There could be a 'grand coalition' between Labour and the Tories instead

Liberal Democrat Business Secretary Vince Cable said his party should prepare for the apparently unthinkable prospect of Labour and the Tories in power

Labour and the Conservatives may take the extraordinary step of entering a ‘grand coalition’ with each other after the next election, a senior Cabinet minister has claimed.

Liberal Democrat Business Secretary Vince Cable said his party should prepare for the apparently unthinkable prospect of David Cameron and Ed Miliband reaching some sort of power-sharing deal.

‘We may have to prepare ourselves for the possibility that we won't be in the coalition at all, that there will be a grand coalition between Labour and the Tories instead,’ he said.

Asked if he expected that to happen, he said: ‘It's one of the possibilities we should be preparing for.’

Mr Cable went on: ‘It's not something I'm advocating, as it would put me out of a job. But we need to consider all of the possibilities.’

The Business Secretary’s startling prediction came as he spoke to other guests after recording last week’s BBC Question Time programme.

In recent weeks, some political commentators have raised the possibility of a Labour-Tory alliance as polls suggest the two main parties are on the slide and both will struggle to command a Commons majority.

Conservative hopes of an outright win are threatened by the rise of Ukip in England, while a dramatic advance by the SNP surge in Scotland since last year’s independence referendum is hampering Labour’s chances.

Ian Birrell, a former speechwriter for David Cameron, has speculated about a ‘national government’ bringing together the largest parties – a familiar arrangement in Germany, where it is called a ‘grand coalition’.

‘A government of national unity between Labour and the Conservatives may sound far-fetched, especially amid the froth and fury of a nascent election campaign,’ he said.

‘It would certainly be tricky, exacerbating internal divisions and leading to more defections.

'Yet, while there are serious disagreements, the two parties have more in common with each other than with the insurgents on many key issues – especially if David Cameron survived and Miliband was replaced by someone such as [shadow business secretary] Chuka Umunna.’

In the 1929 general election, Labour won 37 per cent of the vote and cobbled together a minority government led by Ramsay MacDonald with Liberal support.

But when public spending had to be slashed to rein in a spiralling budget deficit following the Wall Street crash, the government fell apart. MacDonald, encouraged by Palace officials, formed a national government in 1931, with the Conservatives joining a coalition.

Conservative and Labour strategists dismiss the prospect of a similar arrangement after May’s election, despite the similar difficulties facing Britain as it tries to cut the vast debts run up in the 2009 financial crisis.

Tory David Cameron and Labour leader Ed Miliband could be forced to enter a power-sharing deal if the election result is inconclusive, Mr Cable suggested

One senior Tory said Mr Cable’s predictions were ‘absolutely absurd’ and there was ‘not a snowball’s chance in Hell’ of an arrangement with Labour.

Labour leader Mr Milband prompted speculation of a deal with the SNP over the weekend when he four times refused to rule out a coalition or looser arrangement with them.

A deal with the Nationalists would most likely would be a ‘supply and demand’ arrangement, ensuring budgets and other key pieces of legislation were passed rather than a formal coalition.

Senior Scottish MPs are known to bitterly oppose the idea, but Mr Miliband repeatedly declined to rule it out in an appearance on the Andrew Marr Show on Sunday.

We may have to prepare ourselves for the possibility that we won't be in the coalition at all, that there will be a grand coalition between Labour and the Tories Lib Dem Vince Cable

SNP Westminster leader and General Election campaign director Angus Robertson said: ‘Ed Miliband refused to rule out working with the SNP following the General Election, leaving the door open to the benefits of the SNP holding the balance of power in a hung Westminster parliament with a minority Labour government.

‘Left to their own devices, Labour would continue with austerity. With a strong group of SNP MPs holding the balance of power at Westminster, we can ensure that Scotland’s voice is heard and use our influence positively to end austerity economics, free Scotland of Trident nuclear weapons, and secure the powers we need to build a fairer, more prosperous country.’

Scottish Conservative leader Ruth Davidson said: “With every week that passes, we hear more evidence Labour and the SNP are preparing to jump into bed with each other after May.

‘Ed Miliband and Nicola Sturgeon are already halfway down the aisle.