In an article on Critical Reaction Mark Littlewood argues a blue/yellow coaltion might now be the best option

A blue-yellow coalition was not what anyone voted for on 6th May, but it might still be the best that anyone can reasonably expect. There are a number of factors in play – most of which are changing by the hour in all directions – and all of which the media and the political classes are finding hard to calibrate.

What we can say for sure is that the only stable, comfortable majority government that could possibly be created now is a Liberal-Conservative coalition. No other permutation can obviously or easily produce the magic number of 326 seats that forms an overall majority.

A Tory minority administration, a Conservative-Unionist pact or a Lib-Lab rainbow coalition might just, somehow, stumble over the finishing line, but it would face the daily risk of collapse if just two or three disillusioned MPs took umbrage. A further general election would surely follow – and in quite short order. And all of this is in the context of the British economy facing its severest crisis in decades.

If the mood music is to believed, the Tory and Liberal negotiating teams are getting on like a house on fire. Their discussions are ‘constructive’, they’re making ‘progress’ and they can barely wait to meet each other again to continue to eye each other up and play footsie a bit more under the table.

Looking at LibDem high command, this isn’t surprising. Nick Clegg himself is something of a classical liberal who is suspicious of big government, sceptical of high spending government projects and a firm civil libertarian. His key appointee at the heart of the delicate negotiations with the Conservatives is David Laws, the party’s education spokesman, who is also firmly on the classical liberal or “Orange Book” wing of the party. Laws has been assiduously courted by the Tories for several years and is seen by many of his fellow party members as an oddity within the Liberal Democrat party, albeit a highly gifted one.

The working assumption has been that the Lib Dem leadership is not representative of its wider party base. That a majority of Liberal members, activists, councillors and parliamentarians would more naturally gravitate towards an arrangement with Labour. In normal circumstances, this might be true.

Many Lib Dems see themselves as opposing the forces of conservatism and thereby advocate a new constitutional settlement for Britain. The egregious behaviour of the public sector is often overlooked – or worse still, practised – by Lib Dem activists “on the ground”. Indeed, in the 2005 election, the Lib Dems pledged in their manifesto to collect – and spend – even more in taxpayers’ money than the Labour Party did. Five years hence, such a stance has been shown to be utterly ridiculous, of course.

In private, a good number of Lib Dems will now agree that public spending has got out of control. But considerably fewer have publicly opposed the key elements of the spending binge that has brought the country to the brink of bankruptcy. What many Lib Dem activists seem to want is a one-off solution for making the world a “fair” place. And this desire for fairness is often based around the rules of engagement – for example, the precise nature of the electoral system – rather than on the day-to-day behaviour and expenditure of government.

So, it is here that Nick Clegg has a problem in delivering his own party into a coalition with the Conservatives. The need to reduce the size and spend of the public sector might just be intellectually accepted by Liberal Democrat members – but it certainly doesn’t excite them.

Clegg needs to get his party to face reality. A genuinely liberal party would, of course, be utterly appalled by the fact that government expenditure amounts to fully half of total national income. Gladstone himself must be spinning in his grave.

And the immediate state of the nation’s finances makes this a pressing matter. The next government will surely have to make cuts and reforms in the public sector that go far beyond anything outlined in any of the three main parties’ manifestos.

If Nick Clegg can deliver his party into government and assist in the dramatic – and, frankly, painful – surgery that the UK’s economy desperately requires, he will have shown that the Lib Dems under his leadership have truly grown up. If he stumbles, Britain’s third party can expect to be sidelined for a long time to come.