Monday 10 May was the day of Gordon Brown’s first resignation – as Leader of the Labour Party. This was intended, and for some hours tentatively expected, to bring about a Lab–Lib coalition government. But it was not to be, and his second resignation, as Prime Minister, followed twenty-six hours later. This is how it happened.

I returned Paddy’s call at 6.30 a.m. He was on the phone and we only got to speak at 7.25 a.m. ‘I only want to have one conversation like this,’ he said in his endearingly peremptory Captain Ashdown manner. ‘So could you discuss what I am going to say with Gordon, Peter and Alastair, and let’s have just one conversation afterwards.’

The previous night’s conversation between Gordon and Nick had been ‘a disaster’, Paddy said. Nick had gone in thinking that Gordon was going to give him a firm early date for his departure, and on that basis they could start negotiations for a Lib–Lab coalition, which was strongly supported by him (Paddy) and other key figures in the party. But instead Gordon had dug in and rowed back from the understanding Nick believed he had reached in their earlier Foreign Office conversation. Unless this changed, ‘it will all be off, and you will have driven us into the arms of the Tories’.

I was cautious. A reliable intermediary had told me that Paddy had been asked by Nick to ‘big up’ the Labour alternative to the Tories, not least to give Nick a stronger hand to play with David Cameron. On the other hand, Gordon’s future did have to be resolved before any serious Lab–Lib plan was going anywhere, and Gordon had said as much to me. It was a question of dates and context.

So I thought I’d better check I had got him right.

‘Sorry, Paddy, can I be clear. You are saying that if there were an agreed early exit by GB, the only obstacle to a Labour coalition would be gone?’

‘Yes.’ Lib Dem MPs, he said, were meeting at 1 p.m. ‘The question is whether Nick opens the way for a Lib–Lab coalition or continues on the Tory track. Gordon is the difference between the two.’

‘Right. And Nick thought he was meeting GB to agree this last night?’

‘Yes, in fact he thought they had agreed it in their earlier meeting. But instead Gordon dug in, said he needed to stay on for an indefinite period. Nick left in despair, and we have got one chance to put this back together again.’

Having had only a brief read-out by Peter of this part of the Gordon–Nick conversation (Gordon hadn’t mentioned it to me at all; we had only talked policy and Clegg), I was flying blind.

‘When would GB need to go to make this possible?’ I asked.

‘It needs to be soon. He needs a dignified exit, but it needs to be around the summer and announced at the outset.’

‘So before the AV referendum, if we were to hold that in the late autumn?’

‘Yes.’

‘Well,’ I said, calculating weeks and months in my mind. ‘Being realistic, our party conference at the end of September sounds like the natural break point.’

We batted this around. The party conference was a dignified and orderly moment of transition. It gave time for a proper leadership election. It gave the time Gordon needed to embed the coalition within the Labour Party and pioneer the economic and political reform policies of the coalition. It also put a new leader in place before the start of the AV referendum campaign, assuming the referendum were held in November, which I was now clear was the earliest it could be held in any event.

Paddy thought this worked. There was the ‘another unelected Prime Minister’ point. But if that Prime Minister were David Miliband, then he didn’t think this mattered particularly. ‘Nor if it is his brother, though he’s the second best,’ Paddy added. David would be popular on all sides, would get on with Nick, and was manifestly qualified for the job. ‘He’s been a great Foreign Secretary, I really mean that.’ Everything depended on winning the referendum and making a good start on the economy.

‘But what about the Tories?’ I asked. ‘Aren’t your Tory negotiations supposed to be going swimmingly?’

‘Yes, they have made a good offer,’ said Paddy. ‘But not as good as Labour could make, particularly on the constitution. And we both know the wider progressive arguments. GB’s the issue.’

‘OK, let me see what’s the score. This is a bit above my pay grade,’ I said.

‘It’s very urgent,’ was Paddy’s passing shot, as if I wasn’t aware.

I immediately phoned David Laws. We had spoken the evening before, but before the second Clegg–Brown meeting. He was closer to the negotiations and, I thought, to Nick Clegg, and not so obviously Labour-leaning.

David was walking across Westminster Bridge, on his way in. I told him what Paddy had said. ‘That’s about right: Gordon is the major barrier,’ he said. He also thought that Nick would have ‘no problems at all’ with David Miliband.

Walking to the tube to go to Downing Street, I texted Paddy about one issue which I didn’t recall we had nailed down. ‘Are we talking about a coalition agreement for a full four-year term?’ I asked. ‘Yep. I don’t think anything else has been suggested,’ he came back ten minutes later, by when I was squashed on the Victoria Line thinking how on earth the next steps were going to be handled.

I assumed that Peter would be up to speed and have a plan. Hopefully he was already speaking to Gordon. Danny Alexander had texted me at 7 a.m. saying he couldn’t raise Peter on his mobile and needed to speak to him before 8. I woke Peter on his home line, asking him to call Danny pronto. There was a text message from Peter as I got off the tube, asking that we meet in his Cabinet Office room at 9.30.

I was going to see Gordon imminently so I phoned Peter. He was on voicemail. So I called Alastair. He had also had Paddy on to him, and said Paddy had also phoned Tony Blair in the middle of the night, saying what he’d said to me.

