Labour still in play
I can reveal that the Lib Dem negotiating team met over the weekend not just with the Tories but, in secret, with a team from Labour consisting of Peter Mandelson, Ed Miliband, Ed Balls and Andrew Adonis. So far, I can get no official comment from either party about what was discussed.
Labour have not given up on the Lib Dems returning to them for a deal. However, if electoral reform is the stumbling block to any deal with the Tories, Gordon Brown is the block to any Lib/Lab deal. The solution being pushed by senior cabinet figures is for the prime minister to oversee the transition to a new coalition whilst announcing his intention,as Tony Blair did, to stand down by a specified future date. I am told that Gordon Brown would not allow himself to be a block to a deal but does want to see through both the handling of the current economic crisis and the delivery of a new political system.
Thus, it's increasingly clear that the Lib Dems face this choice:
• An arrangement with the Tories which does not deliver electoral reform but does produce a stable government committed to introducing some Lib Dem priorities. The fear many Lib Dems have is that they would be tainted by association with the Tories who could call a snap election at a moment's notice.
• A coalition with Labour with seats in cabinet, a pledge to change the voting system and a promise that Gordon brown will not be around for ever. The fear here is that they will be harmed by the allegation that they have created a "coalition of the losers" in an unstable coalition which could collapse long before it could deliver electoral reform.
Update 13:50: To add to Tory paranoia I now learn that they knew nothing about a face-to-face meeting held this morning between Gordon Brown and Nick Clegg.
David Cameron had his own meeting with the Lib Dem leader (at 11.45 lasting 45 mins) and was, I'm told, feeling pretty good about the progress of negotiations until learning that the Lib Dems appear to be pursuing two sets of negotiations at the same time.