Wednesday, May 12, 1999 Published at 10:56 GMT 11:56 UK
Coalition gulf narrowing, says Wallace
The parliament on the Mound, where MSPs gathered on Wednesday
Liberal Democrat leader Jim Wallace has raised the prospect of an end to the deadlock over forming a coalition government in the Scottish Parliament.
Discussions between Labour and the Lib-Dems' negotiating teams broke up on Tuesday evening without agreement on key issues, most notably student finance.
However, Scottish Liberal Democrat leader Jim Wallace predicted on Wednesday there was a good chance of a deal.
Any signs of talks tension were little in evidence during the swearing-in of MSPs at the parliament as Scottish Labour leader Donald Dewar and Mr Wallace could be seen sharing a joke across the floor of the chamber.
Serious hurdles still remain and first-minister-in-waiting Mr Dewar's stated aim of forming a coalition by Thursday morning still seems some way off.
The Lib-Dems have rejected a Labour offer to review student finances, with the party stipulating that nothing short of the abolition of student tuition fees will be acceptable.
They said the Labour offer to put funding before a committee was not a compromise they could accept.
If the parties fail to resolve their differences, Mr Dewar said he would settle for a minority government if talks continued to drag on.
With 56 seats, Labour is nine short of the unassailable majority it needs within the parliament and knows that going it alone could see it overruled on key votes, such as the beef-on-the-bone ban and, ironically, student tuition fees.
Liberal Democrat peer Lord Steel, who is tipped to be the parliament's first presiding officer, said: "I think it's a very complicated business trying to put together a programme for a government for four years.
"I would say both parties are absolutely right to try to do this because obviously if we have a stable majority in the parliament, the work of the parliament will be easier.
"It's perfectly possible for both parties to walk away from them and say 'well, we did try but we haven't ssucceeded' and the parliament will have to go on with a minority government."
The negotiations are taking place in the ministerial suites on the fifth floor of the Parliamentary Administration building, overlooking Edinburgh's historic Royal Mile.
Labour's team consists of Mr Dewar, Home Affairs spokesman Henry McLeish, Health Minister Sam Galbraith, newly elected MSP for Hamilton South Tom McCabe and MSP for Edinburgh Central Sarah Boyack.
The Lib Dem team includes Mr Wallace, Finance spokesman Ross Finnie MSP, Aberdeen South MSP Nicol Stephen, North East Fife MSP Ian Smith, and Party Treasurer Dennis Robertson Sullivan.
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