As I paced up and down in front of the Ministry of Defence, not wanting to go into No. 10 without a plan, Alastair and I discussed the position. He had from the outset been more sceptical than me about dealing with the Lib Dems, but if Clegg was indeed determined not to support the Tories then the path ahead was clear. ‘We can’t hand the country over to the Tories if there is a viable alternative,’ he said. He agreed that a leadership transition at party conference worked best for all concerned. ‘OK, that’s what we go for then,’ I said, crossing Whitehall to go into No. 10 through 70 Whitehall.

It was 8.30 a.m. Apart from a few officials, the only people in the war room were Gordon and Sarah, who was about to take the boys to school.

‘I need to tell you what the Liberals have been telling me overnight,’ I said to Gordon. We went into his inner office and shut the door.

I paraphrased what Paddy and David Laws had said to me, and our discussions, prefacing it with: ‘Gordon, we have never really talked about how you see your own position going forward. But I know you want to forge a progressive government if it can be achieved, and this is what the Liberals are telling me.’

Gordon listened intently, then got up and paced around the room, responding calmly. He had clearly thought all this through.

‘This can all be done,’ he said. He said he had wanted to announce before the election, and then again in the final leaders’ television debate a week before the poll, that he would only be staying until autumn 2011 in order to get clearly through the economic crisis and enact the next raft of major political reforms. ‘I’m not clinging on once the job is done. The others were against my saying this, so we didn’t, but that’s my position.’ What mattered to him above all else was keeping Labour in power.

So it came down to the difference between about five and eighteen months. I said it wasn’t the number of months that counted but what was accomplished during them. By the party conference he could have achieved all his principal goals – the progressive coalition in place, economic recovery on the way, major constitutional reforms underway. And he would be handing the coalition over to another Labour Prime Minister.

It would only work, he said, if Clegg was genuinely asking him to stay until October. There was no question of him clinging on. And any announcement had to be made by him before anything got out. He also needed to speak to Sarah (who couldn’t be contacted – she had gone from dropping the boys at school to the hairdressers).

At this point Ed Balls came in, followed soon after by Peter. They quickly agreed with the plan. The issue was how to announce it and secure a coalition. We started talking about how and when announcements would be made, when formal negotiations would start, when to call the Cabinet, the Parliamentary Labour Party, the party’s ruling National Executive Committee and the so-called ‘Clause 5’ joint meeting of the Cabinet and the NEC that would be needed to ratify a coalition agreement. The letter to Clegg, started the previous night, also had to be completed. Sue Nye, David Muir and others joined, and logistics took shape over the next hour before GB was due to see Clegg for the third time.

After the immediate decisions, I left GB’s office to phone Paddy. As I came off the phone, a civil servant asked me the state of play. ‘Well, wait for it. It looks as if we may be about to start negotiating a coalition with Clegg; and GB will announce that as part of it he is standing down in October.’ Which is how it looked at 9.30 a.m.

The 11.15 a.m. meeting with Nick Clegg (it got delayed from 10.30) was the last of the cloak-and-dagger affairs. Gordon left by car from the back of No. 10, turning right into Horse Guards Road, left onto the Mall and, via Buckingham Palace and the backstreets between Victoria and Millbank, entering the Palace of Westminster by a back entrance. As his car sped out of Downing Street there was another media flurry. Had it turned right and onto the Mall because he was going to the Palace to resign? Even the helicopter lost him.

It was a businesslike meeting, as related by GB afterwards. Gordon explained what he was proposing to do in terms of leadership, if a coalition was for real. Nick said that Gordon’s decision – about which he had been briefed – unlocked a potential coalition and said that on this basis he would recommend to his MPs in their 1 p.m. meeting that negotiations open with Labour on the same basis as had taken place with the Conservatives. He would continue dialogue with the Tories, but he hoped that a Lab–Lib coalition could now be secured, and the negotiations should start as soon as possible.

GB was precise about Clegg’s intention to ‘open negotiations with Labour on the same basis as with the Conservatives’ when he debriefed us in No. 10 immediately afterwards. If carried through, this would have given strong momentum to Lab–Lib negotiations, which in turn, would have made far easier the task of rallying the PLP and the wider Labour Party, since the alternative was to oblige the Lib Dems to put David Cameron in power against their will, or face an immediate second election if they voted against a minority Tory government’s Queen’s Speech after Labour had refused to entertain a coalition. (It was to be sharply at variance with what in fact came out of the meeting of Lib Dem MPs at 4 p.m., when David Laws, on behalf of the party, said that that the Lib Dems were making ‘very good progress’ with the Tories and just needed ‘clarification of details … while we continue to listen to the representations that are coming from the leader of the Labour Party’. So in the intervening four hours Nick Clegg changed his mind or had it changed for him. But that is jumping ahead.)

Gordon also gave Nick the letter he had written about the imperative for progressive values to underpin a coalition, and they talked with animation – as GB recalled to me later – about the importance of fairness, internationalism and political modernisation as the foundations of a partnership. ‘This is what I’m really interested in,’ Nick said repeatedly. They also agreed that Gordon would make his leadership resignation statement immediately after Nick had announced the start of formal Lab–Lib negotiations, to give them maximum momentum. Nick said he would call Gordon once the Lib Dem parliamentary party meeting was over.

