

He continued: "After all, Vince and I agreed about the problem. I didn’t agree with Vince on all the cures, but I’m sure somebody could sit down with Vince and get very near to something in the national interest."

Mr Clarke hinted that the Conservatives might be prepared to rein back on their plans to introduce cuts to start paying off the country's deficit in the first year of a new administration.

He said: "There are much bigger issues in the economy when you look at the parliament as a whole, and that is actually one of the comparatively small ones – and David Cameron in his statement mentioned compromise."

He concluded that if his party and the Liberal Democrats could not form a sustainable working arrangement over two or three years, "then that kills the case off for electoral reform for good and all because we obviously cannot handle a multi-party parliament".

Channel 4 News Economics Editor Faisal Islam writes
Is this the shape of the Con-Lib alliance? Tories drop immediate cuts, offer Cable Cabinet Treasury position, suggest three-year programme

The shadow business secretary, Ken Clarke, today dropped clear hints as to the shape of a Conservative-Liberal Democrat deal to lead the government.

His comments to Channel 4 News on compromises over economic policy were highly significant. Nick Clegg and Vince Cable had previously ruled out backing what they called the "economic masochism" of starting sharp spending cuts in the current financial year.

Mr Clarke told Channel 4 News that it was still "his opinion" that the £6bn of immediate cuts to waste identified by Sir Peter Gershon should be made. But he added: "There are much bigger issues in the economy looking at parliament as a whole and that [£6bn of cuts] is one of the comapratively smaller ones. David Cameron mentioned compromise, well compromise might be necessary and is necessary."

Senior Liberal Democrat sources have told Channel 4 News that they expect the Conservatives to drop the need for the immediate cuts entirely.

Mr Clarke also indicated the length of a possible Con-Lib pact. "We need a programme not just for the next week or two but for the next two or three years."

When asked by Jon Snow whether he really thought that the Treasury could be run jointly with another party, Mr Clarke suggested that Vince Cable could be considered by David Cameron as a potential Chief Secretary to the Treasury, a junior Cabinet position.

Mr Clarke said: 'There are two Cabinet ministers in the Treasury. Not sure whether anyone is to look at that, though. It's not my position."

Vince Cable as CST would put him in charge of an austerity programme expected to be at least as hard as anything in Britain since the 1970s. A spokeswoman for Vince Cable said: "We are not giving running commentaries."

It is unclear if Mr Cable is directly involved in the three-man negotiation team.

A momentous day in British politics
It was a day in which the electorate allowed none of the parties to claim outright victory in yesterday's general election.

Labour and Nick Clegg's Liberal Democrats both emerged with fewer. David Cameron's Tories won the most seats and votes, but not enough to govern alone.

As Gordon Brown wooed the Liberal Democrats with a promise of "far-reaching political reform", David Cameron urged them: back me - and serve the national interest.

Nick Clegg has already spoken to Mr Cameron by phone. Face to face talks between the two parties are happening tonight. A deal could include Lib Dem seats in a coalition Cabinet.

In this fast moving environment, Mr Clegg will meet his own MPs tomorrow morning.

For now, Gordon Brown remains prime minister - and leader of the party that definitively lost the election. He is still in No.10 tonight, but how long he will stay there is anyone's guess.

Cameron's 'comprehensive' offer
Tory leader Cameron made what he described as a "big, open and comprehensive" offer to the Liberal Democrats to work with the Tories in a collaborative government this afternoon.

But he could not have been clearer in his offer to the Lib Dems, setting out the lines he would not cross in negotiating a governing agreement.

And from Europe to public spending cuts, they are all issues close to the heart of many Liberal Democrats.

It was not immediately clear whether Mr Cameron's offer could involve a formal coalition with Lib Dem ministers in a Cameron Cabinet.

Former prime minister Sir John Major told Channel 4 News: "The debt we have been left - I don't think people realise how serious is the problem the Labour party have left us. It is very serious indeed. And it needs to be dealt with.

"And I don't think Labour could do it. I don't think you ask the pyromaniac back to douse the fire."

As a major carrot to attract Lib Dem support, Mr Cameron offered an all-party committee of inquiry on political and electoral reform to look at the possibility of changing Westminster's first-past-the-post voting system.

But he stopped short of promising the immediate legislation on a referendum on voting reform offered by Prime Minister Gordon Brown less than an hour earlier.

He said: "Britain voted for change yesterday, but it also voted for a new politics, it did not vote for party political bickering, grandstanding and point-scoring.

"Our country's problems are too serious, they are too urgent for that. So we must all rise to this occasion, we must show leadership."

On the thorny issue of electoral reform, Tories from the left and right of the party are nonetheless tempted to reach out to the Lib Dems.

Conservative MEP Daniel Hannan told Channel 4 News: "I could be persuaded on a referendum on the voting system because I like referendums (...) But long before you get there, I think there are things which all parties could agree would improve the current system."

But the prospect of a Tory-Lib Dem pact is a strange turn of events when the leaders of both parties have spent the past four weeks tearing chunks out of each other.

Nick Clegg accused David Cameron of already "measuring up the curtains for No.10". David Cameron charged Nick Clegg with wanting "to hold the whole country to ransom, just to get what would benefit the Liberal Democrats".

