The fallout continues. Labour colleagues are pointing more fingers at Watson:

“It looks like Watson may have overplayed his hand here. Its difficult to see how Siôn Simon is going to come out of this well and if MPs do make it on to the ballot paper its  going to look like a defeat for them. In 24 hours they’ve managed to give shadow cabinet member Liam Byrne the outsider/underdog status which can only help his campaign. 

 Watson tried to reinvent himself for the new politics era but he’s let the mask slip. He walks around with a halo on calling for more transparency in the media one moment and then be doing secret back room deals half an hour later. He’s the fixers fixer, in many ways he’s like Kevin Rudd in Australia. He complains about “invisible voices” and “faceless men”, but they are him. He called James Murdoch a mafia boss, but it takes one to know one, he’s Labour’s mafia boss”

Labour sources point to the fact normally “the General Secretary would have stepped in by now to sort out this mess,” but Iain McNicol is “an ineffective lightweight with no authority”.

Tempers are flaring…

UPDATE: A former Labour SpAd twists the knife:

“This is now going to turn into a ‘stop Sion’ campaign. Watson, what a genius. Doing for Sion what he did for Gordon…”

Patrick Wintour’s article in the Guardian this morning has gone down very badly in Labour circles. The notion that Labour MPs could be banned from triggering by-elections in order stand as Mayors or Police Commissioners due to dire finances has been met with outrage throughout the party. Though Labour are indeed broke, insiders see this for what it is – a direct attack on Liam Byrne and his bid to run for Mayor of Birmingham. Central command and control is back.

One former SpAd said: “Such a naked stitch-up. It would be simpler if Tom Watson just said that no-one whose name wasn’t Siôn Simon was allowed to run. Mind you, Siôn would still find a way to cock it up.”

Another senior party staffer points out: “why is the by-election thing only a problem when it’s Liam? They were happy to do it when it suited them, ie to get Lucy Powell in. Precedent was set by Sir Peter Soulsby in Leicester South, Watson was desperate to get his best mate Jonathan Ashworth in. It’s only when they lose control of the fixing they want to change the rules. Harriet biggest hypocrite of all. She used by-elections to get her cronies in – Ashworth was her former political secretary. And Seema Malhotra in Feltham and Heston was her former adviser.”"

The article has fingerprints all over it, especially as it names Harman as the driving force behind the idea. Her husband Jack Dromey is likely to chair Siôn Simon’s Birmingham campaign. Guido understands that a deal was struck when Dromey replaced Simon in the All Female Selection for Birmingham Erdington in 2010. One source called this an “old school Labour/union stitch up of the worst kind.”

Whoever the person at Labour HQ is who's giving @GuidoFawkes hourly updates, I wish they'd stop it. Whatever the beef, it won't fix it.—
Paul Richards (@Labourpaul) March 15, 2012

Paul Richards is clearly not happy about Guido’s run of scoops about the Labour Party’s internal problems.

 “It’s a great shame that someone thinks passing regular updates to Guido Fawkes is the best way of settling disputes. I’m a bit exasperated and I expect many Labour Party members will be too. It’s pretty despicable really.”

This zinger just in from a senior Labour source

“Its a bit f*****g rich of Paul Richards telling people to stop doing hostile briefings, it is a bit like desperate Dan telling everyone to go vegan.”

Our source reminds us that when he was Hazel Blears’ SpAd Paul Richards constantly briefed against John Prescott to try and further Hazel Blears’ position. The poisonous “YouTube if you want to” uncoded attack on Gordon Brown was drafted by him and he encouraged Hazel Blears to wear a “rock the boat” broach on the day of the European and local elections after she resigned.

“He was one of the most poisonous f*****g briefers working for anyone in the cabinet…”

… screams our exasperated Labour stalwart…

The Labour Party’s centrists and the realist operators who just want power have written off the 2015 electoral prospects of the Labour party under the two Eds. So it is against this backdrop that we should look at two new publications that have just come out. Labour’s Business written by Luke Bozier and Alex Smith argues that the party should be pro-business, it even has one brilliantly simple business-friendly idea that the government should steal immediately – small businesses should have one person as their point of contact at the HMRC. One person who is responsible for dealing with issues arising from the complexity of the myriad of taxes – VAT, NI, capital gains, corporation taxes and the like – burdening small businesses.

“In the Black Labour: Why fiscal conservatism and social justice go hand-in-hand” is a new Policy Network discussion paper in which the authors; Graeme Cooke, Adam Lent, Anthony Painter and Hopi Sen, call for Labour to embrace fiscal conservatism. Policy Network is backed by Peter Mandelson, so is not exactly a fringe ginger group. The paper can be seen as a direct rebuttal of the kamikaze economics of Ed Balls endorsed by Ed Miliband, which poll after poll shows is not seen as credible by the public. Despite the state the economy is in George Osborne is believed and supported by the British public.

