Brown's endgame


■ Prime Minister will stand aside in last-ditch bid to convince Lib Dems to share power with Labour

■ Tories table counter-offer and say they will include referendum on alternative vote system to woo Liberals

GORDON BROWN finally loosened his grip on power yesterday, announcing his resignation as Labour leader in a last-ditch bid to strike a power-sharing deal with the Liberal Democrats.

The Prime Minister’s announcement sent shockwaves through an already febrile Westminster, and provoked the Tories to offer the Liberals a referendum on the alternative vote (AV) electoral system as part of a Lib-Con coalition.

In a final act of brinkmanship, Brown made his move just as coalition talks between the Lib Dems and the Tories appeared to be nearing a conclusion, with both sides describing negotiations as “positive”.

Brown said he would stay on to form a Lib-Lab coalition government that was “principled and stable” before standing down to make way for a successor at the Labour party conference in September.

He added: “The reason that we have a hung parliament is that no single party and no single leader was able to win the full support of the country. As leader of my party, I must accept that that is a judgment on me.”

The Lib Dems are tempted by a deal with Labour, because it is offering immediate legislation on the AV system followed by a referendum on a proportional voting system that would boost their number of seats.

Shadow foreign secretary William Hague, who is leading negotiations on behalf of the Tories, was quick to make a counter offer, saying that the party would include a referendum on the alternative vote system.

“The choice now before the Liberal Democrats is whether to go in with the Labour party in a government that would not be stable or secure, that would have a second unelected prime minister in a row, and that would impose voting reform on the country without any consultation,” he said.

The decision to include a referendum on the AV system shows just how desperate the Tories are. Previously, any reform of the voting system was considered “off limits” by the party.

Lib Dem leader Nick Clegg was last night locked in talks with his MPs to decide who to continue negotiations with. He appears to be playing both sides against each other, in the hope of maximising the number of concessions he can extract in exchange for propping up one of the parties in government.

He said that Gordon Brown’s resignation was an “important element which could help ensure a smooth transition to the stable government that everyone deserves”, in the biggest hint yet that he would be willing to do some kind of deal with Labour.

The stability of any Lib-Lab tie-up is doubtful, however, as they would need to rely on smaller parties like the Scottish and Welsh nationalists to push legislation through the house.