For Cameron and Clegg, there is still no alternative to the coalition

The PM and his deputy are more dependent on each other than ever.

The rumours are confirmed. House of Lords reform – at least the variant of it proposed by Nick Clegg – is dead. In retaliation, the Liberal Democrats will not support Conservative plans to change the boundaries of parliamentary constituencies, reducing the overall number of seats (to the detriment of the junior coalition party).

This development seemed inevitable from the moment last month when a decision was taken not to force the House of Commons to vote on a "timetable motion" ensuring Clegg’s reforms safe passage through parliament. At that point, David Cameron asked for more time to persuade rebels on his own side to back the plan. Anyone familiar with the mood on the Tory backbenches could have predicted they were not up for persuasion. Labour indicated clearly then too that the limit of their support had been reached – backing the bill in theory, but not the parliamentary means to rush it through. Game over.

That it has taken weeks for the last rites to be read is testimony to how much determination there remains at the very top to maintain the impression that coalition is a functional form of government. Even in his statement today, Clegg presented the move as a contractual renegotiation – part of the technical evolution of a two-party alliance in the event that the terms of agreement are breached – rather than a disorderly tit-for-tat exchange of blows.

He referred at length to what he sees as Labour’s failure to compromise, while glossing over, it seemed to me, the more substantial failure of the Prime Minister to deliver on the commitment he had made. Privately, senior Lib Dems blame Cameron for capitulating to his backbenchers and for generally taking a far too cavalier attitude to what is meant to be – as Team Clegg likes to put it – "the sacred text" of the coalition agreement.

The Tory rejoinder is that the very same text commits the Lib Dems to boundary changes and not just on condition of getting a reformed House of Lords. This hermeneutic dispute can go on forever and is never very edifying. Its very tone, quibbling over commas and interpretations like medieval monks, reinforces the sense of a government lacking broad intellectual and ideological consistency. The reliance on textual analysis to decide which party gets what out of the deal does not exactly indicate strategic clarity.

From speaking to people in Number 10 and the Deputy Prime Minister’s office today I get the impression that both sides are very alert to the danger of appearing adrift and at the mercy of political currents beyond their control – whether it is angry Tory backbenchers thinking they can boss Cameron about or a media mood that starts to write off the coalition and speculate endlessly about when and how it will end.

Hence the decision to get this piece of grim news out now, in the middle of the summer recess, when most eyes are on the Olympics. Both coalition parties are determined to use the autumn season as an opportunity for political re-launch and need to put this ugly episode behind them.

That won’t be so easy. For Clegg, the big problem now is the persistence of questions about what, if not Lords reform, he can hold up as an exclusively Lib Dem trophy snatched from reluctant Tories. (Yes, the raising of the income tax threshold and pupil premium are Clegg’s policies, but Conservatives like them too. The emblematic value of Lords Reform – the thing that would have made it cathartic for Lib Dems -  is that it was something Tory MPs would have to vote for against their will, just as the junior coalition party held its collective nose and marched through the lobbies for tuition fees and NHS reform.)

The resilience of the Lib Dems and their public loyalty to Clegg has been remarkable given the pounding they have taken in opinion polls. But this is the first issue where I sense large numbers, including some ministers, really questioning the big strategic choices that their leader has made in coalition. Why, they ask, did he pick such a battle over an issue too obscure and technical to do the party favours as a badge of political identity in the country? And could he not have foreseen that he would lose?

The climbdown does Cameron no favours either. It means, in essence, that a high-profile part of the government agenda, one that was in the Queen’s Speech and for which legislative time had been allotted, has been vetoed by backbench MPs. Precedent suggests they will be emboldened by that victory. Now more than ever, Cameron faces a challenge to prove that he is leading rather than following his party.

In the past, whenever the Prime Minister has been forced to choose between loyalty to his partnership with Clegg and acceding to the demands of his angry backbenchers, he has chosen the latter. Senior Lib Dems are now saying Cameron must accept that his serial flakiness has got him nowhere and has only weakened his authority. It is time, they say, to recognise that his political future depends on making coalition work and not undermining it when he is too chicken to take on his party.

Many Tories, meanwhile, are saying that Cameron has called Clegg’s bluff. The boundary changes are a serious tactical loss for Number 10 (unmourned by many Conservative MPs, it must be said) but not the kind of defeat on policy that registers with the country as a great humiliation. It is not a point of political honour the way Lords reform was for Clegg. The reality, as one Downing Street aide put it to me this morning, is that the Lib Dems are in no shape to fight an election and must, for the sake of their own credibility, stick with the Conservative line on the economy - the issue that counts more than any other. They have nowhere to go.

That emphatically does not mean the coalition is dissolving. Reports over the weekend that senior Tories were seriously plotting how to govern without the Lib Dems are dismissed by a Downing Street source as "nonsense." Cameron is no less dependent on Clegg’s MPs than he was in 2010. If anything, he needs them all the more now that a small but noisy band of his own MPs have decided to behave as if they were in opposition.

That is the curious paradox of today’s events. The acknowledgement of a breach of the coalition agreement and the announcement of a technical retaliation are clear reminders of how brittle the whole project is. And yet, as Clegg and Cameron are the biggest individual losers, their dependence on one another to keep the show on the road is increased. Today’s news is hardly an affirmation of coalition but it is a stark reminder that, for the Prime Minister and his Deputy, there really is no alternative.

