Britain Votes: Lib Dems set price for coalition deal

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A PERIOD of intense negotiations began last night as Labour and the Liberal Democrats manoeuvred over the formulation of a Lib-Lab government for the Scottish Parliament.

With Labour falling nine seats short of a 65-seat majority and four short of the 60 that Donald Dewar, the Scottish Labour leader, wanted for minority government, a coalition deal was inevitable. Although the Liberal Democrats had achieved just 16 seats, trailing the Conservatives in fourth place, they and Labour will hold a comfortable majority in the Parliament.

The Liberal Democrats were confidently expecting two ministerial posts and a concession on student tuition fees in return for backing Labour. Detailed negotiations over a joint programme for the home-rule government may not be concluded until early next week. Jim Wallace, the Liberal Democrat leader, said having waited 300 years for a parliament, Scots would have patience for three or four more days. Mr Wallace wants an agreed programme for a full four-year parliament, which would be published.

"A hand-to-mouth existence for a government, where it doesn't know from one week to the next whether it is going to get its legislation through, is not the way for the Parliament to get off on the right foot," he said.

Liberal Democrat MSPs will meet in Edinburgh this afternoon to discuss the programme and following a party executive meeting tomorrow, the horsetrading with Mr Dewar will begin in earnest. Both parties have formal negotiating teams.

After seemingly unequivocal statements that tuition fees would have to go, Mr Wallace seemed ready to do a deal on the issue. The most likely solution was a watering-down of Labour's pounds 1,000 per year charges, with a greater proportion of students being excused payment on the grounds of low income.

Mr Wallace would like the education portfolio in Mr Dewar's cabinet but may well be offered agriculture. A second seat could go to Nicol Stephen, the former MP who captured Aberdeen South, an upset for Labour, or Ross Finnie, a close aide of Mr Wallace. As part of the deal, the speaker of the new Parliament will almost certainly be the former Liberal leader Lord Steel.

The Deputy Prime Minister, John Prescott, has publicly declared himself to be "not a Lib-Lab fan" and the Chancellor, Gordon Brown, is known to be irritated by the smaller party's demands on tuition fees.

Despite having beaten the Liberal Democrats to come third, the Conservatives did not manage to win a single seat on a first-past-the-post basis, and their share of the vote had dropped further below their disastrous result in the 1997 general election.