He suggests in this article that it would be a good idea to merge the Labour party and the Liberal Democrats into one political party, call it the Liberal party, and ensure that the Tories never get into power!
In his 1991 book The Progressive Dilemma, Marquand noted that the in the 20th century the Conservative Party had so far spent 60 years in power. At the time of the Liberal landslide of 1906 such Tory dominance seemed unlikely. And a number of Conservative historians have observed that for ten years after that victory the Liberal offering seemed so potent that the Tories struggled to find a response.
Then, as Marquand tells it, came tragedy for the Left. It split. A new party emerged commited to two things that the Liberals refused to endorse - the power of organised labour and socialism. The split was not inevitable. The Liberals might have offered their support to the unions, the effort to commit Labour to socialism might have failed. But inevitable or not, the split happened. And the result has been years of Tory hegemony.
Any further analysis?
Such a party would be rife with internal divisions.
But I don't think there are as many old-guard socialists in the Labour parliament as there were.
However as Finkelstein points out, socialism doesn't really work (Finkelstein claims that democratic socialism is a contradiction in terms - which is why I prefer to think of Sweden, France et al as liberal democracies, as opposed to social democracies) and unions are certainly necessary, but I don't see why they have to be any more powerful than other interest groups in society.
So a liberal party wouldn't necessarily be any more divided than the Tory party.