Party believes it impossible to rule out any relationship at all without questioning the legitimacy of Scottish MPs at Westminster

Labour is close to ruling out forming a coalition with the Scottish National party that involves SNP ministers. But Labour argues it is impossible to rule out any looser relationship without questioning the legitimacy of Scottish MPs at Westminster, something the pro-union party is not prepared to do.

Labour believes the demands being made by David Cameron for it to rule out even “a confidence and supply relationship” with the SNP, or something even looser, are ridiculous. They argue it would virtually imply all Scottish MPs should be disenfranchised at Westminster – without a vote on the Queen’s speech or the budget, the two key elements of a confidence-and-supply arrangement.

“David Cameron for his own electoral purposes is trying to suggest Scottish MPs should have no vote at Westminster and that is an extraordinary position for a Unionist politician to adopt,” said one Labour source.

The prime minister has been trying to drive a wedge by claiming Labour leader Ed Miliband will be dependent on SNP votes to survive, so leaving England held to ransom by the latter demanding cash or the removal of the Trident nuclear deterrent from Scotland.

Shadow chancellor Ed Balls continued to stop short of entirely ruling out such a coalition on Sunday, saying: “We don’t want any deal with the SNP, it’s not part of our plans. It’s nonsense”.

Asked why he could not rule a deal out altogether, Balls said: “Large parties at this stage say we’re fighting for a majority – and we are – I’m not going to get involved in speculation about post-election deals. We are fighting for a majority.”

He did reaffirm existing Labour policy to look at reducing the number of Trident submarines from four to three. At present the polls show neither main party can secure an overall majority in the Commons, even if they struck a deal with what is forecast to be a 30-strong group of Liberal Democrat MPs following the general election in May.

Election 2015: The Guardian poll projection Read more

Labour has been reluctant to rule out a deal since it opens a Pandora’s box in which it is next asked whether it will rule out a deal with the Lib Dems, or other parties, sidetracking the campaign into a discussion about the day after polling day. Discussion of SNP pacts also contains the implicit admission that Labour cannot win an overall majority.

But Labour thinking has been shifting in the past week, and it is now a matter of when rather than if it will rule out a deal with the SNP. With little sign that the SNP are being pegged back in the polls in Scotland, Scottish Labour MPs have told Miliband he needs to rule out the pact to sharpen the choice for the party’s traditional supporters.

“It needs to be crystal clear that if you vote for the SNP you are putting the Tories into power at Westminster,” said one Labour MP. Labour has also been frustrated that it is being put under rightwing media pressure to rule out an SNP pact when little comparable pressure has been put on the Tories to rule out pacts.

They point out that the last UK politician to do a deal with the SNP was a Conservative when Alex Salmond ran a minority government at Holyrood from 2007 to 2011, relying heavily on the Tories to pass all four of his annual budgets.

This included his budget in the first year of the Tory-led government at Westminster in 2011, with total spending over that time worth about £120bn. Some Labour sources claim there are back channels between the SNP and the Tories about a post-electoral deal.

In a move to reassure English voters, Nicola Sturgeon, the SNP leader, in a speech in London on Monday will promise to be a constructive force at Westminster, adding the party will argue for a “moderate approach to deficit reduction – one which does not penalise the vulnerable and harm economic growth”.

She will add that the SNP will not just serve Scotland’s interests but will help where it can to bring positive change across the UK as well.

She will add: “We were constantly told by the UK government before the

referendum that Scotland was an equal and valued member of the UK. So don’t be surprised if the SNP government now start taking them at their word. We have clear and constructive views on many aspects of UK policy which affect Scotland deeply – views which we know are often shared by many people elsewhere in the UK.”

Labour also tried to turn the tables on the Tories by pouncing on Nigel Farage’s offer of a confidence and supply arrangement with the Tories in return for an in-out referendum on Europe, saying it shows the Ukip leader wants to prop up a Tory government that wants to cut spending levels back. The chancellor George Osborne ridiculed the idea of a Ukip pact as “total nonsense” but he would not categorically rule one out.

He said: “Voting for Nigel Farage makes Ed Miliband the likely prime minister and it means that instead of getting a referendum on Europe, we will get no referendum at all.”

