"The emergency debate in the Commons highlighted a significant divide. Labour and the Liberal Democrats agree on the need for substantial government intervention at a time of national crisis. They disagree on what form the fiscal stimulus should take, with the Lib Dems favouring tax cuts for the low paid and bringing forward more capital investment. But both parties accept the principle that intervention is vital. This is also a view shared by a few Conservative MPs, the genuine modernisers. There are even one or two Tories who tell me they support the principle, at least, of tax rises for high earners – a view now backed to varying degrees by Labour and the Liberal Democrats.
Cameron's position on Europe was always going to make it difficult for the Lib Dems to support a minority Conservative administration. The Tory leadership's response to the crisis blocks off the route almost entirely. When I put it to an influential Lib Dem that politically the Tory leadership was on a high again, and receiving rave reviews in parts of the media, he observed: "Cameron should be worried. The wrong people are cheering."
There are some echoes with wartime situations in the current crisis. No one knows how long it will last or how grave it will become. It could easily overwhelm the Government and propel Cameron into No 10 with a landslide. But if there is the equivalent to a war time coalition it is suddenly more likely that it will be a partnership between Labour and the Liberal Democrats. Whether it would last for very long is a different question".
All very interesting. But I would judge that a coalition is very unlikely. In any hung parliament scenario, by far the most likely outcome is that Labour would leave office. The theory that the LibDems may have become uncoalitionable on left or right is strengthened by their choices after recent PR elections in Wales and Scotland. Cooperation is much easier from a position of strength rather than weakness, but the 1997 opportunity was missed.
So the economic crisis does not yet outweigh several, potentially formidable barriers on both sides to progressive cooperation. There is a mutual mistrust between MPs and activists in different parties; the failure to consummate the Blair-Ashdown project leaves the LibDems suspicious of being led up the garden path again, and there are important substantive policy differences on major issues, most notably civil liberties and electoral reform.
For all of those difficulties, serious voices on both sides do believe that there should at least be greater dialogue between the parties.