LONDON (Reuters) - The Scottish National Party (SNP) could support a minority government led by the Labour Party after national elections on a "vote by vote" basis in return for an end to austerity policies that have resulted in public spending cuts.
Neither the Conservatives, who are currently ruling in coalition with the Liberal Democrats, nor the Labour Party are on course to win an outright majority in the vote on May 7, according to polls, and minority parties such as the SNP and the anti-EU UK Independence Party (UKIP) could hold the balance of power.
The SNP, which is set to beat Labour north of the border, will be a "tartan block occupying the green benches of the House of Commons", former leader Alex Salmond told the BBC's Andrew Marr, and they would push for more public spending.
"If you hold the balance, you hold the power," he said, adding that although Labour had ruled out a coalition, it had not ruled out a confidence and supply arrangement or, more likely, a vote-by-vote arrangement.
"I think hopefully that decisive block of SNP MPs (lawmakers) will move the Labour Party in a different direction and I think many people south of the border would like to see that as well," he said.
A "confidence and supply" deal is a looser arrangement than a coalition, requiring the junior partner to support the larger party in votes of confidence and in approving the supply of finances to enact policies. A vote-by-vote agreement would see them lending support on the basis of individual issues.
Salmond said the SNP could demand amendments to a budget from Labour, which like the SNP is left wing. For example, the SNP could require a high speed rail link from London extended to Edinburgh or Glasgow in Scotland.
The Labour Party ruled out forming a coalition with the SNP last week, aiming to shore up its support in England and offer a clear choice to voters in Scotland, with the message that a vote for the SNP could result in the Conservatives retaining power.
However, Labour Party leader Ed Miliband did not rule out an informal deal.
Jim Murphy, the leader of the Labour Party in Scotland told Sky News the only "balance of power" that Salmond had was the inadvertent ability to return Conservative leader David Cameron as prime minister for a second term, if people voted for the SNP.
A spokesman for the Conservatives said: "At a time when we need to stick to our clear long-term economic plan to secure Britain's future, a deal between Ed Miliband and the SNP would have disastrous and chaotic consequences for the country."
Reporting by Paul Sandle; editing by Susan Thomas