Denis MacShane: The nation has spoken. Now Labour must learn the lessons of its verdict

David Cameron follows William Hague and Michael Howard in being unable to deliver a Conservative majority at the ballot box.

Nick Clegg won the TV debates but lost the election. Ask Paul Scriven, the Lib Dem leader in Sheffield. He poured all his party's resources into winning Sheffield Central, but lost. Worse, he was evicted as leader of Sheffield City Council.

Unnoticed in the focus on the Parliamentary election was the rout of Conservative and Lib Dems in council seats.

Voters don't like Labour on its own in national government and don't like the Tories or Lib-Dems in local government.

But how can a country be governed on the basis of what people don't like?

Cameron and Clegg don't like ID cards or Heathrow Airport. But can the pro-Europe Lib Dems swallow the secret William Hague memo to David Cameron with unrealistic demands that the other 26 EU member states agree to re-open the Lisbon Treaty?

On electoral reform, Cameron is offering far less than Tony Blair's gift to Paddy Ashdown of the commission chaired by Roy Jenkins.

Will Lib Dem or new Tory MPs vote to reduce their numbers by scores in favour of Cameron's idea of giant new constituencies all with rectangular boundaries?

Already, Labour has made a better offer to Clegg – a

guarantee of an early referendum on full PR.

The voters have made clear they do not want the old 20th century politics in which one party takes hegemonic control of the state and the 700bn Government has to spend.

Even if a new election is held in the autumn, it is unlikely to produce a clear result. So can MPs listen to their voters or must the sight of back-room wheeling and dealing of the weekend now be the norm?

Why shouldn't Nick Clegg be Foreign Secretary – it would be good to have someone who can speak to partners in their own language? A combination of Alistair Darling and Vince

Cable at the Treasury would reassure markets. Had Chris Huhne stayed in the Labour Party, he would have been a Cabinet star by now.

There is no government job that he would not do well. There are plenty of Lib Dem MPs who could make good junior ministers. Add in posts for Scottish and Welsh nationalist MPs as well as Lady Sylvia Hermon and a Lib Lab government that brings in a fixed term parliament begins to look

a reality.

All these propositions should be discussed in Parliament instead of in BBC studios. The Commons should return this week and hold three days of debate on what needs to be done.

And where does this leave Gordon Brown?

He is the man who is widely acknowledged globally to have been the architect of the policies that stopped the credit crunch and recession turning into a 1930s slump. Is his reward to be dismissed?

One or two rent-a-quote Labour MPs have had their 30 seconds of weekend media glory opining along these lines. But Gordon Brown will be the first to admit that the national interest and the future of the Labour Party are more important than his own personal fate.

The calm common man who

is Alan Johnson would be a

good Prime Minister to preside over a reforming 21st century-style Cabinet that dealt with the hard economic choices that lie ahead as well as the constitutional reforms which 15 million voters who voted Labour and Lib-Dem appear to have endorsed.

Other Prime Ministers in our history have made way as votes in elections or the Commons have evaporated, but stayed in the Cabinet. Brown's economic stewardship should not be lost.

Meanwhile, the next generation of Labour leaders working with some of the brilliant young women who have been elected as new Labour MPs can prepare a new offer to the nation.

Whatever happens, Labour must learn the lessons of the past. After 1951 and 1979, an old guard clung on in the Shadow Cabinet. The party turned in on itself and spent years in the wilderness. Labour is in a much better position in terms of MPs than in the 1980s.

Then there were 7.5 million industrial workers. Now there are 2.2 million. Labour has to speak to 21st century citizens, including struggling businessmen and women.

The days ahead may produce a Cameron-Clegg marriage of cynical convenience. If so, Labour must be an intelligent opposition.

The nation no longer wants to give one man, one party, one foreign-owned media total unchecked power. If Labour can learn that lesson, it will have a strong future.