Cameron is no less dependent on Clegg’s MPs than he was in 2010. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Former Irish premier John Bruton on Brexit: "Britain should pay for our border checks"

The former Taoiseach says Brexit has been interpreted as "a profoundly unfriendly act"

At Kapıkule, on the Turkish border with Bulgaria, the queue of lorries awaiting clearance to enter European Union territory can extend as long as 17km. Despite Turkey’s customs union for goods with the bloc, hauliers can spend up to 30 hours clearing a series of demanding administrative hoops. This is the nightmare keeping former Irish premier John Bruton up at night. Only this time, it's the post-Brexit border between Northern Ireland and the Republic, and it's much, much worse.   

Bruton (pictured below), Taoiseach between 1994 and 1997, is an ardent pro-European and was historically so sympathetic to Britain that, while in office, he was pilloried as "John Unionist" by his rivals. But he believes, should she continue her push for a hard Brexit, that Theresa May's promise for a “seamless, frictionless border” is unattainable. 

"A good example of the sort of thing that might arise is what’s happening on the Turkish-Bulgarian border," the former leader of Ireland's centre-right Fine Gael party told me. “The situation would be more severe in Ireland, because the UK proposes to leave the customs union as well."

The outlook for Ireland looks grim – and a world away from the dynamism of the Celtic Tiger days Bruton’s coalition government helped usher in. “There will be all sorts of problems," he said. "Separate permits for truck drivers operating across two jurisdictions, people having to pay for the right to use foreign roads, and a whole range of other issues.” 

Last week, an anti-Brexit protest on the border in Killeen, County Louth, saw mock customs checks bring traffic to a near standstill. But, so far, the discussion around what the future looks like for the 260 border crossings has focused predominantly on its potential effects on Ulster’s fragile peace. Last week Bruton’s successor as Taoiseach, Bertie Ahern, warned “any sort of physical border” would be “bad for the peace process”. 

Bruton does not disagree, and is concerned by what the UK’s withdrawal from the European Convention on Human Rights might mean for the Good Friday Agreement. But he believes the preoccupation with the legacy of violence has distracted British policymakers from the potentially devastating economic impact of Brexit. “I don’t believe that any serious thought was given to the wider impact on the economy of the two islands as a whole," he said. 

The collapse in the pound has already hit Irish exporters, for whom British sales are worth £15bn. Businesses that work across the border could yet face the crippling expense of duplicating their operations after the UK leaves the customs union and single market. This, he says, will “radically disturb” Ireland’s agriculture and food-processing industries – 55 per cent of whose products are sold to the UK. A transitional deal will "anaesthetise" people to the real impact, he says, but when it comes, it will be a more seismic change than many in London are expecting. He even believes it would be “logical” for the UK to cover the Irish government’s costs as it builds new infrastructure and employs new customs officials to deal with the new reality.

Despite his past support for Britain, the government's push for a hard Brexit has clearly tested Bruton's patience. “We’re attempting to unravel more than 40 years of joint work, joint rule-making, to create the largest multinational market in the world," he said. It is not just Bruton who is frustrated. The British decision to "tear that up", he said, "is regarded, particularly by people in Ireland, as a profoundly unfriendly act towards neighbours".

Nor does he think Leave campaigners, among them the former Northern Ireland secretary Theresa Villiers, gave due attention to the issue during the campaign. “The assurances that were given were of the nature of: ‘Well, it’ll be alright on the night!’," he said. "As if the Brexit advocates were in a position to give any assurances on that point.” 

Indeed, some of the more blimpish elements of the British right believe Ireland, wedded to its low corporate tax rates and east-west trade, would sooner follow its neighbour out of the EU than endure the disruption. Recent polling shows they are likely mistaken: some 80 per cent of Irish voters say they would vote to remain in an EU referendum.

Irexit remains a fringe cause and Bruton believes, post-Brexit, Dublin will have no choice but to align itself more closely with the EU27. “The UK is walking away,” he said. “This shift has been imposed upon us by our neighbour. Ireland will have to do the best it can: any EU without Britain is a more difficult EU for Ireland.” 

May, he says, has exacerbated those difficulties. Her appointment of her ally James Brokenshire as secretary of state for Northern Ireland was interpreted as a sign she understood the role’s strategic importance. But Bruton doubts Ireland has figured much in her biggest decisions on Brexit: “I don’t think serious thought was given to this before her conference speech, which insisted on immigration controls and on no jurisdiction for the European Court of Justice. Those two decisions essentially removed the possibility for Ireland and Britain to work together as part of the EEA or customs union – and were not even necessitated by the referendum decision.”

There are several avenues for Britain if it wants to avert the “voluntary injury” it looks set to inflict to Ireland’s economy and its own. One, which Bruton concedes is unlikely, is staying in the single market. He dismisses as “fanciful” the suggestions that Northern Ireland alone could negotiate European Economic Area membership, while a poll on Irish reunification is "only marginally" more likely. 

The other is a variation on the Remoaners’ favourite - a second referendum should Britain look set to crash out on World Trade Organisation terms without a satisfactory deal. “I don’t think a second referendum is going to be accepted by anybody at this stage. It is going to take a number of years,” he said. “I would like to see the negotiation proceed and for the European Union to keep the option of UK membership on 2015 terms on the table. It would be the best available alternative to an agreed outcome.” 

As things stand, however, Bruton is unambiguous. Brexit means the Northern Irish border will change for the worse. “That’s just inherent in the decision the UK electorate was invited to take, and took – or rather, the UK government took in interpreting the referendum.”