There was another telling exchange. Gordon was keen to get out a joint statement with the Lib Dems about the imperative for co-ordinated European action on growth as part of tackling the euro crisis.

GB said that he suggested to Nick that he get a draft over to Vince so he and Alistair could do this together. ‘No, no, get it to my office, not to Vince,’ he said Nick responded curtly.

‘So that’s why Vince is not part of their negotiating team,’ said Peter. ‘No love lost there.’

Back in No. 10, ministers and senior MPs were briefed by phone on the likely start of negotiations, and drafting started on GB’s leadership resignation statement. The Cabinet was summoned for 6 p.m. A meeting of the officers of the National Executive Committee was summoned for the Tuesday morning. These meetings were deliberately in advance of the meeting of the Parliamentary Labour Party on Wednesday. Gordon’s intention was that the Cabinet and the NEC, which includes union and wider party representatives, should first endorse the Lab–Lib strategy; this, followed by decisive momentum in the negotiations themselves, would give maximum leverage for the meeting with all Labour MPs, where there was likely to be more dissent. The ‘Clause 5’ meeting was provisionally fixed for the Sunday, as the formal party mechanism to endorse the coalition.

All these steps were taken in a spirit of tentative expectation that we were moving towards a Lab–Lib coalition. An expectation because Gordon’s decision to resign the leadership appeared to have cut the Gordian knot (a weak pun used on the day). It was the answer to senior internal party critics who said that GB simply couldn’t continue in any event; and it was being done on a basis which the Lib Dems, including Nick Clegg personally, said made a Lib–Lab coalition possible or even likely.

Yet only a tentative expectation, because ‘there’s many a slip ‘twixt cup and lip’. And despite the protestations of desire from the Lib Dems, including Clegg, their dialogue with the Conservatives had not cooled. On the contrary, the Lib Dem team held a further ninety-minute meeting with the Tory team in 70 Whitehall while GB and Clegg were meeting in the Commons. As Danny Alexander left this session shortly before noon he told the cameras that the two teams had got on ‘really well together’ – identical words to William Hague’s as he left moments before. At the very least, we and the Tories were being played off against each other. To what end wasn’t, we sensed, decided even by Clegg and his immediate colleagues, although the tension between the Ashdown and Cable ‘progressives’ who gravitated naturally towards Labour, and David Laws’s ‘Orange Book liberals’, who had no difficulty endorsing Tory ambitions for ‘further and faster cuts’, was fairly evident. A text I sent to Paddy shortly after seeing Danny’s positive statement about the Tory talks summed up our unease: ‘All on course. Big issue resolved. Essential Nick is generous in public about GB. Asked him to lead government until Oct etc.’

Paddy called back to say that all was on course. But it wasn’t. We waited anxiously for the Lib Dem parliamentary party meeting to end so that Gordon could make his statement and negotiations could start. Three o’clock came and went, then 3.30 and 3.45. Suddenly BBC News 24 went over to a crackly David Laws making a statement outside the Commons committee room where the Lib Dem meeting was breaking up. The BBC broadcast him live via a journalist’s mobile phone. He was saying that they had had ‘very good negotiations with the Tories’ and would now be seeking ‘further clarification of details’ of aspects of the Tory offer – ‘details, details’, Peter and I said in unison to the giant screen in the war room, while David Laws was adding: ‘The parliamentary party has agreed that the leader will continue to listen to the representations that are coming from the leader of the Labour Party.’

‘So it’s negotiating final details with the Tories while listening to see if we’ve got anything to say,’ Alastair said.

‘Not what we were told at all; they are playing games,’ said Peter emphatically.

‘Or perhaps this is Nick’s idea of moving towards us in stages,’ I said more optimistically.

The imperative now was for Gordon to speak to Clegg to understand what was going on, and then to make his leadership resignation statement before it leaked.

A few minutes later, Clegg came on the line.

It had been a long meeting with lots of views expressed, he began. ‘But to get to the point, lots of people want to open talks with you,’ he said. However, there were ‘huge risks of the smaller party being the minnow swallowed up by two whales’, and they needed ‘some form of down payment’ about a change in the electoral system because this mattered so much to his colleagues.

‘What kind of down payment?’ Gordon asked.

‘We are relaxed about the terms and conditions of a coalition,’ he said, ‘provided legislation on AV can be brought forward subject to final agreement in a referendum.’ A strong view had been expressed that the AV legislation should take effect even before a referendum, ‘but I think I agree with you that it requires a referendum before coming in,’ he said, referring to their earlier conversation.

‘It’s essential that we can’t be massacred,’ Nick went on, explaining why AV was so important to him. He said David Cameron hadn’t responded on AV since he (Clegg) had raised the issue, beyond noting that the Conservatives had voted against it in the past, although he was ‘clearly desperate to do a deal’.

Gordon confirmed that Labour would definitely offer AV legislation and a referendum. The issue now was the status of the Lib–Lab talks and what they both said in their forthcoming statements. People needed to understand that the talks were for real.

They were for real, Clegg responded. ‘Lots of people would just walk if we went in with the Tories.’

But, GB pressed, would he say that the talks with Labour were on the same basis as with the Tories?

