Is this the shape of the Con-Lib alliance?

Is this the shape of the Con-Lib alliance? Tories drop immediate cuts, offer Cable Cabinet Treasury position, suggest three-year programme

The shadow business secretary, Ken Clarke, today dropped clear hints as to the shape of a Conservative-Liberal Democrat deal to lead the government.

His comments to Channel 4 News on compromises over economic policy were highly significant. Nick Clegg and Vince Cable had previously ruled out backing what they called the “economic masochism” of starting sharp spending cuts in the current financial year.

Mr Clarke told Channel 4 News that it was still “his opinion” that the £6bn of immediate cuts to waste identified by Sir Peter Gershon should be made. But he added: “There are much bigger issues in the economy looking at parliament as a whole and that [£6bn of cuts] is one of the comapratively smaller ones. David Cameron mentioned compromise, well compromise might be necessary and is necessary.”

Senior Liberal Democrat sources have told Channel 4 News that they expect the Conservatives to drop the need for the immediate cuts entirely.

Mr Clarke also indicated the length of a possible Con-Lib pact. “We need a programme not just for the next week or two but for the next two or three years.”

When asked by Jon Snow whether he really thought that the Treasury could be run jointly with another party, Mr Clarke suggested that Vince Cable could be considered by David Cameron as a potential Chief Secretary to the Treasury, a junior Cabinet position.

Mr Clarke said: ‘There are two Cabinet ministers in the Treasury. Not sure whether anyone is to look at that, though. It’s not my position.”

Vince Cable as CST would put him in charge of an austerity programme expected to be at least as hard as anything in Britain since the 1970s. A spokeswoman for Vince Cable said: “We are not giving running commentaries.”

It is unclear if Mr Cable is directly involved in the three-man negotiation team.