UK's Labour woos Liberal Democrats to form gov't

[May 11, 2010]  LONDON (AP) -- Britain's pivotal third party kept its larger suitors -- and the electorate -- hanging Tuesday, opening formal negotiations with Prime Minister Gordon Brown's Labour Party to form a new government after talks with the rival Conservatives.

Caption: Britain's Prime Minister Gordon Brown reads a media statement outside 10 Downing Street in London on Monday in which he said he intended to stand down as Labour Party leader. (AP photo by Simon Dawson)

Five days after an election that produced no outright winner, the third-placed Liberal Democrats were playing hardball in hopes of extracting maximum concessions in return for propping up a Conservative or Labour administration.

Brown's dramatic decision Monday to announce his impending resignation opened the way for a possible deal with the Liberal Democrats -- who had demanded his removal as a condition for any deal.

Both of the two main political parties have now offered to meet the Liberal Democrats' key demand -- electoral reform -- muddying the differences between the two offers.

Conservative leader David Cameron appeared miffed at the sudden turn of events, which came after both the Conservatives and the Liberal Democrats claimed to be making progress Monday in their coalition talks.

"It is now, I believe, decision time," Cameron said early Tuesday.

Cameron's Conservatives -- who won the most seats in Parliament in Thursday's national election but fell short of capturing a majority -- have struggled in their attempts to win over the Liberal Democrats.

Though the Liberal Democrats appeared genuinely open to a deal with the Conservatives, they are more ideologically compatible with Labour. Brown's offer to resign could give Liberal Democrat leader Nick Clegg a viable chance at passing electoral reform and a role in the British government after years on the political fringe.

Yet such a move could be seen by many as an affront to the will of the people, who gave the center-right Conservatives 306 of Parliament's 650 seats -- just short of the 326 needed for a majority. Labour won 258 seats, Liberal Democrats won 57, and smaller parties took the rest.

A Labour-Liberal Democrat alliance would also be weak because it would need the support of other minor parties in order to rule.

Clegg said Tuesday he was "as impatient as anyone else" to resolve the political impasse and said he hoped to make an announcement "as quickly as we possibly can."

The talks between the Liberal Democrats and the Conservatives had foundered on the issue of voting reform.

The Liberal Democrats have demanded moving the voting system toward proportional representation, which would greatly increase their future seats in Parliament. In the latest election, Liberal Democrats won almost a quarter of the overall vote but that earned them only 9 percent of the seats in Parliament.

Most Conservatives are adamantly against voting reform, but the party made a limited counteroffer to the Liberal Democrats on Monday -- offering a referendum on a less dramatic type of electoral reform.

Still, the talks with the Liberal Democrats left even some Labour supporters uncomfortable.

Former Home Secretary John Reid said such a pact "would be mutually assured destruction."

He told GMTV on Tuesday that while such a deal might keep Labour in power a little while longer, it ran the risk of alienating even more voters from the party.

"I fail to see how trying to bring together six different parties -- and even then not having a majority -- will bring the degree of stability we need," he said. "It may be perceived as acting in our own self-interest. The public aren't daft."

While uncertainty prevails, one thing is certain: The career of Brown -- the Treasury chief who waited a decade in the wings for his chance to become prime minister -- is ending.

Brown accepted blame Monday for Labour's loss of 91 seats in last week's election and its failure to win a parliamentary majority.

No other party won outright either, resulting in the first "hung Parliament" since 1974 and triggering a frantic scramble for who will create the next government.

"As leader of my party, I must accept that that is a judgment on me," Brown said, offering to step down before the Labour party conference in September.

Monday's drama deepened the postelection limbo that many feared could further undermine confidence in Europe's financial markets.

The British pound traded at $1.485 Tuesday morning, up from its overnight low of $1.478 but down from around $1.50 before Brown's announcement.

[Associated Press; By DANICA KIRKA and JENNIFER QUINN]

Associated Press writers Paisley Dodds, David Stringer and Raphael G. Satter contributed to this report.

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