Clegg opens door to Lib-Lab pact

Only a few weeks ago, the Lib Dem leader Nick Clegg was putting the word about that he did not fancy doing a deal with Gordon Brown in the event of a hung parliament. All that has changed today with his revelation to the Independent that he will be prepared to consider a deal with either the Tories or Labour if neither party wins an overall majority. He will, he says, talk to the party that wins "the strongest mandate".

Like everyone else, Clegg can see which way the wind is blowing and right now it's blowing in Labour's favour if the opinion polls are anywhere near accurate. Which explains both his new-found willingness to consider a Lib-Lab pact of some sort - and some tough talk directed at the Tories regarding their "thuggish" line on the economy.

Clegg described warnings by David Cameron, shadow chancellor George Osborne and shadow business secretary Kenneth Clarke about market instability in a hung parliament as "an act of economic vandalism and a political protection racket".

He told the Independent: "They are basically saying, 'Vote Conservative or the markets in the City of London will tear the house down'.

"It is a very thuggish threat ­ using the markets for short-term political benefit, warning people that their savings and jobs are at risk because their mates in the City would not tolerate anything other than the result we want."

As for the Tories' promise to tackle as quickly as possible the national deficit, Clegg accused them of taking a "macho, tub-thumping masochistic approach" to cuts. "They keep banging on about a timetable because they don't have a plan," he told the Independent. "We want to turn this on its head. We are not fixated on a timetable. It will happen at a time when it is most sensible economically."

Quite how this sort of talk will go down with David Cameron remains to be seen. But, of course, if the Tories come out of the general election with more seats than Labour but without an overall majority, this angry talk will all be water under the bridge.

So, what sort of post-election partnership is Clegg offering? And what will he demand in return?

Clegg says he will give more details at his party's spring conference this weekend. In the meantime, he told the Independent that he would consider all options, from an informal pact through to a formal coalition with Lib Dems sitting in the Cabinet.

As for the price the Tories or Labour would have to pay, he outlined four "tests" - or "four steps to fairness" as he put it. They are:

• A shake-up of the tax system, with four million people let off paying taxes by raising the threshold to £10,000, and greater - though unspecified - taxes for the rich;

• A "pupil premium" aimed at spending more on the education of children from poor families;

• A switch to a greener British economy that would be less dependent on the financial services industry;

• Political reform, including a new voting system for MPs, to replace the first-past-the-post system.

The latter is, of course, the big one, and while the Tories remain wedded to first past the post, Gordon Brown has already indicated a willingness to pursue the 'alternative vote' (AV) system.

Old-fashioned Lib Dems will continue to say they want the single transferable vote or nothing. But the chance to finally play a role in Britain's government could persuade even the most hardline Lib Dems to loosen up and accept AV as a way ahead. ·