Britain's Brown Says He'll Quit for Deal With Liberals

Gordon Brown said he’s willing to resign as prime minister and leader of Britain’s Labour Party, clearing the way for talks with Nick Clegg’s Liberal Democrats on forming a government.      “I have no desire to stay in my position longer than is necessary,” Brown told reporters outside his Downing Street residence in London today. Brown, 59, will remain as prime minister until a new Labour leader is chosen, something he said would happen by September.

Brown’s surprise announcement came just an hour after indications that the Liberal Democrats were struggling to seal an alliance with David Cameron’s Conservatives following the inconclusive May 6 election. Lawmakers in Clegg’s party demanded more details on proposed policies on an overhaul of the voting system, their central demand, taxation and education funding.     The pound pared gains after Brown’s announcement threatened to delay the formation of a new government that would focus on cutting the record budget deficit. Sterling slid to $1.4872 at 7:42 p.m. in London after rising as high as $1.5054. The 10-year gilt yield rose 9 basis points to 3.92 percent.

“With Brown gone it reduces a huge obstacle to a Liberal- Labour coalition,” said Mark Wickham-Jones, professor of politics at Bristol University.

‘Smooth Transition’

Clegg said Brown’s decision might pave the way for an agreement with Labour.     “Gordon Brown has made an important announcement today,” Clegg told Sky News television. “It could be an important element in a smooth transition to the stable government that people deserve -- without prejudicing or predicting what the outcome of the talks will be between ourselves and the Labour Party.”

The Conservatives improved their pitch to Clegg on electoral reform this evening, calling it a “final offer.”

“In the interests of trying to create a stable government, we will go the extra mile,” foreign-affairs spokesman William Hague, one of the party’s negotiators, said after meeting with Conservative lawmakers. “We will offer to the Liberal Democrats in a coalition government a referendum on the alternative-vote system.”

Order of Preference

Under such a system, voters number candidates in each district in order of preference. Those choices are taken into account to ensure that the winner has the backing of at least half the electorate. Brown has also offered Clegg’s party a referendum on voting reform.

Britain’s first-past-the-post electoral system gave the Liberal Democrats 9 percent of the seats in the House of Commons for 23 percent of the popular vote.

“As you know, the Liberal Democrats felt that they should first talk to the Conservative Party,” Brown said. “Clegg now wishes also to take forward formal discussions with the Labour Party. I believe it is in the national interest to respond positively.”

The Conservatives won 306 districts in the vote, a net gain of 97 from the previous election in 2005. Labour had a net loss of 91 seats to end with 258. The Liberal Democrats lost five seats and now have 57 members of the 650-seat House of Commons. It was the first hung Parliament after an election since 1974.

‘Judgment on Me’

    “As leader of my party, I must accept that is a judgment on me,” Brown said of the election result that saw Labour lose its majority in the House of Commons after 13 years.

The Liberal Democrats and Conservatives have held four rounds of talks since the election on forming an alliance. Brown had his first post-election meeting with Clegg yesterday.     “This would be a partnership of principle,” Labour Transport Secretary Andrew Adonis told the BBC. “We would go into those negotiations determined to make them succeed.”     Even if the Liberal Democrats and Labour could make a deal, they would still need to bring in at least two more parties to reach a majority. The Scottish and Welsh nationalists have both said they would be willing to enter an alliance in return for funding guarantees for their parts of the U.K. All parties to those negotiations face the problem that they won’t know who would be the prime minister they would serve under.

Hague said that if the Liberal Democrats went into such a coalition, “that would have a second unelected prime minister in a row, something we believe would be unacceptable to the people of this country.”

Nationalist Parties

“We have been preparing the ground with a senior civil servant to assist with the process if we do enter into talks later in the week,” Elfyn Llwyd, the parliamentary leader of the Welsh party, Plaid Cymru, said in an interview.

Brown “has done the right thing,” the head of the Scottish National Party parliamentary group, Angus Robertson, said in an e-mailed statement. “The SNP stands ready to work with other parties in an arrangement which will deliver a functioning parliament.”     A Labour leadership contest takes a minimum of seven weeks. Possible candidates include Foreign Secretary David Miliband, listed by William Hill Plc as favorite, followed by Chancellor of the Exchequer Alistair Darling, Home Secretary Alan Johnson, Energy Secretary Ed Miliband and Children’s Secretary Ed Balls.

The Labour electoral college is made up of three parts, each carrying equal weight: lawmakers, labor unions and party members. Brown was elected without a contest in 2007.

To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net; Kitty Donaldson in London at kdonaldson1@bloomberg.net.

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