Despite superficial similarities between the leaders, they are worlds apart on Europe, immigration and defence.

Watch the hung parliament in 60 seconds here.

Tories and Liberal Democrats also had priorities in common which could provide "a strong basis for a strong government", said Mr Cameron, citing the scrapping of ID cards, enhanced funding of disadvantaged schoolchildren with a "pupil premium", support for low carbon industries and avoiding the National Insurance rise.

He reassured Tory activists that he would not soften his stance on the European Union, immigration or defence to secure Lib Dem support, and said that he would expect "the bulk" of the Conservative manifesto to be implemented in any administration which emerges from the talks.

As the election results confirmed a hung parliament, both Nick Clegg and Gordon Brown also set out their stalls in speeches to the media. 

In his statement, Brown made clear that government was continuing with business as usual, but was open to talk to either Nick Clegg or David Cameron about forming a "strong and stable government".

In a short statement outside No. 10, he angled his pitch specifically to the Liberal Democrat leader, saying that the paries should talk on "areas where there may be some measure of agreement".

He highlighted "substantial common ground" on the economy, and on the "very strong message" from the voters on electoral reform. The prime minister offered immediate legislation for a referendum on electoral reform.

Earlier, Mr Clegg told media and supporters outside the Liberal Democrats' Westminster HQ that the party with the most seats and the most votes has the "first right" to try to form a government, as he had repeated throughout the campaign.

In a clear signal that Mr Clegg will talk to Mr Cameron about coalition deals first, he said: "I have said that whichever party gets the most votes and the most seats has the first right to seek to govern, either on its own or by reaching out to other parties and I stick to that view.

"I think it is now for the Conservative Party to prove that it is capable of seeking to govern in the national interest."

Aides said Mr Clegg had not been in touch with the Tory leader.

Mr Brown responded saying: "I understand and completely respect the position of Mr Clegg." He added that the other leaders should take "as much time as they feel necessary" over talks.

"In understand, as I know my fellow party leaders do, that people do not like the uncertainty or want it to be prolongued," he said. "We live, however, in a parliamentary democracy. The outcome has been delivered by the electorate. It is our responsibility now to make it work for the national good."

Mr Brown also indicated that he would not be leaving No. 10 immimently, insisting that Chancellor Alistair Darling would be representing the UK in an G7 finance ministers' conference call on the Greece crisis later today.

With 32 seats left to declare, the Conservatives have so far won 301 seats, and 36 per cent of the popular vote. Labour trails in second with 255 seats and 29 per cent of the vote. No party can now achieve an overall majority.

Political editor Gary Gibbon writes
"Nick Clegg pretty much ignored the overnight flirting from Labour and said he wanted David Cameron to pick up the phone and make him an offer.

"Labour will be disheartened (as might Gus O'Donnell – Nick Clegg is tearing up his republished constitutional guidance that says the incumbent gets first go at forming a government).

"The Conservatives will be pondering how to react."

Paddy Ashdown, the former Lib Dem leader, said Mr Cameron has a right to try and form a government, and must speak next.

"There have been no deals," said Lord Ashdown. Mr Clegg has "plonked the ball absolutely in Cameron's court," he added.

"No one got what they wanted", he added, while denying that the Lib Dems have been crowned kingmakers.

"If we were we might have chosen to go with Labour, but we haven't," he said.

Boris Johnson, the Conservative London Mayor, said Mr Cameron's aim was to see a government come together as fast as possible.

After winning the most seats, "it is only right that they should be the dominant element" of a government, he told Channel 4 News.

A deal must "patantly be done with Nick Clegg or anyone else that we can do a deal with," he said. 

A Conservative/Lib Dem coalition could hold an outright majority in the House of Commons, but a Labour/Liberal pact would require the support of the smaller parties.

As the incumbent, Gordon Brown is entitled to be the first leader to attempt to form a government, until he loses the confidence of the House of Commons or he resigns.

Senior Labour ministers have made overtures to the Liberal Democrats overnight, promising electoral reform.

This morning, Gordon Brown released a statement saying that he had instructed Cabinet Secretary Gus O'Donnell to draw up a manual for a hung parliament, and that Sir Gus had been asked to support any party on request that was taking part in negotiations to form a government.

The Liberal Democrats have had a disappointing night. After "Cleggmania" of the last few weeks, the polls suggested the party would increase its share of seats. But the party has so far only managed to win 55 seats, down from the 63 they took at the 2005 election.

High profile Lib Dems such as Dr Evan Harris in Oxford West and Lembit Opik in Montgomeryshire lost their seats to the Conservatives overnight.

But the party did get a boost this morning, when Sarah Teather won her head-to-head battle with former Labour MP Dawn Butler in Brent Central. The two were thrown into competing for the same seat following boundary changes which should have given Labour the advantage.

Mr Clegg said this morning: "Even though more people voted for us than ever before, even though we had a higher proportion of the vote than ever before, it is of course a source of great regret to me that we have lost some really valued friends and colleagues and we have returned to parliament with fewer MPs than ever before.

"Many, many people during the election campaign were excited about the prospect of doing something different.

"It seems that when they came to vote, many of them in the end decided to stick with what they know best."

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