Bedroom tax victims are the real losers of the EU referendum bill’s death

The strange death of the Tories' EU referendum bill has been a particularly ugly coalition one. And it's not one without casualties, as thousands of bedroom tax victims will testify.

Somehow, a Liberal Democrat backbencher's bid to mitigate the worst impacts of this damaging policy became embroiled in coalition negotiations over the Conservatives' EU referendum bill. Now the hopes of both parties' backbenchers are dead on the floor after a messy government shootout.

And all the while Westminster is wondering: was this David Cameron's plan all along?

That is the suspicion of MPs on all sides of the House right now. None of them are 100% certain about all this. But they all smell an enormous rat.

One thing is clear: in the end, money ruined everything.

Private members' bills need a money resolution in order to progress. Convention dictates that any bill which has secured its second reading gets the nod from the executive, because they can't really be seen to be going against the will of the majority of MPs who backed the legislation at second reading.

This week, something went badly wrong. In backroom coalition talks, we now know, the EU referendum bill – which the Lib Dems don't like – become tied with that of a Lib Dem backbenchers' bill reversing the Tory-backed bedroom tax. Never mind the fact the Lib Dems were responsible for introducing the spare-room subsidy, as they used to call it. Nick Clegg was offering a clear quid pro quo – give a money resolution to Lib Dem MP Andrew George's bill and the Lib Dems would do the same for the Tories' EU referendum bill.

What happened next was deeply revealing. The Conservatives raised the stakes. They declared they would only back the Lib Dems' bill if the coalition's junior partners allowed George's bill to proceed in government time. This was an obvious dealbreaker. "The Tories put forward a proposal they know for certain will be turned down by the Lib Dems – a completely unfair deal," a senior Lib Dem source said.

It was supposed to be a win-win situation for the Conservatives. Either they were to succeed in legislating to guarantee an in-out referendum in the next parliament, regardless of who actually wins the next general election, or they might able to force Labour to show their hand in opposing giving the British people their say.

As it is, Labour has got away with it – and its MPs know it. "Something not quite right about this," as one puzzled senior Labour frontbencher put it. The opposition was expecting the Tory bid to progress much further than it did. What went wrong?

The answer depends on who you speak to. Conservative eurosceptics, naturally, are furious with the Lib Dems, providing yet another bone of contention as the coalition's internal harmony gradually breaks down. The leadership feels the same way – or almost the same way. Cameron said he was "disappointed" in PMQs.

His problem is that not all of his backbenchers believe him.

They have not forgotten the circumstances in which the prime minister was dragged 'kicking and screaming', as they put it, round to the position of backing legislating for a referendum in the first place.

Eurosceptics remember well a 1922 committee meeting back in the early summer of 2013, the week before that year's Queen's Speech, when the Tory leadership made clear it would not support calls for legislation guaranteeing a referendum.

The backbenches made their views clear the following week, when – in an extraordinary development – 115 Conservatives voted in favour of an amendment to the Queen's Speech introducing such a bill.

The issue was pushed to a vote in part because the government game plan – bypassing the Lib Dems and pursuing a Tory-championed private member's bill – was viewed as seriously flawed.

Private member's bills are undoubtedly vulnerable creatures. It is much harder for them to get on to the statute book: a determined minority is usually sufficient to prevent this from happening. Under the terms of the Parliament Act, all Neill needed to do was get the legislation through the Commons unamended for it to become law. Now, thanks to the Lib Dems, that is not going to happen.

Eurosceptics are understandably angry. They suspect this was the PM's plan all along.

That's because the Tories' supposed win-win situation doesn't make a lot of sense if you're David Cameron. This is a man whose job is on the line next year. He needs to do everything he can to convince voters only the Tories are the only party both willing and capable of delivering a referendum.

If Neill's bill had passed, the Tory referendum cause wouldn't be politicised. It would become dead ground. That would have been no good to the Conservatives at all.

All this explains why eurosceptics now suspect the Tories deliberately overplayed their hands in negotiations with the Lib Dems.

Asking for the EU referendum bill to be given government time would not necessarily have guaranteed its passage, because Labour and the Lib Dems could still have combined to block it.

But without making a comparable offer to George's anti-bedroom tax bill, the Tories were drastically overbidding.

And that would be that – another Westminster episode in which tricksy politicians have found ways to use the system to their advantage.

But there is much more to this than just yet another coalition row. There are real victims of all this – the thousands of people whose lives are made miserable by the bedroom tax. Somehow, George's bid to mitigate the worst impacts of the policy became embroiled in the coalition talks.

George, his affordable homes home bill dead and buried, stood up in PMQs this week and accused Cameron and the Conservatives of "abusing the privilege of executive power". The disdain that greeted that remark from Tory MPs was part-understandable, part-shameful. They blame the Lib Dems for killing off the bill and couldn't care less about George's alternative. They also couldn't care less about executive power. It's always the case that government MPs are curiously indifferent about its unnecessarily strong domination of the Commons – even though they suffer from it almost as much as the opposition.

Andrew George's question to the prime minister is at  09:45

Speaking afterwards, George said: "They should hang their heads in shame." He's guilty of just as much finger-pointing as the Tories. But the Lib Dems, too, bear some responsibility. They were the party that aided and abetted the introduction of the bedroom tax. Now they are trying to walk away from the policy and get credit with the voters ahead of next year's general election.

This is the depressing truth at the heart of this story: Westminster's politicians have raised the hopes of campaigners hoping to give the people their say on Europe, and to give people some relief from the government's welfare policies. Both, it now seems clear, were futile. The coalition parties have treated this whole affair as an exercise in maximising political advantage out of a situation they never expected would actually lead to change.

Private member's bills can change this country for the better. Or they can be used for cheap political pointscoring.

George's bill, after all, was only ever a Lib Dem attempt to distance themselves from a policy they themselves created. Clegg has as much to gain from generating publicity about this row as Cameron did in seeing the Tories' EU referendum bill fail.

"You could call it clever politics," one disappointed Tory moaned. It does look rather like that. But let's not pretend for a minute that ordinary people weren't the real losers of all this.