Compromises helped forge agreement

The Conservatives and Liberal Democrats were both forced to make compromises as they drew up a coalition agreement in the frenzied five days following the 2010 general election.

Here is a list of how the two parties stand on the main issues:

:: Deficit and spending

The parties agreed that deficit reduction was the "most urgent" issue facing Britain. Chancellor George Osborne unveiled plans to eliminate the ?109 billion structural deficit by 2015, with an average 19% cut in departmental budgets. Labour has accused the Lib Dems of turning away from their manifesto and backing billions of pounds of extra spending cuts. But the Lib Dems scored a major coup on raising the personal allowance by ?1,000 to ?7,475, benefiting 23 million taxpayers and taking hundreds of thousands of people out of income tax altogether. The two parties agreed to work towards increasing the threshold to ?10,000, a key Lib Dem manifesto policy.

:: Constitutional reform

A referendum on changing the Westminster voting system was an important condition on the Lib Dems joining the coalition. The resulting campaigns for and against the Alternative Vote (AV) increased tensions within the Cabinet, with Energy Secretary Chris Huhne threatening to sue his colleagues over their No campaign claims. The referendum was one part of the controversial Parliamentary Voting System and Constituencies Bill, which was vehemently opposed by Labour. The legislation also included Conservative plans to reduce the number of MPs by 50 and redraw constituency boundaries. Labour believed the Bill should be split into two parts, allowing the referendum to go ahead. Fractious debates in the Lords stretched out over weeks, with the House sitting all through the night on one occasion.

:: Higher education

The Lib Dems came under heavy fire for agreeing to treble university tuition fees to a maximum of ?9,000 a year from 2012 following recommendations from Lord Browne. They had originally pledged to phase out fees altogether within six years and immediately scrap fees for final-year students. Photographs of Cabinet ministers signing these pledges during the election campaign, including Nick Clegg, quickly became an internet sensation. The Prime Minister appointed Lib Dem deputy leader Simon Hughes as an advocate for access to higher education, with Labour criticising the role as "window dressing".

:: Schools

The ?2.5 billion pupil premium for disadvantaged children was a massive coup for the Lib Dems. In return, they agreed with the Tories to ensure that "new providers can enter the state school system in response to parental demand". But the coalition's plan to set up a network of free schools did not go down well with Lib Dem activists, who voted against the policy at their September party conference. Many party supporters argue that free schools will divert cash from struggling schools.

:: Health

The two parties agreed that funding for the NHS should increase in real terms in each year of this parliament. But the coalition's Health and Social Care Bill has had a troubled passage through the Commons, with Labour claiming that plans to transfer power from managers to GP-led consortia has no mandate. The Bill stalled as Lib Dem activists at the party's spring conference backed a call to halt the "damaging and unjustified" shake-up and Mr Clegg's aide Norman Lamb threatened to quit over the plans. Ministers have announced a "pause" in the legislation to hold a series of "listening events".

:: Immigration

Tensions were ramped up within the Cabinet when the Prime Minister made a tough speech on immigration, saying it was time Britain returned to the levels of the 1980s and 1990s where the number of people coming to the UK was in the "tens of thousands, rather than the hundreds of thousands". Business Secretary Vince Cable criticised the speech as "very unwise" and said the "tens of thousands" figure was "Tory party policy only". The coalition agreement states that there should be an annual limit on the number of non-EU economic migrants into the UK but does not go further.

:: Nuclear

The Lib Dems had rejected a "new generation of nuclear power" but they were forced to embrace nuclear as the price of joining the coalition. Mr Cameron tactically appointed Lib Dem Chris Huhne as Energy Secretary in a bid to defuse potential stand-offs. Tories are committed to replacing existing nuclear power stations as long as they receive no public subsidy. The parties agreed that a Lib Dem spokesman would be able to speak out against any new nuclear plants but Lib Dem MPs would have to abstain on the issue. On nuclear weapons, the Tories are strongly in favour of a like-for-like replacement of Trident while the Lib Dems are opposed. The parties agreed that its renewal should be scrutinised to ensure value for money. Lib Dem Defence Minister Nick Harvey was accused by Labour of trying to score "political points" when he told his party conference that the final decision on Trident's replacement could be delayed until after the 2015 election.

:: Welfare

The parties agreed to shake up the welfare system, stressing that people should only be entitled to benefits if they were willing to work. But the Prime Minister came under attack from Lib Dems when he suggested there should be no more "council houses for life". Mr Hughes dismissed this as a "prime ministerial idea" and stressed that it was not in either party's manifesto or in the coalition agreement. London Mayor Boris Johnson also joined the housing benefit row, saying he would not accept "any kind of Kosovo-style social cleansing" in the capital.

:: Europe

The parties agreed a "referendum lock" to ensure that any proposed transfer of powers from Westminster to Brussels could not take place without a national referendum. The European Union Bill was introduced by Mr Cameron amid unease from Conservative eurosceptics over the partnership with the pro-European Lib Dems. The parties also agreed to limit the application of the Working Time Directive in the UK and pledged not to join the euro during this parliament.