The main development of this morning has been Labour MPs throwing up obstacles to a Lib Lab deal. At the moment there are four main problems. First, David Blunkett and others arguing that Labour would be better off going into opposition and—this is implicit—letting the Tories and the Lib Dems make the cuts. One union fixer told me Labour couldn’t go into a coalition with a party committed to cuts to benefits and tax credits. Second, Jon Cruddas, a champion of party democracy, has demanded that the parliamentary party, the NEC and the unions be consulted on the terms of any deal. Third, there are lots of Labour MPs letting it be known that they’d vote against AV so the Lib Dems might not get the main thing they want from a coalition. Finally, there’s speculation that if there was a Lib Lab deal a couple of Labour MPs might refuse to take the whip.
Lib Dem MPs are gathering again this evening and the current expectation is that this meeting will endorse some kind of deal with the Tories. But as we have learnt over the past few days, everything is subject to change.