David Cameron is Britain’s 53rd Prime Minister, the 19th to hail from the exclusive Eton College. He is also the first Conservative Prime Minister to offer Britain’s electors a referendum on electoral reform. It’s this concession — a breathtaking development and shift from Conservative tradition — that landed Cameron the top job.

Having ended up so close to power but without an absolute majority, Cameron convinced his backbenchers what many had thought impossible: a referendum on electoral reform must be offered to the Liberal Democrats. Up until Monday, the only offer Cameron had put on the table was a wishy-washy proposal to have an inquiry into electoral reform, which made Labour and their offer of a referendum a serious option for the Liberal Democrats.

It was the news of Labour’s entry into the fray that pushed Cameron and his team to the brink. It was then that he rallied for a counter-strike, producing his own game-changing offer of a referendum. Voters would be presented with a referendum proposal by Cameron to replace the current "first past the post" system with an Australian-style preferential voting system. While this falls a fair way short of a full proportional representation system (NZ and Tasmania use these systems) that the Liberal Democrats aspire to, preferential voting will be a start. Certainly Liberal Democrat leader Nick Clegg and his off-siders realised what a big opportunity Cameron’s referendum offer presented — especially when they looked to history and the decades in the wilderness before reaching this point.

Senior Liberal Democrat figure Vince Cable told the party as much on Monday, telling them to go with their heads rather than their hearts. Cable’s call for a coalition with the Conservatives was significant. He is one of the most respected politicians in Britain, hails from the party’s centre-left and was an adviser to Labour party leader, the late John Smith. He told his colleagues that reason dictated that a coalition government with the Conservatives offered the best chance for stable government. He said this knowing his party’s historical links with Labour are very real. Indeed there are a significant number of Liberal Democrat members who worked at the election to keep the Conservatives out, so the decision was a hard one to make.

As far as the Conservatives are concerned, the fact that Cameron could go to his backbench and sell them the referendum proposal is an illustration of how much parties stranded in Opposition for long periods are prepared to compromise on issues thought to be non-negotiable. Another instance was Labour in the 1990s and Tony Blair’s and Gordon Brown’s great "New Labour" modernisation drive which was a prelude to 13 years of power.

While Cameron’s referendum offer was decisive, the travails of Labour and its post-election internal differences also played a significant role in forging the "Con-Lib" coalition. A number of respected party voices including rising star Andy Burnham and "New Labour" founding father David Blunkett called for Labour to reject any deal with the Liberal Democrats describing it as "a coalition of the defeated" which would damage the Labour party.

Speaking on the BBC yesterday, David Blunkett said Labour needed time in Opposition for renewal and re-grouping after a mauling at the polls and 13 long years in power. It also reflected the reality of the election result, with any Liberal-Labour coalition likely to be seen as having no legitimacy in the electorate. While only representing one strand of thinking in Labour, statements like Blunkett’s and Burnham’s indicated that they were not united in offering electoral reform to the Liberal Democrats. Not all Labour backbenchers, many of whom benefit from the current electoral system, support reform and the Liberal Democrats would have needed every vote from Labour given the state of the parties in the new Parliament. This presented a major barrier to a deal with Labour — as of course did the fact that a coalition with them still did not offer an absolute majority, meaning more talks with minor parties to form a government.

Labour will now use the time in Opposition to elect a new leader and settle what the "New Labour" legacy of the last 20 years or so means. They would seek to exploit the inevitable tensions that must arise between the coalition partners given the massive spending cuts demanded by Britain’s creditors as well as the tensions caused by some basic differences in the philosophy department between the coalition partners.

However, that said, some aspects of the coalition may appeal to Liberal Democrat voters. David Cameron, at 43 years old, is the youngest Prime Minister since Lord Liverpool in 1812 and shares a similar class background to Liberal Democrat Nick Clegg, another young leader. The two get on quite well in person. Further, Cameron is the most socially progressive Conservative party leader in modern times, and he has very progressive views on gay rights, civil liberties, and climate change. Since becoming leader in 2005, Cameron has worked extra hard to distance himself from the "there is no such thing as society" statements of Margaret Thatcher. His "Big Society" policy was a conscious repudiation of that. Cameron is not the "die in the ditch" conviction politician of the Howard or Thatcher variety. He is an old style Tory pragmatist, very much in the Harold Macmillan mould.

He has reportedly compromised with the Liberal Democrats in a number of areas including giving ground on tax cuts for low income earners. He has also been generous in other areas like education and health in his quest for power. Certainly the impression has been that Cameron has gone a long way to win over the Liberal Democrats and he has offered Nick Clegg and Vince Cable, among others, important positions in his cabinet.

Once the deal beds down, Cameron will need to watch his own party. The backbone of the modern conservative party is still right-wing and Cameron is a source of suspicion. He does not appear to be in the mould of their icon, Margaret Thatcher. He also failed to win an outright majority despite the poor record of Gordon Brown. They also distrust his "Big Society" policies which they see as being vague and quite likely soft on crime and other social problems. The point out of this is that in an era of "new politics" it is not only politicians who will have to learn about coalition governments and all their attendant compromises but so will the grassroots members of the two coalition partners and the wider electorate in general.

Ultimately last Thursday’s disappointing election results and the onrush into power talks has represented five very difficult days for the Liberal Democrats. Their choice about what to do was best summed up by their former leader, Lord Paddy Ashdown. He said on one hand, a coalition with the Conservatives was a choice for stability in government while on the other hand a coalition with Labour was a choice for "a program that Britain needs". The make-up of the numbers in the 2010 parliament, world economic events and big concessions from the Conservatives, ultimately made the Liberal Democrat choice for stability, the obvious one. Now it’s time to govern and the breather the financial markets gave the British economy while the voters sorted out a government is officially over.

One suspects Britain will now need all the stability it can get.