‘Well, we don’t want to bounce ourselves,’ said Clegg, uneasily. He suggested that after GB’s statement he say something like: ‘You and I have talked. We intend to continue our existing dialogue with the Tories and we now also wish take forward discussions with the Labour Party.’

But, GB asked again, would this mean formal negotiations with Labour on the same basis as with the Tories? In his own statement, he said, he was proposing to talk about negotiations for ‘a progressive government’ with progressive economic plans for jobs, growth and deficit reduction, able to meet the demand for electoral reform.

‘I don’t want to do this in a muddle,’ said Clegg, now still more uneasy. ‘I don’t want to screw things up. I want to talk to a couple of people and call back in five minutes, if that’s OK.’

So the Laws mobile phone statement was indeed the Lib Dems’ considered position. They wanted to negotiate a final deal with the Tories while merely listening to representations from Labour. This wasn’t going to work, we all said as the call ended, and started discussing what this meant for GB’s imminent statement.

A few minutes later, Clegg came through again to say that they would state in terms that they wished to open ‘negotiations’ with Labour. This was a step forward, but it still left the question as to what Clegg himself would say about GB’s departure. Here again, Nick proposed some bland words, and started reading wording about GB’s announcement being a positive statement in the national interest. Those of us listening in shook our heads again. This was getting uncomfortable for Gordon personally.

Peter, who was listening to the call in the war room, walked into the inner office where GB was speaking and waved to Gordon to put him on. ‘I think Peter may be able to help here,’ GB said. ‘Good, put him on,’ said Nick eagerly, ‘we need to get this right.’

‘Nick, I don’t think what you are proposing to say is clear enough if we all want this to succeed,’ said Peter. ‘It needs to be much clearer: you need to find the right way of saying that should your talks with the Labour Party be successful, it would be important for Gordon to continue to play his role in the months ahead. For this coalition government to work, and for us to make the changes that we face in the country, we would need this man’s experience and skills, which is why I want him to continue for the coming months.’

Nick, clearly taking notes, said ‘OK, OK’ and that he would speak ‘in this kind of way in my own words’, and the call ended.

Once again, Nick wanted Lab–Lib discussions, but supported by weak and uncertain statements as to their status and where they might lead. However, we had no time to debate this further. GB’s statement had to be made as soon as possible. He wanted to go out into Downing Street and make it to the media camp there and then, but Iain Bundred persuaded him to give a little notice so that the main political reporters could be present. It was set for 5 p.m., and delivered from the lectern in front of the No. 10 door.

Gordon’s Monday statement stunned the political world, much as had David Cameron’s initial statement offering the Lib Dems a coalition on Friday afternoon. It opened up a serious Lab–Lib coalition alternative to the Tory–Lib Dem arrangement which by then had been nearly four days in the making.

There was no prevarication in Gordon’s statement either about the credibility of a progressive coalition or about his intention to resign the leadership to make that possible:

Gordon walked back into the packed war room to spontaneous applause from assembled staff and ministers, who had been watching it gathered around the giant TV screens. Peter and several aides were in tears. ‘Thanks, but back to work, back to work,’ Gordon said with a broad smile, motioning everyone to sit.

‘That’s done the business. Now we need everyone out there,’ he said, looking at Alastair, Douglas and me, standing together by the Sky screen. The three of us left for College Green in Douglas’s car to do a live media round.

On College Green, the media debated a scene transformed. ‘Game-changer’ was the word of the hour. The question was, how would the – currently silent – Tories react? Would the Lab–Lib negotiations make as rapid progress as the Tory–Lib negotiations?

Nick Clegg’s reaction, when it finally came on Sky TV more than an hour later, was lawyerly and weaker than Peter’s formulation. But it did the job of pointing to a possible Lab–Lib coalition in the wake of Gordon’s resignation:

Pundits started chewing over the intense Brown–Cameron competition now taking place for Clegg’s support. They also relished an on-air shouting match between Alastair Campbell and Sky’s Adam Boulton, an immediate YouTube hit.

The Cabinet at 6 p.m., less than an hour after Gordon’s leadership resignation statement, was to be the last formal ministerial meeting of thirteen years of New Labour rule. But it could hardly have been less elegiac. It was the most electric and urgent Cabinet of my year as a member. It was far from clear that it would be either Gordon’s or Labour’s last Cabinet, and Gordon certainly wasn’t treating it as such.

The official Cabinet, with civil servants present, spent the first quarter of an hour on the euro crisis and Afghanistan. Sir Gus O’Donnell and his colleagues then withdrew, and ninety minutes of intense discussion of Lab–Lib coalition prospects took place in a ‘political Cabinet’, hurried at the end by the need for the negotiators to get to the first formal session with the Lib Dems set for 7.30 p.m., for which we were by then already late.

Gordon started with his by now well-rehearsed arguments. ‘The numbers’ were there for a Lab–Lib coalition without deals with the minor parties. The imperative was for a principled progressive coalition to secure the economic recovery and carry political reform. The policy basis for such a coalition was unproblematic. Summarising his discussions with Nick Clegg, he asked the Cabinet to agree that negotiations now start. He emphasised trade union support for such a coalition: ‘They are absolutely clear that we should govern with the Liberals rather than let them put the Tories in, with all that would mean for the public services and union members.’ The Cabinet, the PLP and the NEC on behalf of the wider party would be kept informed of progress and asked to ratify any coalition programme. ‘Now that I have resigned the leadership, I have no personal advantage in this at all,’ he emphasised. ‘This isn’t about me; it’s about Labour, and whether we can give the country the change it wants, and I believe we can.’

