Sir Vince Cable says new party may form after Jeremy Corbyn's Labour win

A new political party may emerge as disgruntled Labour moderates team up with the Liberal Democrats following Jeremy Corbyn's election win, former Cabinet minister Sir Vince Cable has suggested.

The senior Lib Dem made the prediction as he called for a "common sense centre-left formation" to oppose the Conservatives.

The former business secretary said there were "millions of people" who wanted an alternative to the Tories but would not back Labour under Mr Corbyn and shadow chancellor John McDonnell.

Sir Vince's comments came after Lib Dem leader Tim Farron claimed his party offers the only credible alternative to a generation of Tory rule despite the Lib Dems' disastrous general election result.

Mr Farron will face questions about his plans from the party's activists later today in a session on the second day of the Lib Dems' autumn conference in Bournemouth.

The gathering will also hear calls for the party - a strong supporter of the European Union - to play a leading role in campaigning for the UK to remain a member of the bloc in the in/out referendum promised by David Cameron.

Writing in the Mail on Sunday, Sir Vince forecast that some Labour supporters - and possibly MPs - would switch to the Lib Dems because of their concerns over the left-wing nature of Mr Corbyn's politics.

In the long run Sir Vince, a veteran of the 1980s split which saw the SDP break away from Labour, predicted that an entire new centre-left party could emerge.

He said: "There are many voters who will never back the Tories, and are now desperately unhappy with Labour's leftward lurch, who will be looking for a new home.

"I think we may get some people coming across. It may even become an avalanche, although I doubt it. Defection is never an easy option, as I know all too well.

"I am a veteran of the party's civil war in the early 1980s, albeit as a foot soldier rather than a general. Those of us who like me jumped ship to the SDP had mixed success. The Tories remained in power for over a decade.

"But the influence of the SDP on ideas and policies was immense.

"What I hope emerges from this is the creation of a common sense centre-left formation made of sensible Labour, the Lib Dems and indeed some Tories who don't like the direction of their party.

"It will be a very long process but ultimately, this movement might well have to become a fully fledged political party."

Mr Farron is expected to use the conference - his first as leader - by unveiling a pro-business policy in an "unashamed land grab" for the centre-ground.

The plan would see a "start up allowance" worth £2,600 being made available to new small firms. The giveaway would be paid for by reversing cuts to corporation tax announced by George Osborne in the Budget.

A senior Lib Dem source said: "This policy is an unashamed land grab for those Labour voters who understand and care about Britain's economic stability and who look at Corbyn's offering and despair."