Today we have news of Cameron putting out feelers to the LibDems, saying that he would consider electoral reform if it meant a coalition with them, and the LibDems saying that they won't enter any coalition with a party in third place in votes (and most polls show Labour in this position).
So we are very likely looking at a Lib-Con coalition, with Labour in opposition. Labour shouldn't be unhappy with this, in democracies you have to lose sometimes after all, and if you do, the best place to be is the main opposition and even better the only opposition.
I'm in Southampton, and we have experience of how a hung council works. In 2007, Labour and the Conservatives got 18 councillors each, and the LibDems got 12 and held the balance of power. The LibDems put the Tories into power. In the 2008 elections, when the govt was deeply unpopular and the national YouGov polls had Labour on 23%, the council went Con 24 councillors, Labour 14 councillors and LibDems 8. Everyone locally expected the Conservative surge, but no-one expected the LibDem collapse. Essentially by siding with the Tories the previous year, they got obliterated. Labour is now the main opposition to the Tories in the council and hopes to regain seats.
If the LibDems go into government with the Conservatives, one party will obliterate the other - this always happens in coalitions (look at Germany, where the SPD and Merkel's CDU were running on the same record, having been part of a grand coalition, but Merkel got all the credit for handling the financial crisis, even though all the work was done by the SPD in the finance ministry).
Conventional wisdom is that the Conservatives will obliterate the LibDems. I'm not so sure. Clegg has achieved rock-star status and is far more popular than Cameron - he looks like a nice Tory without the nastiness, in fact he would have fitted in nicely with MacMillan's government. I think what might happen here is that the LibDems (who are incidently one of the oldest political parties on earth, dating back to 1678) will obliterate the Tories.
If Labour is the only opposition, we will benefit in the same way we benefitted in 1945 for being the only opposition to the national government of the previous 15 years. If you have to lose an election, forming the only opposition is the best way to do it.
BTW, there are some excitable people claiming that the LibDems will "demand" that Brown goes as the price of a coalition and Labour will deliver. You'd think people would have learnt from the last few years, but clearly not. Once again - to change leader of the Labour party requires an election involving three electoral colleges - the membership, the affiliates and the parliamentary MPs. It will take a good three months to organise. Labour cannot change leader in a backroom deal in a couple of days the way the LibDems or Tories can. My guess is that if we lose the election, Brown will remain leader for the rest of the year, and when we do have a leadership election, Ed Miliband will get elected. And I also predict we will not be part of a coalition.
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In 1945 how was Labour the only opposition to the National government when it had been part of it, with Atlee as deputy Prime Minister? It benefited from not having been in power before the war and by being in the wartime coalition couldn't be hit with inexperience either. Pretty much the perfect mixture for a party in an election but pretty rare and the circumstances were so exceptional you can't take them as an example now.
You fail to show how the Lib Dems can reach into the 30% of the population who have voted Tory through thick and thin. Where the Lib Dems and Tories currently agree it is because the Tories have moved to Lib Dem ground, not vice versa. Lib Dem policies resonate far more with Labour supporters than Tories. Witness how many Labour figures are suggesting they would be happy with a coalition with the Lib Dems, while the Tories don't seem keen.
Your central thesis that a Lib-Con coalition is likely is also very weak. The Tories don't see a fit with most Lib Dems (they would take the Orange bookers but know the LD activists are hostile). The Lib Dem base is more left wing than its voters and would hate shacking up with the Tories and the Triple lock in their party’s constitution would pretty much prevent it. Much more likely is a Tory minority government dependant on Lib Dem votes.
That is much more of a problem for you. Then the Libs would be on the opposition benches with Labour. If they got more votes they would be cutting up about how Gordon isn't actually the Leader of the Opposition. The Lib Dems would have distance to campaign against government policy. After winning so many votes they would get equal news time to Labour. They could plausibly say they were the main party of the left.
Now Labour has shown great sticking power in the past and recovered from 1983 but I'd say this time the threat is greater. In 1983 you won more votes to come second placed (just) so had an authority to lead the opposition to eventual recovery. If the Lib Dems beat you in vote share, that authority wanes. It won't seem fair to your supporters, who value fairness above most things.
'I think what might happen here is that the LibDems (who are incidently one of the oldest political parties on earth, dating back to 1678) will obliterate the Tories.'
I know you must be dissapointed but 'get real',you really believe that the Bristish public will accept an electoral choice of two left wing parties 'two cheeks off the same arse'?
The issue of who will join who in coalition cannot be properly resolved until the result is known. However, since the Lib Dems see electoral reform as key to them joining a coaltion, a Lib-Con pact seems unlikely.
However, if somehow Cameron manages to convince Clegg, then this could be damaging for the Lib Dems. As I see it, the Lib Dems are still part of the 'anyone but a Tory' spectrum - a stance that would be damaged considerably if this scenario comes to fruition.
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