Gordon asked me to summarise the policy issues at stake. To be properly heard I had to move from my usual seat at the end of the oval table to the vacant Cabinet Secretary’s seat next to Gordon, because five members of the Cabinet were participating by conference call via a spider phone in front of him. ‘It’s like a séance,’ Gordon quipped as the spider phone was passed along to move it closer to a later speaker. ‘No, we aren’t in the afterlife yet,’ someone quipped.

I was relentlessly upbeat about coalition prospects with the Lib Dems, saying there were no obvious show-stoppers and on the face of it we were far closer to the Lib Dems on policy than were the Tories on the two key areas of electoral reform and the economy. (I deliberately didn’t refer to the fact that the Lib Dems appeared comfortable with the Tory position on significantly ‘further and faster’ deficit reduction, assuming they would not insist on this in negotiations with us.) Labour in particular could offer a referendum on AV, for which we would campaign in support, which the Tories couldn’t. But the devil would be in a lot of detail and we would all need to engage on this.

Peter Mandelson and Harriet Harman spoke next, followed by a tour de table punctuated by ethereal contributions from the spider phone.

Most of the mini-speeches – which is the nature of Cabinet discussion in a body of nearly thirty members – were in strong or measured support of a Lab–Lib coalition, starting with Peter and Harriet. Harriet, in clear, straightforward support of GB, said, ‘We shouldn’t lose sight of the fact that it was a remarkable election result, coming after three terms in office, the economic crisis, the expenses crisis, and the feral media and the Tory millions.’ Gordon was ‘putting the interests of the country and the party first’ in pursuing Lib Dem coalition while announcing his intention to stand down soon. The arguments for a coalition came down to one simple fact. ‘I fear the Tories and their impact on the people I represent. I couldn’t go back to my constituency and say that we could have put in place an alternative government to the Tories, but we didn’t because we didn’t particularly like the Lib Dems.’

This ‘principled duty to stop the Tories and forge a progressive alliance if we can’ argument was broadly supported by the great majority of the Cabinet, including Alan Johnson, David Miliband, Ed Miliband, Ed Balls, Hilary Benn, Peter Hain, Ben Bradshaw, Jim Murphy, Shaun Woodward, Yvette Cooper, John Denham, Jim Knight, Jan Royall, Bob Ainsworth, Tessa Jowell and Douglas Alexander. ‘There’s going to be either a Labour or a Tory Prime Minister coming out of this,’ said Ed Miliband, ‘and for the people we serve, it needs to be a Labour one.’ David Miliband said there were ‘grave risks – no one won, but we lost’. Nevertheless, ‘Cameron has legitimised coalition government by offering one to the Lib Dems rather than just saying ‘I’ve won, you’ve lost’, and in those circumstances we are absolutely entitled to seek to govern in coalition.’ The tests were how to keep the government in power into the medium term and how to carry big reforms with no automatic majority. John Denham was blunt: ‘We need to present this as the best attainable government. If we don’t seize it the Tories could lock us out of power for a generation.’ So was Ben Bradshaw: ‘Don’t just hand power to the Tories. We have as good a right to govern in coalition with the Lib Dems as had Brandt and Schmidt when, as the second largest party, they governed with the FDP – and we regard them as great historic progressive German governments.’ Jim Knight was briefest: ‘Go for it.’

Peter Mandelson took a more nuanced line. A Lab–Lib Dem coalition was the right course ‘but the Lib Dems will need to stop being normal opportunist Lib Dems’, he said. ‘We will have to be the ones holding them to a responsible course, particularly in view of the incredibly lavish, sky’s-the-limit, absolutely desperate strategy of the Tories to getting the Lib Dems into an alliance.’ This hit an anti-Lib Dem vein, but in the cause of coalition if it could be secured on reasonable terms. The evident sceptics, notably Alistair Darling and Jack Straw, adopted this position, declaring themselves not opposed to the principle of talks but raising the spectre of real problems in working with the Lib Dems in practice and settling the details of a coalition agreement. ‘We have been fighting the Lib Dems like cats and dogs’, said Jack, ‘even if our programmes aren’t that different. And I remember 1974 and all those knife-edge votes.’ Alistair said: ‘I have no difficulty in speaking to Liberals. There is a lot of common ground, but how much detail would we need to agree on and can we agree, particularly on the economy?’

Liam Byrne and Sadiq Khan took a nuanced dissenting line. ‘Many of the PLP think it better to renew in opposition,’ said Liam, ‘and they positively relish the idea of the Liberals doing a deal with the Tories.’ But only Andy Burnham struck a clear note of opposition. ‘While we might be able to stitch something together, it won’t be renewal and the country won’t listen to us,’ he said. ‘The public will find it a surprise; it will build up resentment and we will find ourselves punished in an election in twelve to eighteen months’ time.’

