A lot of people talk about what ifs. What if, following the general election, the Lib Dems had done this, or Labour had done that or if the Tories had done something else. Some scenarios have no coalition being made and no confidence and supply agreement either. Somehow this would have led to a magical progressive wonderland where the tories would have been defeated and been forced to implement left wing policies. That indeed is a wonderful image. But complete and utter poppycock.
There are three main reasons why any scenario other than the current one was impossible. The first is that the tories could have simply called another election, which the other parties couldn't afford to contest, and won the slim majority they needed to form a government.
The second is that any longer without a government and the markets would have lost confidence, pulling the rug out from underneath us and leaving us in a situation as bad as Ireland's. They don't do this when other countries (such as Belgium) spend ages holding coalition negotiations, but that's because a) in this country we have a media which was in uproar at a mere five days without being privy to what was happening and b) because the markets have all the intelligence of an over-ripe turnip.
The third reason is that there were no real alternatives to a coalition. I wish there had been others but there weren't. The LDs are making the best of a bad job and, apart from the monstrous betrayal by some (not all) of them over fees, they aren't doing too bad.
Not everyone will agree with me on this of course, so let me address my two hypotheses:
Labour and the Lib Dems would have been unable to afford to fight a second election
Labour is £20 million in debt already, the Lib Dems coffers are almost empty. There are 650 constituencies, merely to stump up the deposit to stand a candidate would be in the region of £500k - and that's not taking into account printing costs and all the other paraphernalia of an election campaign. There'd be no money for political broadcasts or anything else - sure people would come out and vote but the overwhelming message dominating the election campaign would have been the tory one - relentlessly pumped out via television, leaflets and the tabloids - that any government other than a majority would cause financial ruin. That would probably have been enough to win the election for them.
Of course, people might have voted differently but it's a hell of a lot to gamble on - particularly when the only thing you have is the hope that your vote will hold up.
An absence of a strong government would have led to a collapse in market confidence
Here's what it boils down to: as a nation, our credit rating is determined by market confidence. If confidence falls, so does our credit rating and then our interest payments go up, making it even harder to pay off the deficit. On the monday following the election the FTSE fell - the markets didn't like the uncertainty of the election results. In the negotiations even Labour were willing to concede that a quicker deficit reduction was needed. I'm not saying that politicians or the markets were right to think that a government without a majority would have meant disaster but that was the orthodox opinion at the time and it is hardly surprising that the politicians made their decisions accordingly.
Why there were no alternatives to a LD/Tory Coalition
If you read Mr Laws' account of the coalition negotiations you will see that the Lib Dems had already decided to do a confidence and supply agreement if no coalition deal was possible. The details of it were all worked out before Labour came to the negotiating table. We could have had a confidence and supply agreement but the tories could have threatened to call an election at any time whilst simultaneously being dependent on their right wing to get anything done. I guarantee you that, however abhorrent you find our centre-right government, it is far better than a full fat right wing government which is what the alternative to the coalition was.
Under the current government we have earning linked pensions, the pupil premium, an end to the detention in barbaric conditions of innocent children, trident renewal kicked into the long grass, reform of the House of Lords and a referendum on AV. None of these would have been possible without Lib Dems in a coalition.
Personally I would have liked to see a rainbow coalition, which might well have been possible, despite the parliamentary arithmetic being against it, were it not for the fact that half the Labour leadership, including Ed Milliband, were opposed to it.
It's almost amusing that the Lib Dems are now shouldering the burden of government whilst Labour are enjoying the blanket of opposition without yet providing any alternatives to what the coalition is doing. Our political system requires a credible opposition but we do not have that at the moment. Labour failed in government and now they are failing in opposition.