Clegg's next dilemma: does he reaffirm the Coalition deal – and risk his party's wrath?

Andrew Grice on the question threatening to deepen splits within the battered and bruised Liberal Democrats

Nick Clegg is being warned by Liberal Democrat ministers not to commit to a new set of "marriage vows" with David Cameron following the bitter clashes between the two Coalition parties over electoral reform.

Some senior Liberal Democrats want to scrap plans for a "Coalition Agreement Mark 2" to update the historic deal signed by the two parties when they formed the Government a year ago tomorrow. They argue that key elements of the original agreement have not yet been implemented and want the Liberal Democrats to "diverge" from the Tories in the run-up to the next general election scheduled in 2015.

Initial work on a "Coalition 2.0" policy document for the second half of the five-year parliament has been started by Oliver Letwin, the Tories' policy guru, and Danny Alexander, the Liberal Democrat Chief Treasury Secretary. It is due to be published next year.

But Liberal Democrat ministers including Vince Cable, the Business Secretary, and Chris Huhne, the Energy Secretary, are believed to have cooled on the idea since Mr Cameron allowed the No camp in the AV referendum campaign to launch personal attacks on Mr Clegg.

Lord Matthew Oakeshott, the party's former Treasury spokesman, said yesterday: "We have done a five-year deal. We need to think carefully and work back from 2015 as to how we disengage so that we can be a clear, independent force at the next election."

He added: "We have an excellent Coalition Agreement but in some areas – such as banking and cracking down on tax avoidance – we have barely scratched the surface.

"We said we would reform party funding and the No campaign showed how the Tories produce their murky millions at the drop of a hat. It's not so much unfinished business as barely started business."

Clegg allies insisted no decision had been made on whether to go ahead with a "Mark 2" agreement.

They said there was a case for updating last year's deal to take account of events and pointed out that the 32-page document was rushed out within days of the general election. But a final decision will probably depend on the state of the Coalition next year.

For now, the two leaders are trying to put the divisions over electoral reform behind them and send a message that they have got "back to business".

They held their first meeting since the referendum yesterday, which was described as business-like. Both men will mark the Coalition's anniversary by trumpeting the progress towards the majority of the 400-plus pledges made a year ago. Ministers believe that more than 100 have already been met and another 200 are "work in progress." But critics claim some promises have not been kept or are being implemented very slowly.

Despite recent tensions, ministers insist that the purpose which united the two parties a year ago – the need to tackle Britain's record peacetime public deficit – remains as strong today.

Last night Mr Alexander said: "The AV campaign has been a forcible reminder to us all that the Liberal Democrats and the Conservatives remain very different parties." But he told the Institute for Public Policy Research think tank that the Coalition is a "partnership of equals" between two parties acting in the national interest.

"We came into government not to make friends, but to make a difference," he said. "He pointed to an academic study suggesting that the Coalition Agreement implements 75 per cent of the Liberal Democrats' election manifesto and 60 per cent of the Tories'.

"We need to communicate that more strongly," Mr Alexander admitted. "And we need to make sure that the Lib Dem voice that argues its corner strongly within government is heard more loudly outside government too."

Despite yesterday's united front, tensions remain at the highest levels of the Government following the referendum. Senior Liberal Democrats insisted that Mr Clegg had led the way on the rethink over the Health Secretary Andrew Lansley's NHS reforms, while Tory sources insisted that Mr Cameron was equally involved.

"The Tories have now come in behind us," said a Clegg ally.

"They know that this is toxic for them and how important it is for the electorate."

Happy Birthday: the first year of the Coalition, audited


Pledge: "We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector... and take steps to reduce systemic risk in the banking system."

Action: Voluntary agreement with the banks in February was criticised as a damp squib for failing to rein-in bonuses. Independent Commission on Banking chaired by Sir John Vickers will produce its final report this autumn.

Verdict: Broken.


Pledge: "We will stop the top-down reorganisations of the NHS that have got in the way of patient care."

Action: Health Secretary Andrew Lansley produced sweeping plans to abolish primary care trusts and hand control of commissioning to GPs. Now being reconsidered.

Verdict: Broken.


Pledge: "We will promote the reform of schools in order to ensure that new providers can enter the state school system... we will fund a significant premium for disadvantaged pupils."

Action: Education Bill creating "free schools" completes Commons passage tomorrow; £7bn "pupil premium" over four years announced.

Verdict: On track, but questions remain over whether pupil premium funds are genuinely "new money".


Pledge: "We will significantly accelerate the reduction of the structural deficit over the course of a parliament."

Action: Deep cuts announced George Osborne spending review last November despite economists' fears that going "too far, too fast" could stifle growth.

Verdict: Kept (but the pain is yet to come).


Pledge: "We will further increase the personal allowance to £10,000... we will reform the taxation of air travel by switching from a per-passenger to a per-plane duty... we will seek ways of taxing non-business capital gains tax (CGT) at rates similar to those applied to income."

Action: Personal allowance promise on track. Aircraft duty plan dropped as unworkable. CGT plan watered down; it rose to 28 rather than 40 per cent.

Verdict: Mixed.

Armed forces

Pledge: "We will work to rebuild the military covenant" (between the state and armed forces personnel).

Action: Government has backed away from David Cameron's promise to enshrine the covenant in law. Instead, it will now make an annual statement to parliament.

Verdict: Watered down.

House of Lords

Pledge: "We will establish a committee to bring forward proposals for a wholly or mainly elected upper chamber on the basis of proportional representation."

Action: Draft motion due by last December has still not materialised. Nick Clegg will unveil blueprint this month amid growing doubts about whether the Conservatives will back it.

Verdict: Don't hold your breath.


Pledge: "We will introduce new protections for whistleblowers in the public sector".

Action: Nothing. Described as "ongoing" but dropped from Cabinet Office business plan last November.

Verdict: Sounded good in opposition.


Pledge: "We will establish a commission to consider the West Lothian question" (whether Scottish MPs should vote on issues relating to England that are handled in Scotland by the Scottish Parliament).

Action: None. Overtaken by SNP triumph in Scottish Parliament elections.

Verdict: Too late now.

Andrew Grice