The position of the minor parties was raised several times, but not as a particular problem. Shaun Woodward said that all the Northern Ireland parties would either actively support Labour or abstain, without any sectarian deals. ‘The DUP hate the Tories; Cameron has been trying to wipe them out.’ Peter Hain said Labour’s coalition in Wales with Plaid Cymru ‘had fierce critics inside the party when it was formed in 2007, but it has been a success and they will support us in Westminster’. Jim Murphy said it was ‘essential we don’t negotiate with the SNP, although they are desperate to negotiate with us’. ‘Alex Salmond keeps leaving beseeching messages for me to call him,’ interjected Peter. ‘Don’t become a suitor under any circumstances,’ said Jim to laughter. ‘The SNP could not vote against us on any confidence vote without being massacred in next year’s Scottish elections.’

Gordon summed up that the Cabinet was agreed that negotiations should now start. He also wanted departmental heads to talk to their opposite Lib Dem numbers during the evening. As to the negotiating team, it would be Harriet, Peter and myself – then, he added, a bit hesitantly, ‘because I know there are others who have views’ – ‘Ed Miliband and Ed Balls’. This provoked an outburst from Bob Ainsworth on the spider phone that he wasn’t happy with that team, but GB cut him short, saying he would speak to him afterwards. ‘I promise each of you a report back and a further Cabinet before any decisions are finalised,’ he said.

As he was speaking, a note was passed to me. ‘Hague has just said the Tories will give Clegg a referendum on AV!!’ I showed this to Gordon as the Cabinet was breaking up. ‘We’ve got to go as fast as possible on AV,’ GB said. He repeated this as parting advice to the negotiating team as we gathered in No. 11 before leaving for Portcullis House. ‘There’s got be a referendum, but do the legislation in parallel, or something like that, so it can be brought in immediately after the referendum. We can’t have the Lib Dems claiming they have got nothing to choose between us and the Tories on this.’

Whereupon we decamped in cars to Portcullis House, which in contrast to just two days previously – although it seemed more like two weeks – was heaving with MPs, staff and journalists, all throwing questions, comments and knowing glances as we passed on the way to the lifts to the same third-floor conference room overlooking Big Ben where we met on the Saturday.

This time the Lib Dems were there ahead of us. Sir Gus O’Donnell was also present, and began proceedings with words of welcome and best wishes, adding that as with the talks between the Lib Dems and the Tories, he and his colleagues stood ready to assist as needed. He then left, and the civil service played no further part in the negotiations. The Lib Dems did not want any officials present at any stage ‘because they will just be the arm of government and this is a political exercise’, Danny Alexander insisted.

Over the next eighty minutes until shortly after 9.30 p.m., when the Lib Dems had to leave for another session of their MPs, two different meetings took place in Room 319 of Portcullis House. There was the meeting that took place in the room itself. And there was the meeting which was briefed by the Lib Dem team to their MPs and the media afterwards.

The meeting proper started with pleasantries from Danny, who said he knew it ‘had been a difficult and emotional time for you with Gordon’s announcement’. Peter said that for our part the intention was to seek to form a coalition which would be a ‘fresh, completely new government, based on real compromises between us, and not just a continuation of the existing Labour government with some Lib Dem participation’. This statement was welcomed by Danny, who tabled a revised version of the Lib Dem policy note which Nick Clegg had given GB the previous evening. This largely replicated the previous note but with two new commitments: that there should be immediate legislation to enact the AV electoral system, separate from a referendum on electoral reform, and also immediate legislation to create ‘a fully elected second chamber’.

Danny suggested we start by discussing the economic proposals in the note. David Laws reiterated that the Lib Dems wanted to see ‘further and faster’ deficit reduction than Labour’s existing plan to halve the deficit within the next four years. As part of this, they now favoured immediate in-year cuts, with half the saving going into deficit reduction and half into new stimulus measures. David repeated Chris Huhne’s argument in Saturday’s meeting that the fall in the value of sterling made immediate cuts possible without an impact on the recovery. They also wanted to see a significant immediate start made on their £17 billion plan to raise the income tax threshold to £10,000, and a bank levy. To set all this out they favoured an Emergency Budget within a few weeks. They had also seen a Treasury note on immediate cuts, which the Conservatives had commissioned, which satisfied them that £6 billion of immediate cuts could be carried through without damaging the recovery.

Ed Balls responded that we agreed there should be a new economic statement for the new government after the Queen’s Speech, including progress towards a higher tax threshold within a credible funding envelope. But not an Emergency Budget. And was it economically or politically sensible to go faster than Labour’s existing ambitious plans to halve the deficit within four years starting in 2011, which the Lib Dems had so recently supported in the election? He probed on what was meant by the proposed commitment to ‘expedite’ elimination of the ‘structural deficit’, which implied big extra cuts? David did not offer figures, but said this was essential for ‘credibility with the markets’. Ed disagreed.

It was left that both sides would reflect on all this further overnight. Peter said it would be a good idea if Vince Cable and Alistair Darling could engage directly on the tax/spending issues, and on the Lib Dems’ bank levy plans, before we discussed them again. Danny didn’t object but said, ‘Agreements have to be made here.’

The discussion then turned to constitutional reform. Andrew Stunell pressed again on the Wright Committee and its proposal to give an elected committee control of timetabling government business in the Commons. He objected ‘very strongly’ to Peter’s statement on Saturday that this could be ‘a rod for our backs’. ‘If this coalition is going to be about the new politics, then you have got to stop wanting to control everything,’ he said bluntly. Harriet, who as Leader of the Commons had been in the thick of the Wright Committee discussions, said there wasn’t a problem here. It was just a question of phasing the implementation of Wright’s recommendations, and ensuring they proved workable in relation to other areas of Commons business before they were extended to the crucial area of government business. This appeared to take the trick.

