I can see a Con-Lib pact being reasonably effective, especially since a lot of the far-right Tories* would probably break away leaving a relatively center-left Conservative Party (Thatcher'd turn in her grave if she was dead). It would also mean that we could have general LibDem** policies, without their looney pro-life stuff coming through.
*
OK, for the benefit of those observing from accross the Atlantic, here's a very very brief overview of British politics. Many Americans struggle to understand how British politics work, that's ok, many Brits struggle to understand how British politics works also.
History.
Traditionally there were two major players in British politics. We'll start with, based on proportin of elections won to contested, the most successful political party in world History. The British Conservative Party. The roots of the Conservatives go back to the time of Oliver Cromwell, when the monarchy were in excile bandits engaged the Lord Protector's army in guerilla warfare, these Torys (literally "thieves"), were in the main Cavaliers who had fled at the end of the English Civil War. After the Restoration of the Monarchy, the Torys became a legitimate political party, their main area of support was in the English Country side as they were seen to represent traditional Royalist England and were (and still largely are) the party of the "statu quo". After the Restoration, many parliamentarians remained, indeed the new King even recognised any knighthood or peerages granted by Cromwell and thus even the nobility had people from lowley, anti-royalist backgrounds. These people united for protection and entered Parliament as The Whig Party (the name comes from "whig" sound Scottish Parliamentarians used to shout to urge their horses on in battle). The Whigs on the whole stood left of the Conservatives (although would be considered center-right by modern interpretation). They supported US independance (hence the American Whig Party of early US politics), supported votes for non-landowners, votes for women, Irish independance (after changing their name to the Liberal Party) etc. Their is one major black mark on Whig history. They believed in lessay fare politics, which is essentially the idea that Government should never interfere with private indeviduals. This meant that they blocked the Tories proposed measurse to limit how much land owners in Ireland could demand from their tenants and thus propogated the Potato Famine. That said, they almost redeemed themselves in the mid-19th Century when, now as the Liberal Party, they proposed an Irish Independance bill. Unfortunately the Tories, now know as the Conservative Party, blocked this bill and Ireland remained part of the UK. In (I think) 1900 Trade Unions were legalised by The Liberal Party, allowing as a side effect the formation of the Labour Party. The Labour Party were funded by the Trade Unions and thus stood much to the left of the Liberals, the Conservatives were having a fit that Socialists should be allowed into politics, but on the whole the Labour Party were not taken seriously, and general consesus was that they'd merge with the Liberal Party within a few years. I wont go into detail but a series of unexpected events happened which changed the face of British politics. The Liberals again proposed an Irish Independance bill, which was passed, however, in the meantime 80% of the province of Ulster had industrialised and many people didn't want to be ruled by what they percieved as "country yokels" in Dublin and went as far as to arm themselves (illegally imported weapons from France and Germany) stating that they would "violently oppose any Irish Government forced upon them". This was the conception of the Ulster Freedom Fighters (or Ulster Defence Army) and the start of the modern troubles in Ireland. The Conservatives fully supported the UFF (ironic as the Tories were a largely rural Catholic group and the IFF were an urban Protestant group). This resulted in a massive split in the Liberal Party, leading to an election where Liberals even stood against each other for the same seat in Parliament. This pretty much destroyed the Liberals. They became a laughing stock in British politics at a time when center ground was not popluar in an increasing polarised climate. their swan song was probably their involvement in the coalition Governments of the War years. Traditional Liberal support shifted either to the Conservatives (about 20%) or to the Labour Party (80%), meaning that in the first post WWII election, Churchill's landslide defeat was not at the hands of the Liberals, but at the hands of the Labour Party (depite modern perceptions Churchill was never an overly popular figure in British Politics, he rested primarily on the fact that he was decended from British war hero Sir John Churchill and his claims that the Labour Party were akin to the NAZI Party destroyed what credibility he did have). Clement Atlee's Labour Government of the post war years had the biggest majorty in British history (a majority that has only been beat once sice, by Tony Blair in 1997), they were undoubtably the most radical Britsih Government and set up things like the Welfare State, National Health Service, Nationalised Transport, and Public Services, and essentially formed the Socialist Britain that has not yet been fully destroyed (despite Thatcher's best efforts which succeeded in undoing about 90% of what Atlee achieved).
Today.
So, the later part of the 20th Century saw two major players, The Conservatives (similiar in outlook to the Republicans), and the Labour Party (traditionally Socialist), and a sizable third party The Liberal Party (similar in outlook to the Democrats, indeed the Liberal Party merged in 1988 with a breakaway group from the Labour Party and are now known as the Liberal Democrat Party, or LibDems for short). From 1979 the Conservatives won a succession of elections under first Margaret Thatcher (there's no two-term rule in Britain, a leader can theoretically continue as long as they keep winning elections), and later John Major, however increasing sleaze scandals, along with continually failing to deliver on promises of "better times ahead" caused a growing disenchantment with the Conservatives, in 1997 The Labour Party (unofficially known as New Labour) under Tony Blair took full advantage and by dropping a lot of traditional Labour policies (including removal of the word "Socialist" from their charter) and claiming the center ground, in the process winning a lot of Conservative votes. They won a landslide victory, and many predicted a repeat of the reforms of 1945. This was a very different Labour party form Atlees though. In adopting a more traditional Conservative stance they alienated a lot of old Labour supporters,and Tony Blair's Government has been far from Socialist. As the Conservatives have gradually got back on their feet some tradional voters are seeping back away from Labour to their old party, leading to the situation described in the first post. British Politics has become very fragmented. Recent years has seen a number of fringe partys often issue-specific such UKIP (UK Independace Party wishing to withdraw from the EU), Veritas (essentially old Tory moderate-right politics, very anti-immigration), The Liberals (those opposed to the merger with the Social Democrats are still there claiming to be the real Liberal Party), Socialist Labour (those opposed to New Labour who would prefer a return to Labour Party policies of 1945, they get a lot of verbal support, but little electoral support), the Green Party (environmentalists, act more as a pressure group than as electoral candidates), the Scottish National Party (campaigning for Scottish Independance - obviously only exist in Scotland and struggle to get support there outside Glasgow), Clywd Cymrie (as with SNP but for Wales), Sinn Fein (campaigning (and shooting people) for Northern Ireland to become part of the Irish Republic). The good ol' British Communist Party are still there and not really achieving any more than they have over the last 100 years. More worrying are the British National Party, or BNP. Headed by Nick Griffin they are a breakaway group from the National Front (NF). On the surface they appear reasonable, claiming to stand for "British, and particularly English culture". they oppose immigration but state that they are not for repatriation. In truth people who have joined an then fled reveal that their policies are almost idential to those of the German NAZI party and that once in power they would seek to eliminte any non-Celto-Saxons from the Isles, retake the rest of Ireland and of course withdraw from the EU. The BNP are small but growing, absurdly a large portion of BNP support comes from people who are ethnically Asian. less than 50% of those eligible to vote in the UK do meaning that it's easier for fringe partys to grab seats on councils and possibly even Westminster if the turnout keeps dropping. Many blame apathy though it's likely that the apparant lack of differnce between the modern Conservative Party and the modern "new" Labour Party is causing people to look elsewhere, or to get so jaded that they just don't bother.
Right I've waffled far more than I intended, and am even now thinking I've missed stuff (such as joining the EU) and am sure Brits will be yelling at their screen because I've left something they consider paramount out. For those ouside the UK hope this has made it slightly clearer, or at least made you realise why it it ain't clear?
Smash the BNP, before the BNP smashes you.
Just like Blair is the best Tory leader the Old Tories never had (since Thatch)?
