Lib Dems stand firm on Lords reform amid speculation plans may be ditched

House of Lords The government proposes almost halving the number of people in the House of Lords

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Reform of the House of Lords is "non-negotiable" Lib Dems have said, amid reports Prime Minister David Cameron is to abandon plans for electing members.

Party sources told the BBC the reforms were a "red line", adding "there will be consequences" if they are shelved.

Government sources described press reports that Mr Cameron is to ditch House of Lords reform as "speculative."

However it is understood the prime minister is likely to make a statement on the issue next week.

Liberal Democrats within the coalition government are pushing for Lords reform, including electing 80% of peers and almost halving the total number of members to 450.

But many Conservatives oppose the plans, with 91 MPs rebelling against the government in a vote in July - the largest such act of defiance since the coalition was formed in 2010.

It may not yet be officially dead - but no one around Mr Cameron is denying that next week the prime minister will administer the last rites to Lords reform.

Its a move which could yet plunge the coalition into a particularly bruising bout of recrimination and revenge.

Those close to Mr Clegg have warned of "consequences" - hinting again that they may scupper plans for constituency boundary reform, which many Tories believe would benefit their party at the next election.

But reluctant as he may be to upset his coaltion partners, Mr Cameron has evidently concluded that enraging his own backbenches by pressing ahead with Lords Reform would be an even more unpalatable option.

Mr Cameron has been left in no doubt - following soundings taken with Tory rebels by the Cabinet office minister Oliver Letwin - that many of his backbenchers simply will not tolerate elections of any sort to the House of Lords.

Meanwhile the idea of a "Lords lite" package that would have seen the removal of hereditary peers, a smaller House of Lords and an early retirement scheme was deemed insufficient to appease Mr Clegg.

There is another calculation in government circles which has strengthend Mr Cameron's decision to kill off Lords reform and that is the state of the economy.

After last month's dire GDP figures - where the economy plunged by -0.7% - the view is voters will not be impressed by a government that wastes time and energy on rows over Lords reform.

'One more try'

The prime minister told Tory MPs last month he would make "one more try" to push Lords reform through in September when the Commons returned from its summer recess.

A report in the Daily Telegraph said attempts by Mr Cameron to win round rebels in his own party had failed and the reforms would now be scrapped.

This is likely to anger many Lib Dems, for whom a root-and-branch overhaul of the largely appointed Lords is a key policy.

A Liberal Democrat source told the BBC the party would not accept a smaller package of reforms that would see hereditary peers removed, the size of the chamber reduced and peers able to retire.

Neither would the party be "bought off" on the issue, the source added, rejecting a deal on Lib Dems policies such as legislation on party funding or green policies as an alternative to Lords reform.

Labour said the Conservatives were "tooth and nail opposed to reforming and modernising the second chamber".

Shadow justice secretary Sadiq Khan said: "Nick Clegg marched his MPs through the voting lobbies in support of the harsh and unfair policies of this Tory-led Government in anticipation of receiving Lords reform in return. But now Nick Clegg may end up with nothing, ruthlessly exposing his naivety."

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