The discussion then turned to fixed-term parliaments and electoral reform. We agreed quickly on four-year fixed-term parliaments and the need for a ‘constructive vote of no confidence’ arrangement, similar to Germany’s, for early elections when a government fell. Would we whip on the AV legislation? Yes. Even before a referendum? Yes, as long as the legislation provided for a referendum before it took effect. Were we sure our troops would follow on this? Yes, on AV, but we couldn’t go beyond AV although we were open to the Lib Dems also having a proportional representation option on the ballot paper if they wished.

The Lib Dems also wished the AV legislation to take effect immediately, including for by-elections, even before a referendum. I said this was impossible to justify. Chris Huhne said it would be on an ‘experimental basis’. ‘What, including an experimental general election?’ I enquired. He said they expected the referendum to have been held by then.

I noted that the latest Lib Dem note included immediate legislation for an elected Lords. Did this really mean a first-session Bill? The first parliamentary session would already be preoccupied with difficult legislation for the Alternative Vote, a referendum on AV, and fixed-term parliaments. The Lords Reform Bill would be huge and very controversial in the Lords. Wouldn’t it be better to agree the Lords plan in the first session and then legislate in the second session? Chris Huhne disagreed. ‘The AV Bills are fairly short and straightforward and there will be plenty of time for Lords reform and other measures now we won’t have your usual bevy of Home Office Bills.’

‘Are you sure about that, Chris?’ I said. ‘I don’t want to be the voice of the old politics, but I can’t see us getting all this through in a first session, with the Lords fighting tooth and nail against its extinction, as it will.’ This provoked Andrew Stunell into further remarks about the new politics, and how the Lib Dems would not be fobbed off by assurances that delayed key reforms ‘for which we have been waiting for a century or more’. I observed that if we got everything else through in the first session, with a clear legislative plan for the Lords in place for the second session, that would be as bold as anything Mr Gladstone ever managed. Again, we agreed to consider further overnight.

Next came the Lib Dems’ proposed ‘Freedom Bill’. Here we were prepared to give a lot of ground. I said we were prepared to suspend or cancel the main ID card scheme and move in the Lib Dems’ direction on the DNA database. What about ID cards for foreign nationals, who were already required to have documentation? These were totally unnecessary, said Chris. On the DNA database, again, should we dispose of all existing DNA data on those acquitted of serious crimes after three years, without even waiting for a review of the operation of the Scottish system? Yes, said Chris. I said we needed to consult further with Alan Johnson overnight. I thought we had a deal here.

Time was now running out. There was a brief discussion, led by Ed Miliband, of nuclear power, and what the Lib Dems meant by eliminating all public subsidies, and the credibility of a 40 per cent target for renewable energy by 2020, which Ed said no one in the energy world thought remotely attainable. The Lib Dems raised the Heathrow third runway. Would we agree to its cancellation? Peter started to respond that this was difficult because of its business impact. I intervened to say that we were considering this issue but, again, needed to reflect overnight. (I hadn’t had a chance to tell Peter that I had already agreed with Gordon that we should delay the third runway and set up an independent review to consider airport expansion in the south-east.)

There was a concluding discussion on university tuition fees. Peter noted from their paper that the Lib Dems weren’t calling for abolition of the existing fees, which was a big shift. But what about the ongoing Browne review of student finance? Could we as a coalition agree to consider its report, without prejudice to Lib Dem opposition to fees? If we didn’t, ‘I really don’t know where the money is going to come from to prevent a reduction in student places.’ Danny said he didn’t see how they could move further on this.

Danny asked if what we agreed would bind our new leader. ‘Yes,’ Peter replied.

Peter and Danny both ended by saying that the discussion had been constructive and we would both consider further the points raised before meeting at ten in the morning. Both sides would produce notes of outstanding issues for that meeting.

The Lib Dems left first, further handshakes all round, to go to their parliamentary party meeting. Staying for a few minutes to discuss the outcome, we all thought it had been good progress for a first formal eighty-minute meeting, a fraction of the time the Lib Dems had already spent with the Tories. Peter’s concern was that Alistair and Vince needed to get to grips bilaterally with an economic package. He said he would arrange this and reported later that a meeting had been fixed for eleven in the morning, in parallel with the next meeting of the two negotiating teams. We could make further progress on this after they had met.

It was 9.45 p.m. Harriet left for Newsnight, the two Eds went home, while Peter and I crossed Whitehall to No. 10 to brief GB and No. 10 officials and to commission overnight policy work.

As we broke up, someone mentioned to no particular surprise or comment that John Reid had been on TV attacking a Lab–Lib deal. More critics were bound to come out, and getting a broadly united PLP on side was a challenge to come. But the way forward seemed reasonably straightforward and attainable: to accelerate momentum in the negotiations on Tuesday so that a credible coalition proposal could be put to the Cabinet and the NEC for them to endorse in the immediate run-up to the meeting of the Labour MPs now fixed for Wednesday afternoon. The strong Cabinet endorsement of the coalition strategy, on the back of Gordon’s resignation, was the critical factor.