The policy details in the two papers won’t worry their Coalition opponents, they will however be seen as part of a slow move back towards the electorally potent reality-based politics of New Labour, rather than the one-more-heave-to-the-left politics of Ed Miliband. Ed Miliband and those around him believe the electorate is moving towards the positions of the Occupy and UK Uncut activist groups, a strategic error that will guarantee them electoral defeat in 2015. If Labour’s reality-based wonks want to be in government before they are old men, they have got to either get rid of the Eds or convince them to tack to the centre. These are the opening salvos…

After a “no huskies“ interview with The Guardian this morning there has been radio silence ever since and the lunchtime top of the hour news bulletins have barely even given him a nod. Admittedly the Irish bailout news is dominating, but it’s not as if Red Ed has even managed to secure the second headline slot - that’s gone to the high-heeled Grant Shapps and his council housing reforms.

Apparently Ed is addressing the PLP tonight with his plans for reforming the Labour Party, particularly with how to stop his own farcical technical victory from happening again. Given the slaughtering that Harman got at the last meeting after the sacking of Woolas, (that was coincidently followed up nicely with some interesting facts about her appearing in the press,) it can’t get any worse for the struggling leader. However Guido has to wonder what the point of doing the interview this morning was then? Why not wait until after the meeting (which traditionally happens on a Monday) to go all guns blazing into the press? Is Miliband set to go down the Gordon path of relaunch after tired relaunch?  Another stunning success for Miliband’s Press Manager Calamity Kenny…

It’s worth nothing that it was twenty years ago today that the Tories knifed Maggie. If Gordon had been a Tory leader he would have been out the door by Christmas after the election-that-never-happened. If Ed is really going to significantly modernise the Labour Party he better be careful to keep the rules that make it much harder to oust a Labour leader than a Tory or LibDem. Guido’s always happy to dispense helpful advice…

“…expect civil war between the Brown “machine” and all those hitherto excluded from it, from the moment the PM leaves office.”

A deal looks likely to be agreed by Clegg and Cameron tomorrow morning, put to backbench MPs in the afternoon and then Brown will advise the Queen to send for Cameron on Tuesday.

Newsnight’s Paul Mason, who is as plugged into the Labour Party as Fraser is to the Conservatives, says the lights are going out and many want to “go gracefully into opposition and do it soon”. On the leadership issue

if the David Miliband camp and the Jon Cruddas camp were to get together it would make David Miliband hard to stop… This is being mooted but is not a done deal. Since Harriet Harman has ruled herself out of seeking the leadership [Has she really? Guido] I can see Ed Miliband emerging as a candidate backed by parts of the union movement (eg the GMB) who don’t want an alliance with David Miliband. Ed Balls would be backed to the hilt by the existing party machine, Unite and to an extent the “old Labour” left; also the Scottish Party.

The Labour NEC meets on Tuesday and Labour officials are in a rolling meeting schedule until then to decide how to respond if the party goes into opposition. One told me to expect civil war between the Brown “machine” and all those hitherto excluded from it, from the moment the PM leaves office.

Labour is heading for irrelevance…

For many years Gary Elsby was a regular contributor to the comments on this blog, much to the amusement of fellow co-conspirators. So it is without hesitation that Guido endorses his campaign “to do battle” and “carry the torch of socialism.”

The former Stoke Labour Party constituency secretary is standing as an independent, this is a bit of collateral damage in advance of the full-scale civil war that will come following a Labour defeat. Mandelson is trying to hold the line against the Whelan-Balls-Brown axis which is putting its placemen into upcoming seats using UNITE’s muscle with Tom Watson enforcing the faction’s advantage wherever he can. Mandelson in private sees the battle for Labour’s soul as his primary mission having calculated that Labour is likely to face at least one, if not two terms out of office.

The exit of so many Blairites has been a tawdry money-grubbing affair which has strengthened the Brownite / UNITE hand with ordinary disgusted Labour Party activists.  Mandelson has weakened his hand by misjudging matters and insisting that a “toff” like Tristram should be a standard bearer for his faction.

All in all, Stoke promises to be a foretaste of the chaos that will engulf the Labour Party following election day…

This prospect is viewed with absolute horror by CCHQ.  If Tory staffers could save Gordon by voting Labour on June 4, they would.

The scenario put to Guido goes like this; Thursday June 4 is Labour’s worst nightmare, Labour’s local council low-point goes even lower.  Either the LibDems or UKIP beat Labour on the percentage share of the vote in the Euro vote.  The Sunday press is of course totally hostile to Brown with Labour MPs clamoring openly for him to stand down.  If Sarah Brown can’t or won’t save him from humiliating himself that weekend, he will on the Monday night ( June 8 ) have to face the PLP disarmed of McBride and unable any longer to put the press frighteners on critics as much as in the past.  Watch out for a recent former cabinet member making the Geoffrey Howe speech.  Not Clarke or Byers, it will have to be someone without previous, who has served in Brown’s cabinet, someone like Peter Hain or Ruth Kelly.  For the good of the party and the good of the nation he will be implored to go.  If the mood of the room goes against him, he will fall shortly after, much as the Speaker went.

Guido’s source cautions that we have been here before and Brown has a knack of hanging on by his bitten down fingernails.  Chickens are not being counted.  Campaign teams are however being assembled in readiness with the weekend of June 12/13 pencilled in for them to break cover.  Miliband’s SpAd Sarah Schaefer has sounded out a team ready to go within weeks, Alan Johnson’s unsuccessful deputy leadership campaign team is also clearing the decks.  The game is very much on…