Glasgow East byelection reaction: Labour crisis - 'A cut that keeps bleeding'

· More pressure on Brown after another poll debacle
· Summit with unions is turned into inquest
Gordon Brown during a press conference at 10 Downing Street
Gordon Brown goes to Warwick with the sound of defeat ringing in his ears. Photograph: Dominic Lipinski/PA

"Profound and serious" was how one minister reacted last night to the news that Labour would lose a seat considered one of its safest in Scotland.

But Gordon Brown will have little time for profound or serious thoughts. By lunch today he will be locked in hand-to-hand politics: long and fraught negotiations with trade union leaders, haggling over policy demands of his government in return for the lifeline of money.

Members of his government got their first sense of the impending defeat last night as they arrived in Warwick for the national policy forum meeting. The atmosphere was described by one present as "businesslike" and by another as "febrile". A third agreed that "businesslike febrility" served as quite a good description of Labour politics of recent weeks.

"A cut that keeps on bleeding," was another's interpretation of months of misery for the government.

Brown's first task is to get through the next 24 hours. His reaction will be keenly awaited, but in truth he has already used up the stock of contrite phrases about listening to people's concerns. Afterwards the talks with the unions will no doubt be affected by the result.

One adviser saw a silver lining when he said: "If we're lucky it could focus minds and weaken the trade unions. Which would be good for Gordon."

His argument was that the unions would recognise that they could not force through policies out of kilter with the public mood - such as those that may have lost Labour last night's byelection.

"Or it will have another effect," he added hastily. "It will strengthen the hand of the unions who will say, 'you are losing places like Easterhouse in Glasgow - people who stuck with us through the dark days of the 80s and 90s; you have to start to listen to us and strengthen trade unions - or you are finished'."

Which would it be? "I suspect what will happen will be the latter."

So the immediate effect of the Glasgow East result could be more concessions to the unions than Number 10 has been prepared to concede so far.

Ironically, for a man who doesn't believe in summer holidays, Brown will be cushioned by the onset of summer. MPs will be away from parliament and unable to bump into each other in Westminster corridors. Despite what organisers of flashmobs tell you, it's harder to organise a coup by mobile phone than by tearoom.

"The TUC and [Labour party] conference will be a time of reckoning" said one formerly loyal Scottish MP. "I have never once heard the view that the result of Glasgow East would have any effect on Gordon's position as PM.

"Gordon's position is terminal. Without or without Glasgow. We all know that. Gordon will go in October or November."

Labour MPs are exhorting Brown to produce a big idea, a new direction, something to hold onto as the summer progresses. A cabinet reshuffle is another option, but there Brown may find the choice is between callow youth and disgruntled "big beasts" who may not easily be enticed back into the fold.

A Labour loyalist said: "It's come to something, that significant column inches are being allocated to defending [the chancellor] Alistair Darling, a longtime friend of the prime minister. If Brown is going down, he doesn't want to do so too, but is likely to be one of the so-called 'grey-beards' that go to the prime minister in the autumn and have a word."

One argument that will not be accepted is that byelection losses are the lot of third term governments. One adviser suggested last night that "PMs lose byelections, even in safe seats, it's just a rule of politics."

But the government minister said that was "nonsense". "We can't dismiss this loss as just what happens to governments in their third terms," said the minister. "We are in trouble."

"There are other forces at play," a junior minister agreed. "Our candidate was a good one, but that's not enough. This is about Brown." Last night's result was not a declaration of love for the SNP, said another Labour MP, but about "hatred" for his party.

"The SNP have won because they were the party best placed to beat Labour," he said. "The same was true in Dunfermline when people voted for Lib Dems - that was ... a protest vote against Labour."

Earlier yesterday, it was David Cameron making the news, as the bike he uses to commute to parliament was stolen. Brown's loss was far greater last night.