Only the Tories can keep the future orange

The Lib Dems have no plans to abandon their partners in the coalition

Jane Merrick,Brian Brady
Saturday 29 September 2012 23:03 BST

Senior Tories and Liberal Democrats are involved in a secret plot to keep the two parties together in a coalition after 2015 – even if Labour is the largest party in a hung parliament, The Independent on Sunday can reveal.

Text messages between Ed Miliband and Vince Cable may have been sent in vain, if the meetings in the luxury offices of a City hedge fund a short walk from the Strand are anything to go by. And although Nick Clegg insisted, in his closing speech at the Lib Dems' conference in Brighton last week, that his party remained equidistant between Labour and the Tories, the monthly talks between ministers and key figures reveal that some parties are closer than others. Even some of the most senior Tories and Lib Dems, including, it is thought, Mr Cable, are unaware of the continuing meetings. The group meets unofficially and no civil servants attend, which may cause alarm in Whitehall.

With the second half of this Parliament looming, Mr Clegg made a fresh attempt to differentiate his party from the Tories – criticising David Cameron for mere "PR" on the green agenda, and warning George Osborne he would block a cut in the 45p rate to 40p and step up his demands for a mansion tax. But the main message that will be left in the minds of voters at home is that the Lib Dems want to remain in power. Appointing Paddy Ashdown to run his 2015 election campaign was a statement of intent: there is no one in the Lib Dems who gets the party ready for a fight better than the former spy and SBS officer.

Yet what Lib Dem activists in Brighton, debating whether they should be closer to Labour, would not have been aware of are the secret talks between ministers, MPs and advisers from both parties – talks in which a second term for the Lib/Con coalition is at the forefront of people's minds.

The monthly meetings are held at the offices of Marshall Wace, an investment fund co-owned by Paul Marshall, the millionaire investor and philanthropist, who in 2004 co-edited a collection of essays with David Laws that changed the Liberal Democrat party for ever: The Orange Book. Mr Laws, who returned to government as Schools minister last month, leads the Lib Dem contingent, which also includes Jo Swinson, Mr Clegg's former parliamentary private secretary and now a Business minister, and Julian Astle, deputy director of strategy at No 10. Michael Gove, the Education Secretary, leads for the Tories, with Greg Clark, the new Financial Secretary, Sajid Javid, the new Economic Secretary and ally of Osborne, and Matt Hancock, a Business minister who is also close to the Chancellor and who recently compared himself to Churchill and Disraeli. The Tories are also represented by Amber Rudd, MP for Hastings and Rye since 2010.

The group is called "Coalition 2.0", but is not part of official ministerial efforts to publish a follow-up document to the original coalition agreement in the second half of this Parliament. Plans for the document have been shelved, for now. The group came together in late 2010 and although its meetings tailed off around a year ago, they are now back on with more "energy and vigour", says one member. As members of the group pass between the two olive trees that flank the glass-fronted entrance to the Adelphi Tower on John Adam Street in the Strand, they know their role is to keep informal relations between the two coalition parties on peaceful terms, after bitter rows over the alternative vote, Lords reform, boundary changes, Europe and NHS reform. One meeting was held after Jeremy Hunt's statement to the Commons over the BSkyB affair; another followed the vote in July on House of Lords reform. A Lib Dem member says: "I wasn't sure whether they [the Tories] would turn up – but they did." Ostensibly, their mission is to discuss and develop ideas and policies on a rolling basis, up to 2015. But some in the group are now discussing how to keep the coalition in power beyond the election, even if the result is a hung parliament and Labour is the largest party.

One figure in the group said the Lib Dems would hold talks with Labour on a "procedural" basis, and that, of course, Labour would have the right to go first in any talks if it ended up with the most seats, but he added that this would not stop the Lib Dems joining forces with the Tories and minor parties to make up a majority. Another member said: "Today's Lib Dems have much more in common with progressive Conservatives than the leading figures in the Labour Party – on the economy, education and welfare."

The members of the group certainly do have a lot in common. One Lib Dem says glowingly of Gove: "I can't imagine him being boring about anything." And Paul Marshall, as well as being a long-standing ally of Mr Laws, is chairman of ARK Schools, the charity that runs several academies and free schools under Mr Gove's radical reform agenda. Ministerial oversight for free schools and academies comes under Mr Gove himself, but also under Mr Laws in his new role as Schools minister. Mr Marshall, whose son Winston is in the Brit award-winning band Mumford & Sons, also chairs CentreForum, the think tank where Julian Astle was director before joining No 10 last year. A decade ago, Mr Astle worked with Ed Llewellyn, now Mr Cameron's chief of staff, for Lord Ashdown when he was high representative for Bosnia. The Tory contingent would naturally want to see an outright majority for Mr Cameron in 2015, but, with Labour's poll lead in double figures, the Tories are making a concerted effort to hug the Lib Dems close. The talks mean that, should another hung parliament arise, Labour would be at a huge disadvantage going into coalition negotiations even if it had the most seats, because "shadow negotiations" would have been taking place for more than two years.

In Brighton last week, before the leader's speech, one senior Lib Dem said there was a "75-80 per cent chance" of Mr Clegg remaining as leader until the next election. But the Deputy Prime Minister's clear signal that he wants his party to remain in power must put that percentage higher this weekend. Mr Cable, who indicated this year that he was ready to serve if Mr Clegg stood down, may be "permanently on manoeuvres", in the words of another senior Lib Dem, but the Business Secretary is unlikely to mount a challenge. Tim Farron, the party's left-wing president, is also unlikely to move against the leader. Lib Dem grandees are angry at Mr Clegg's decision to remove all Lib Dem ministers from the Foreign Office and Ministry of Defence, which they say will leave foreign and defence policy at the mercy of right-wing Tories – yet that does not amount to rebellion.

Mr Clegg may have apologised for his tuition fees pledge and lost two key planks of constitutional reform, but could he have played the last two and a half years any differently? Many Lib Dem MPs are delighted that their futures are safer now Mr Clegg has killed off boundary changes, which would have lost his party 14 seats even before polling day. The Lib Dems were slow to act on NHS reform, but the Tories will get most of the blame. Aides of Mr Clegg say he must ensure his party is credited for Lib Dem policies such as the pupil premium and the tax cut for those on low incomes – and that he must hold firm on the mansion tax and 45p rate. One Lib Dem minister says the party "will never emerge from the coalition smelling of roses"; but the challenge is no longer to return to Westminster with 80 to 100 MPs but to retain roughly the same tally of MPs as in 2010. The key objective for those in the Coalition 2.0 group is to hold the balance of power in a Lib/Con coalition – until 2020.

Rising stars and fallen idols


Paddy Ashdown: the ex-SBS officer is going to run the Lib Dems' 2015 election campaign. Expect Nick Clegg to spend his election being woken at 5am for yomps across Devon and Scotland.


Nick Clegg: After peaking at No 37 in the iTunes downloads chart, he, or rather his tuition fees apology put to music, tumbled to 97 by Friday evening. By last night, it had disappeared from the top 100.

Hit on the fringe

Vince Cable: One senior Lib Dem whispered that the Business Secretary was "permanently on manoeuvres" and indeed he was – at nine fringes. Not as many as Ed Davey, who went to 13, but Cable was the bigger draw.

Out in the rain

David Laws: When Brighton was lashed by gales and torrential rain, the minuscule minister was spotted grappling with a brolly wider than he is tall.

Jane Merrick

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