Labour-Liberal Democrat coalition hopes end in recriminations

As Gordon Brown gathered with his praetorian guard of New Labour inside No 10 this afternoon, there was an intense frustration – with the Liberal Democrats, with sections of his own party and, lastly, with the Queen. Brown knew his premiership was at an end, and had wanted for some hours to go to Buckingham Palace to see her to tender his resignation.

But the palace said No. Protocol suggested that he must wait for the call from Nick Clegg, telling him he had struck a deal with the Conservative party.

One minister inside the bunker in the final hours said: "I'm annoyed, relieved and I want to clear off. We are just waiting for Nick Clegg to stop dicking around."

The remarks were a reflection of the bitter recriminations that broke out as Labour negotiators with the Lib Dems accused Clegg's team of proposing ludicrous spending pledges, and Clegg himself of obstructing talks.

They claimed that an effort to open direct discussions this morning between the more sympathetic Vince Cable, the Liberal Democrat Treasury spokesman, and Alistair Darling, the Labour chancellor for three years, had been vetoed by the Lib Dem leader.

Some Labour negotiators involved in two rounds of talks on Monday afternoon and this morning said they had not thought that any insurmountable policy difference was going to block agreement between the two sides.

Instead, they believe the growing opposition inside the Labour party, including from vocal former ministers and some MPs angry at what they regarded as the lack of consultation, confirmed Clegg in his view that a Lib Dem-Labour coalition would be not just be illegitimate, but instable.

In what may turn into a vicious political battle between Labour and Lib Dems in the weeks ahead, some were pinning the blame entirely on Clegg, calling him "a Tory in all but name".

One Labour negotiator hotly denied that there had been divisions within the Labour negotiating team, or that they had displayed bad body language.

Ed Balls said the Liberal Democrats had switched position on whether an emergency budget should be introduced this year. "We tried to negotiate in good faith. David Laws said he wanted to go with deficit reduction and cuts in spending this year, and that is not something we could agree with.

"If we had gone to the cabinet and to the parliamentary party and said cut spending now – which is contrary to our manifesto – they would have said no".

Cable denied this account.

But tonight that was certainly the Labour view of why a day that had started with such high hopes of a Lib Dem-Labour coalition had ended with David Cameron in Downing Street.

According to Labour, there were other key sticking points, and demands from the Liberal Democrats that simply could not be met.

The Lib Dems had apparently asked for an extra £2.5bn to spend on the school pupil premium to be spent on poorer children. Labour argued that it was not against the idea, but asked how it could be funded.

There were also divisions over electoral reform.

On Monday, the Lib Dems had demanded that the alternative vote system for electing MPs be passed by parliament – and that if an election occurred before a referendum, the election would be held under AV.

They also wanted a fully proportional system to be offered in a referendum. Labour flatly refused to introduce AV without a referendum, saying it would be illegitimate.

On the environment, the Lib Dems wanted no new nuclear power stations and to increase the proportion of energy from renewables from 15% to 40% by 2020. Labour also eventually agreed to drop the third runway at Heathrow being agreed in the next parliament and any hint of compulsory identity cards.

Labour said it was even willing to look at Cable's pet idea of taking people earning less than £10,000 out of tax altogether, but said a way had to be found to fund a tax switch that might cost £17bn and anyway not help the poorest the most.

Exasperated by the demands, Labour claimed that the total spending pledges being sought by the Liberal Democrats amounted to £20bn.

A Labour negotiator said: "The body language and mood was fine. The idea being put about by the Liberal Democrats that Ed Balls was sneering or not serious is simply not true.

"I am not sure there was any single policy show-stopper, but they just wanted to go in with the Conservatives in the end. I think they are too relaxed about the consequences of that alliance for them. I would not like to be a Liberal Democrat activist on the doorstep explaining what his leadership has done."

Some of the Labour negotiating team denied that the leadership would have been unable to deliver the parliamentary party to the deal, saying the head of steam against coalition in Labour ranks could have been contained. But that underestimated the growing political and emotional aversion to a deal with the Lib Dems on Labour benches.

That rebellion was launched on Sky News at the unlikely hour of 3am on Friday – election night – and the flag of opposition was unfurled by the unlikely figure of the former home secretary David Blunkett, normally a loyalist.

Responding to the news that the Tories were chalking up swings of 8% against Labour, mainly in the north-east, Blunkett said the game was up for his party, telling his colleagues to throw away his party pagers that suggested Labour had not lost.

Initially his take was that such a result would require the Labour party to go into opposition, to start looking outwards, and learn the lessons of the defeat.

Blunkett told the Guardian today that his remarks that night "led to a comradely expression of views from Downing Street, followed by a comradely expression of views by myself".

He admitted today that at the time he had felt lonely in both his judgment of the election results and its consequences. "It was difficult and painful for me, and I know people will say I played a role in putting Labour into opposition, but in the end you have to accept the legitimacy of the electorate. If we can regroup we will be ready for an election in a year's time."

Blunkett carried on expressing his view during an interview on Sunday, leading to a phone call from John Reid, another former home secretary.

Reid told Blunkett that he intended to condemn the idea of a "coalition of the losers" in interviews as well. Reid is not a natural pluralist – indeed, he favours abolition of the House of Lords – but his condemnatory language was extreme, describing a Liberal Democrat-Labour deal as mutually assured destruction, and adding: " If we continue not listening then we will lose very badly at any subsequent election."

Such has been the anger at these two men's behaviour that one cabinet minister said coldly: "I hope I never have to meet those two again."

Jack Straw, the justice secretary and a long-time foe of the Liberal Democrats, was also deeply unhappy. Straw had been privately fed up with the tone of the election campaign run by Lord Mandelson, telling friends that it had sent out too many warm signals to the Lib Dems, confusing Labour voters in Lib Dem-Labour marginals.

Straw had argued repeatedly in private to Brown after the election that Labour had lost, and just had to recognise that, if anyone had won, it was the Tories.

Labour had won 60 fewer seats than the Labour government of 1964 to 1970 and if a progressive government had been formed, it would have led a hand-to-mouth existence. The coalition would have collapsed, leading to recriminations and anger within the party, Straw argued.

Figures such as Andy Burnham, the health secretary and a long-term cabinet opponent of electoral reform, also voiced his doubts in public. In a delphic radio interview today he hinted at his private doubts, saying: "I think you have got to respect the result of the general election and that we have lost."

Critics of the planned Lib Dem-Labour deal said there had not been enough consultation with Labour MPs. But those involved in the clandestine discussions over the past few days said there had to be secrecy, partly because Clegg had said he must talk to the Conservatives first.

By afternoon the rebellion was gathering strength.

Phil Woolas, the immigration minister and a figure who has fought the Liberal Democrats to a standstill in his constituency, told the Guardian: "I am not going to join a terrible marriage or go into a government with Chris Huhne.

"We have not got a moral mandate to govern. We might have been able to run an arithmetical government, but it would not be a real government. The Liberal Democrats in my part of the world are surrogate Tories, and if you speak to the Labour MPs that is the view of two thirds of them."

By mid-afternoon the die was cast. Labour knew its chances of a fourth term, for long an impossible dream, and fleetingly an unexpected possibility, had evaporated, a victim of the electorate's judgment, the Lib Dems, and Labour's own refusal to take the risk of an alliance with Nick Clegg. By mid-evening, Brown was no longer prime minister, and instead a private citizen – possibly the most brutal life change any individual can suffer.