Vince Cable predicts hung parliament at the next election as he defends talks with senior Labour figures

Business Secretary Vince Cable has predicted that the next election will result in another hung parliament and defended his talks with senior Labour figures, insisting that it is right to maintain “good communications” across the political spectrum.

In his keynote speech to the Liberal Democrat conference he attacked "backwoodsmen" in the Tories who oppose a mansion tax, ridiculed calls from the right for a "hire and fire culture" and mocked Prime Minister David Cameron, describing reports of a split within the Conservative party as "enticing".

He told activists in Brighton he does not believe that any party will win the 2015 election outright and insisted that any future government that resulted "must have Liberal Democrats at its heart".

The Business Secretary joked about his text exchanges with Labour leader Ed Miliband, pretending to receive a message on his phone during his speech.

But he made a serious point to critics of the relationship: "Many of the decisions we face, on banks, industrial strategy, climate change, go way beyond the limitations of one party or one parliament. That's why I also make sure that I have good communications with politicians across the political spectrum.

"I don't believe actually that the British people will want to entrust their future to any one party next time. And if Britain wants sustainable growth, competence with compassion, fairness with freedom and more equality not ever greater division, then that government must have Liberal Democrats at its heart."

Although he attacked "rootless" New Labour, Mr Cable reserved his most colourful language for the Lib Dems' coalition partners.

Expressing frustration at the lack of progress on the "core" Lib Dem policy of a mansion tax, he said: "I know it horrifies the Tory backwoodsmen but it is popular and right."

He described those who called for a major relaxation of employment laws, recommended by the Beecroft report commissioned by Downing Street, as "headbangers".

Mr Cable said: "We have seen off the headbangers who want a hire and fire culture and seem to find sacking people an aphrodisiac: totally irrelevant in a country with flexible labour markets which have created over a million private sector jobs in the last two years.

"Instead, we have concentrated on practical tribunal reform and supported progressive firms who want worker participation and share ownership."

In one passage of his speech he seized on reports of rivalry between Mr Cameron and London mayor Boris Johnson, highlighted the potentially toxic issue of class and also fuelled the row over chief whip Andrew Mitchell's spat with the police.

"Most of our MPs will face Conservatives at the next general election. They face the enticing prospect of a Tory split. Now I don't know what Boris and Dave got up to in Eton. Perhaps a pillow fight got out of control in the dormitories. I have been told, however, that jokes about social class are not good for the unity of the coalition. But as a mere pleb, I couldn't resist it."

The Business Secretary also confirmed plans for a business bank capitalised with £1 billion of taxpayers' money, stressed a commitment to house building and pledged to crack down on "shady" tax havens.

PA