It may or may not have worked. There were plenty of Labour MPs only too eager for opposition. But we were never to know. For a rather different meeting of the Lab–Lib negotiators was soon to be presented to Lib Dem MPs, which had the effect of ending Lab–Libbery for good.

After half an hour in the war room discussing overnight work for the negotiations, I caught the start of Newsnight on the giant screen before walking up to the Prime Minister’s flat at the top of No. 11 to brief Gordon. ‘Do you think you have done enough tonight to get the Liberal Democrats to sign up?’ was Kirsty Wark’s opening question to a straight-bat Harriet. It still sounded very much game-on. Apart from John Reid, all the senior Labour reaction had so far been positive.

Gordon was having a glass of wine with Alistair Darling around the table of his cramped kitchen, discussing how Alistair would handle his economic discussion with Vince Cable in the morning.

‘Look, this is all about politics, not policy,’ Gordon was saying of the Lib Dem plan to raise the income tax threshold. ‘Obviously we’ll have to pay for it elsewhere, but we’ve got to be political like the Tories on this. They are giving the Liberals carte blanche.’

‘I’ll play my part,’ said Alistair, ‘but I can’t have even bigger IOUs floating around the Treasury.’

‘There won’t be. It’s politics, not policy…’ said GB again.

‘I know, but some of us will still have to deal with all this after you have ridden off into the sunset,’ said Alistair in good-natured but weary banter, having been up most of the previous night at the EU finance ministers’ crisis meeting on the euro.

Alistair left a few minutes later, and I took stock with Gordon over another glass of wine. It would come down to Alistair and Vince hammering out a deal on the Lib Dem tax-and-spending plans, and the Lib Dems being convinced we could and would deliver, soon, on AV, we agreed. He said he had been speaking to Ming Campbell and Vince, and they both favoured a Labour deal. Gordon was sure the party remained manageable. There was an NEC meeting in the morning, which would endorse the negotiations. The only hostile ministerial reaction he had had since Cabinet was from Bob Ainsworth – about the negotiators, not the principle of negotiations.

As I left No. 10 at 11.15 p.m. to head to the tube and home, another dramatic text arrived from Paddy:

He was texting from the Lib Dem parliamentary party meeting. I said I’d call when I got home.

I didn’t understand Paddy’s message at all. In no way had the meeting been a disaster; it hadn’t even gone badly. As for body language, there had been frank discussion, but no disrespect or rudeness. Ed Balls had been typically vigorous on the case against immediate cuts and faster deficit reduction, but no more than Chris Huhne and Andrew Stunell on their constitutional reform and Home Office wish list. Anyway, we had only met for eighty minutes, a fraction of the time the Lib Dems had by now spent with the Tories. They couldn’t have expected us to have reached agreement across the piece. But my view was that we had made good progress, particularly on constitutional reform, where we were offering what the Tories could not offer: support for AV in a referendum.

It sounded to me like gamesmanship – ‘the talks are going badly, the Tories are offering the earth, and you need to raise your offer to stay in the game’. I also wondered whether an alibi was in the process of construction – ‘the talks with Labour show they aren’t serious about a coalition of equals, so we’ve got no choice but to go in with the Tories who are so much more constructive and respectful’.

By the time I got home, queries from journalists were also arriving about ‘negative body language’ on the part of Ed Balls and Ed Miliband. The ‘talks having gone badly’ was clearly being briefed by the Lib Dems just as the ‘terrible’ conversation between Clegg and Brown was briefed on the Saturday. The claims about ‘negative body language’ I thought particularly telling. Going for body language, rather than the substance of the negotiation, was something impossible to refute, particularly when everyone knows that Ed Balls gives as good as he gets in any discussion, though no more than Andrew Stunell or Chris Huhne.

Peter and I spoke on these lines – he was also getting calls – before I returned Paddy’s call after half-past midnight.

Paddy was typically blunt. The Lib Dem negotiators had spoken one after another at the meeting; ‘it was like a “Come to Jesus” moment’, someone else said to me. They were unanimous that we weren’t offering enough and were a league behind the Tories in all respects. What hadn’t we been prepared to agree? I asked. The things he rattled off (third runway, ID cards, DNA, House of Lords, pupil premium) were either things we had in fact agreed, or had said we would consider further. I noted that he didn’t mention further and faster deficit reduction, which was in fact the key area of disagreement. On ‘body language’, he said the word was that Peter and I had been friendly and constructive, Ed Balls and Ed Miliband the opposite. ‘You need to get your team in line pdq, with a better offer, or this is going nowhere tomorrow.’

I disputed the body language. On policy, I said that this was all work in progress and we hadn’t had much time to get going compared to the time already spent with the Tories. I started to go through the issues, but he didn’t want to discuss ‘these details’.

‘Are you sure your guys really want to do a deal and aren’t simply softening you up for the Tories?’ I asked.

‘We’ll do a deal if you offer a good one. Nick is still absolutely even-minded on this, so you’ve got to get your act together,’ he said.

After a last mini-lecture on why we needed to stop thinking like a government and start thinking like a supplicant for power, we ended.

It was past 1 a.m. One day which had changed the face of British politics was ending. Another was about to start.