One Wales

[2] On 3 May 2007, Labour won 26 of 60 seats in the 2007 National Assembly for Wales election, four short of an effective majority of 30 (see Speaker Denison's rule for an explanation of why this is so).

Liberal Democrat leader Mike German, who had served as Deputy First Minister of Wales in the previous coalition, favoured the deal, which would have given the Government a majority of four.

[3] The new Assembly formally opened two days later with no clear majority, and Rhodri Morgan was elected First Minister unopposed at the head of a minority government.

The agreement was criticised by some Labour members as too conciliatory towards Plaid Cymru's nationalist leanings, especially in that it included a provision requiring a referendum on full law-making powers for the National Assembly for Wales, in line with the Scottish Parliament.

The key policy proposals of the deal focused on increasing the amount of affordable housing in Wales through various incentives and schemes; investing in a comprehensive rail programme to link North Wales and South Wales more effectively; instituting a moratorium on community hospital reforms and promising to "agree and implement a new approach to health service reconfiguration" when "there is a local agreement on the way forward"; a new commission to tackle climate change problems and alternative energy questions; and, most controversially, an agreement to hold a referendum on new law-making powers for the National Assembly in the vein of those previously granted to the Scottish Parliament.

The text also stated that Plaid Cymru and Labour had agreed "in good faith to campaign for a successful outcome to such a referendum.

"[9] This last section was criticised by Welsh Labour MPs Paul Murphy, Don Touhig, and Kim Howells, Minister of State at the Foreign and Commonwealth Office, who claimed it would lead "nationalists to the gates of independence.