Kennedy backs talks with Labour

The prospect of joint talks between Labour and the Liberal Democrats on how to achieve a Commons majority for constitutional reform was growing yesterday despite a reaffirmation last night by Tony Blair, the Labour leader, of his scepticism about electoral reform for the House of Commons.

Such talks would be strictly limited to the mechanics of how to secure legislation on issues on which the two parties are already agreed. They would not cover crucial differences between the two, such as Lords reform and the Liberal Democrats' demand for Mr Blair to back Commons electoral reform in the referendum he has promised.

Mr Blair dashed hopes of a conversion on that issue last night when he repeated that he was not "personally persuaded" of the value of proportional representation.

Charles Kennedy, a former president of the Liberal Democrats and its European spokesman, said on BBC Radio's Today programme yesterday: "On constitutional issues, anticipating the elephant traps that will be there whatever government replaces the present, one is a dialogue worth having."

Mr Ashdown is thought unlikely to bar such informal talks in spite of his public insistence yesterday that there was no point in further co- operation until Labour had clarified its stand on a series of policy issues.

Sensitivities over advancing relations between the two parties were further exposed yesterday by an interview in the Birmingham Post in which Mr Blair, acknowledged that "in other European countries Labour would be called the Social Democratic Party and in some countries the democratic socialists". His office complained the newspaper had misrepresented the remark as a new proclamation of social democratic identity and said he had said nothing he had not frequently said before.

The new impetus for limited dialogue came as one polling analysis suggested Liberal Democrats could win 30 new seats at the next election. Lord Holme, in charge of the party's election strategy, announced that Alan Beith, the home affairs spokesman, would be in charge of drawing up the party's manifesto.

Leadership sources, irritated by suggestions that Mr Ashdown had adopted "tax and spend" territory vacated by Labour in his leadership speech on Tuesday, said the manifesto would contain full costings - complete with tax implications - of the proposals in the Liberal Democrat Guarantee, the policy priorities document unveiled before the conference and to be debated today.

The analysis by Mori suggests the Liberal Democrats' strategy of targeting between 50 and 60 mainly Tory-held seats could bring the party a total of 54 seats after the next election, even if its poll ratings remained at its current level of about 16 per cent. Lord Holme said that with an overdraft of just pounds 150,000, the party was the "only solvent one" of the three main parties and it expected to spend more than the pounds 2m it spent in the last election.