Cameron seeks to woo Clegg

British Conservative Party leader David Cameron today held out a “big, open and comprehensive offer” to the Liberal Democrats to work together in government.

In a statement in Westminster, he acknowledged that there would have to be reform of the electoral system and he proposed the creation of an all-party committee of inquiry to look at the issue.

Cameron made what he described as a "big, open and comprehensive" offer to the Liberal Democrats to work with the Tories in a collaborative government.

It is understood that the Tory leader has not ruled out any option - including the possibility of Lib Dem ministers serving in a coalition Cabinet.

As a major carrot to attract Lib Dem support, Mr Cameron offered an all-party committee of inquiry on political and electoral reform to look at the possibility of changing Westminster's first-past-the-post voting system.

He stopped short of promising the immediate legislation on a referendum on voting reform offered by Prime Minister Gordon Brown less than an hour earlier, however.

Mr Clegg and Mr Cameron are now expected to speak by phone later today on options for co-operation between their parties.

Mr Cameron gave short shrift to any suggestion that Mr Brown should remain in office, pointedly referring to the "outgoing Labour government" as he addressed the press at Westminster's St Stephen's Club.

Tories and Liberal Democrats had priorities in common which could provide "a strong basis for a strong government", said Mr Cameron, citing the scrapping of ID cards, enhanced funding of disadvantaged schoolchildren with a "pupil premium", support for low carbon industries and avoiding the National Insurance rise.

He reassured Tory activists that he would not soften his stance on the European Union, immigration or defence to secure Lib Dem support, and said that he would expect "the bulk" of the Conservative manifesto to be implemented in any administration which emerges from the talks.

He also said he was "completely convinced" of the need to press ahead with action to reduce Britain's £163bn (€189.4bn) national deficit immediately, rather than waiting until 2011 as the Lib Dems and Labour advocate.

But Mr Cameron explicitly stated his willingness to "compromise" in negotiations, saying: "That's what working together in the national interest means."

In particular, he indicated that he might be ready to give higher priority to moves to reduce the burden of tax on the poor, in recognition of the flagship Lib Dem proposal to raise the income tax threshold to £10,000 (€11,618).

In a statement outside the door of Number 10 earlier, Mr Brown said he respected Mr Clegg's decision to talk first to Mr Cameron on a possible deal, but stressed that Labour and the Lib Dems share "common ground" not only on voting reform but also on the economy.

Brown made clear he does not expect a swift conclusion to the uncertainty surrounding the result of yesterday's election, stating that negotiations between the parties could be "prolonged".

In a sign that Labour remains very much in power for the time being, he revealed that Chancellor Alistair Darling will take part in conference call talks today with fellow G7 finance ministers on the crisis in the euro area.

Mr Brown said he was ready to see any of the other party leaders about the way forward.

In his pitch to be part of any deal on a future government, Mr Brown said: "What all of us need to be mindful of is the imperative for a strong and stable government and for that to be formed with the authority to tackle the challenges ahead and one which can command support in Parliament.

"It is with this in mind that all of us should be facing the times ahead.

"I understand - as I know my fellow party leaders do - that people don't like the uncertainty or want it to be prolonged.

"We live, however, in a parliamentary democracy. The outcome has been delivered by the electorate. It is our responsibility now to make it work for the national good."

Mr Brown said voters had sent "a very strong message which must be heard" on the need for electoral reform and said immediate legislation was needed to restore public trust in politics.

He left no doubt that he has no intention of resigning immediately as Prime Minister, even talking of his plans to stabilise the economy beyond the end of 2010.

He said Mr Cameron and Mr Clegg should be given "as much time as they feel necessary" to sound out whether a deal between them is possible.

"Clearly, should the discussions between them come to nothing, then I would, of course, be prepared to discuss with Mr Clegg the areas where there may be measures of agreement between our two parties," he added.

Yesterday's election left the Conservatives as the largest single party in the new House of Commons, but short of the 326 MPs needed for an outright majority.

Mr Clegg this morning offered him the keys to 10 Downing Street, saying that - as the party with the most seats and the most votes - the Conservatives had the "first right" to seek to form a government.

Mr Clegg made clear that he was ready to enter talks over a possible deal, saying it was now for the Conservative Party "to prove that it is capable of seeking to govern in the national interest".

In a statement on the steps of the Liberal Democrats' Westminster HQ, Mr Clegg announced: "I have said that whichever party gets the most votes and the most seats has the first right to seek to govern, either on its own or by reaching out to other parties and I stick to that view."

With seven seats to declare, the Conservatives had secured 303 MPs, with Labour on 256 and the Liberal Democrats on 56. The Tories were likely to finish with a 36% share of the vote, with Labour on 29% and the Lib Dems 23%.

The projected results indicated that a Conservative/Lib Dem coalition could provide a solid overall majority in the Commons, but that if Labour was to enter into a deal with Mr Clegg, they would also require the support of smaller parties like the Welsh and Scottish nationalists, the SDLP and Britain's first Green MP.

The pound tumbled against the dollar and euro and the FTSE 100 index fell to a three-year low today as the markets took fright at the prospect of a hung Parliament.

Mr Brown this morning fired the starting pistol on haggling over the future government, which could last days, when he ordered the head of the Civil Service, Cabinet Secretary Gus O'Donnell, to provide official support for discussions between the parties.

Scottish National Party leader Alex Salmond revealed that his party and Welsh nationalists Plaid Cymru have accepted an offer from the Prime Minister to discuss possibilities for future government.

Speaking to the BBC, he explicitly ruled out a deal with the Tories, but added: "Fate seems to have dealt us a mighty hand between ourselves and Plaid Cymru.

"I'm accepting the offer of the Prime Minister, on behalf of the SNP, and Plaid Cymru are accepting, to have the Civil Service back-up to have discussions to see what the possibilities are in terms of defending the interests of Scotland and Wales in this parliamentary situation."