The atrocious results from last night clearly show that the Blairite strategy, revived by Gordon Brown, of targeting middle class votes while assuming the working class would back the Party come what may, no longer holds. The working class are now staying home or voting for anyone other than Labour as an alternative to the Tories. Millions still identify with the Party but won't back it because its policies and rhetoric is alienating them.
There is now no point trying to pile up middle class support in southern seats if our core vote is deserting us and destroying our voting base. At the same moment sections of the middle class are voting for the Tories for the first time since the late 1980s. On issues like civil liberties, well being and even audaciously on poverty - David Cameron is setting the terms of debate. This pincer movement is squeezing the life out of the government. The whole electoral strategy of New Labour is in tatters.
Compass has been saying this since 2005 when we analysed the data from that election. It was clear then, with 4.5 million voters lost since 1997 that the Party was heading for trouble. Only a change of direction will renew the Party's electoral fortunes.
The issue is not whether Labour is a party of the middle class or the working class. It has to be both. That was the genius of the 1997 voting bloc. The leadership of the Party must now accept that the same issues affect voters in Reading as in Rotherham; insecurity and anxiety caused by flexible labour markets, the lack of affordable housing, sharp price rises, concerns about pensions, worries about securing places in local schools, immigration and the widening gap between the rich and the poor. But while this pervasive insecurity affects everyone it is the lower social groups who pay the heaviest price. A fresh start is not just an ideological necessity but an electoral imperative.
We must have a vision and a set of policies that unite common interests and concerns. Brown said in the autumn that he would delay the election to set out his vision for the country. Six months on no one is any the wiser. Instead he has panicked and pressed the rewind button back to the failed politics of Blairism. The working class have not just been ignored but attacked on issues such as social housing, benefits and now the 10p tax rate. Trade Union action in defence of workers rights and conditions have also been criticised. John Hutton says the rich should be celebrated! It is little wonder that these people don't vote for us and particularly alarming that regrettably some seem to have backed the BNP.
And when the middle class face university tuition fees, long term care costs, white collar jobs being outsourced to India and when economic good fortune turns against us - the scale of the political and electoral task facing Labour becomes clear. If Brownism is just Blairism without the economic boom then the Party is finished.
Everyone is working hard and playing by the rules but a political and economic system that prioritises the needs of the rich over everyone else is always going to disappoint.
For a moment Brown did hold out the hope of change. The messages early on were about limits to the privatisation of health and education, affordable housing, a new moral direction symbolised by the cancellation of the Manchester supercasino, an emphasis on liberty and meaningful constitutional reform. But these were never followed through. It was the moment he became the Prime Minister for continuity not change that the polls turned against the government and has now led to this disastrous set of local election results.
The long term damage to the Labour Party is becoming clear. Jon Cruddas warned in the Deputy Leadership campaign that the Party was being hollowed out. Membership is at an all time low and will fall further now nearly another 300 councillors have been wiped out; as these are usually the only people who keep local parties going. Thousands of people didn't even have a Labour candidate to vote for last night. The Party has huge and unsustainable debts because it chose to rely on the donations of a few rich individuals rather than building and engaging with a wider membership base.
At the time of writing we don't know how Ken Livingstone has faired in London. The result will obviously be close. He has out polled Labour and has been dragged down by issues like the 10p tax rate. From the congestion charge to the environment he has been brave and pursued a more radical politics. But within the constraints of a City dominated by the distorting effects of financialised capitalism and a national Party that refuses to make society the master of the market Ken was always going to find it tough.
Can Labour recover? Only if the government once again embraces change. The move must be made quickly or the Party will suffer the consequences.
Change needs to be signalled through a new narrative and a set of supporting polices. The needs of society must come before those of the economy. New Labour is still trapped in the Thatcherite refrain that There Is No Alternative. But the fallibility of free markets is now apparent to everyone.
From Northern Rock, to the credit crunch and the Governor of the Bank of England condemning City pay excesses - the moment is ripe for Brown and his Cabinet to assert a need and a willingness to put the interest of society first. Nothing is holding them back than their own timidity.
A new narrative for Britain must be based on the eternal centre-left values of liberty, equality and solidarity. The trick is how we apply them in the world today.
In policy terms he must: