The Fianna Fail leader Micheal Martin is prepared to support a Fine Gael-led minority government on a vote-by-vote basis, the Sunday Independent can reveal.

A 'confidence and supply' deal between the two parties would see the Fine Gael leader Enda Kenny secure a second term as Taoiseach.

Fianna Fail will demand key policy concessions in return for not voting against a Fine Gael-led minority administration on budget and confidence issues.

But Fianna Fail will this week also step up its efforts to win support from Independent TDs and smaller parties to support Mr Martin for Taoiseach.

And the party will expect a 'confidence and supply' deal with Fine Gael if Mr Martin wins more support than Mr Kenny for Taoiseach on March 22.

Senior sources in both parties yesterday said a "formal arrangement" would be reached. "A verbal contract isn't worth the paper it is written on," a senior Fianna Fail source said.

Mr Martin last week put in place a team to negotiate with Independent TDs and smaller parties with a strict condition that no 'sweetheart' deals would be offered.

The Fianna Fail negotiators, Michael McGrath, Barry Cowen, Jim O'Callaghan and Charlie McConalogue, have been instructed to negotiate on policy-issue details only.

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This is in contrast to the position adopted by Mr Kenny, who has offered Cabinet, Minister of State and Oireachtas committee chairman positions to Independents and others in return for supporting his nomination as Taoiseach.

Last week, the Sunday Independent revealed that Mr Kenny was making a behind-the-scenes attempt to form a government of 80 seats, in which Independents and TDs from smaller parties would comprise over half the Cabinet.

Yesterday, several Cabinet ministers told the Sunday Independent that such a government "could not be ruled out".

But a senior Fianna Fail source yesterday said Sinn Fein's "antics" in the Dail last week had made certain that there would be no 'grand coalition'. Agriculture minister, Simon Coveney also said Sinn Fein's "disruptive tactics" were a "reality check", which would focus the minds of those trying to form a government. He accused Sinn Fein of seeking to take "every possible opportunity to gain political advantage and embarrass other parties."

Mr Kenny is now expected to turn to Mr Martin within weeks, if not days, to seek support for a Fine Gael-led minority government.

The Fine Gael leader is understood to favour a 'grand coalition' and had let it be known that he is willing to divide Cabinet seats on a 50/50 basis. But Mr Kenny was told at a meeting of ministers last week that a Fine Gael-led minority government supported by Fianna Fail was the most likely outcome.

Mr Kenny is being advised to "run down the clock" to put Mr Martin under pressure to make a move before the Dail returns in two weeks.

"He will make the call himself but that might not be for some time. We need to put the responsibility back on Fianna Fail," a senior Fine Gael source said.

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Should Independents and other parties support Fianna Fail on the basis of agreed policy issues, including parliamentary reform, the prospect exists that Mr Martin could win more support than Mr Kenny for Taoiseach.

In those circumstances, the Fianna Fail leader would then ask Fine Gael to support a Fianna Fail minority government.

Last night, a senior Fianna Fail source said: "There will be no return to the constituency-type deals we have seen in the past." The offer of Cabinet positions to Independents and smaller parties is also understood to be off the table.

At the moment, Mr Kenny is certain of 50 votes for Taoiseach and Mr Martin is assured of 43.

Last night, a senior Labour source said the party would not support Mr Kenny's nomination for Taoiseach on March 22, nor was it willing to be part of the next government.

However, should Independents and others either continue to abstain or decide to support the Fine Gael leader, Mr Kenny would remain favourite to be Taoiseach, but would still need the agreement of Fianna Fail to form a more stable minority government.

In those circumstances, Mr Martin is understood to favour a 'confidence and supply' arrangement to support a Fine Gael minority government led by Mr Kenny.

There is a growing view within both Fine Gael and Fianna Fail that a 'confidence and supply' deal can be arranged between the two parties, similar to the minority government arrangement that has existed between the main parties in New Zealand.

However, Fine Gael remains concerned that Fianna Fail could withdraw support at short notice and collapse such a government.

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Mr Kenny will demand firm commitments from Mr Martin related to the duration of a minority government.

"Any government that Fine Gael leads, that relies on Fianna Fail supporting from Opposition benches, I think will be in quite a perilous position, given how they might potentially use that," a Cabinet minister said.

"We are not interested in being in government with no power. If you can't make decisions, you can't fulfil a mandate."

'Confidence and supply' is an agreement that is more loose than a formal coalition. Under such a deal, a smaller party (or number of parties) backs a larger party in government on a vote-by-vote basis, in exchange for policy concessions, on budget and other key votes that could otherwise bring a government down if they did not pass.

Fine Gael intends to seek a commitment from Fianna Fail that a minority government would last a full five-year term. However, Fianna Fail believes a deal could be reached for up to two years to implement agreed policies on crucial issues such as housing/homelessness, rural regeneration and health.

Under a 'confidence and supply' arrangement, a Fine Gael-led minority government would be obliged to consult Fianna Fail on all matters, including the broad outline of a legislative programme, key legislative measures, major policy issues, broad budget parameters and policy issues and legislative measures to which Fianna Fail is likely to be particularly sensitive.

If the New Zealand model is to be adopted, consultation would occur in a "timely fashion" to ensure that Fianna Fail views would be incorporated into final decision-making.

Other co-operation would include access to relevant ministers, regular meetings between the Mr Kenny and Mr Martin, advance notification to the other of significant announcements by either Fine Gael or Fianna Fail before any public announcement.

Sunday Independent