Few among us have been untouched by the major changes of the past five years. The crash that unfolded from 2008 saw jobs lost, an enormous rise in the cost of living, and economies retracting and failing across Europe (including our own).

It was in the United Kingdom that we could see most visibly both the problem for, and the failure of, traditional political action. The inability to save the rest of the economy from the shortcomings of both domestic and international banking would have been totally catastrophic. The failure was not the actions taken but, paradoxically, not explaining that this was one moment of our recent history where political democracy was in the ascendant, essential to saving us from those very unaccountable forces which exercise such overwhelming power.

But the last five years of political and economic turmoil has resulted in politics and politicians losing trust and confidence by the people on whose behalf action is taken.

Faith in democratic institutions has fallen to dangerously low levels, as demonstrated in the 2012 Audit of Political Engagement by the Hansard Society. Their survey revealed the proportion of the public who say they are "very" or "fairly" interested in politics has dropped by 16 per cent and now stands at 42 per cent, falling below 50 per cent for the first time since the audits began.

This is problematic in two ways. First, a widespread disengagement with the political process aids extremist candidates. Demagogues will always seek to exploit those people frustrated by the mainstream parties who seem unresponsive to their concerns, but the success of George Galloway in Bradford West in March 2012 was a warning that we must not be complacent.

Second, it gives rise to "technocrats". It could be described as nothing short of a coup in terms of what occurred in Greece, with the removal of the Prime Minister, and in Italy, with the removal of both the Prime Minister and the Cabinet.

Britain is not exempt from this growing trend. Peter Kellner, President of YouGov, tested in spring 2012 the proposition "Britain would be governed better if our politicians got out of the way, and instead our ministers were non-political experts who knew how to run large organisations". Almost as many people agreed, 38 per cent, as disagreed, 43 per cent.

But it is at this moment we need politics and, dare I say it, politicians more than ever. Both to articulate the language of priorities, as described by Aneurin Bevan, but also to mediate and decide between contradictory demands from the public and short term pressures alongside long term imperatives. How much should we cut spending; do we need to raise taxes; how do we structure our health and education systems – making progress on these complex issues can be met only by elections, political engagement and democracy.

Yet in order to defend politics and therefore political democracy, we need to change the way in which we "do" our politics. Today, I have set out several concrete suggestions that will help us achieve this.

For government to directly support mutual action and key campaigns would be unusual but not unthinkable. In the spring of 2012, Which? organised, under the heading of The Big Switch, almost 40,000 people coming together to negotiate a much better personal deal in relation to domestic energy consumption. The winning tariff from Co-operative Energy saved consumers £183 per year. However, the campaign was extraordinarily complicated and the energy companies difficult to deal with. Government support for such initiatives would be transformational.

Similarly, nurturing the process of getting people to run their own facilities locally can be seen as one of the few positive developments from the austerity agenda. There are good examples in North America of how services have been reshaped to offer this new way of meeting need. In Oregon in the USA, for example, people with mental health conditions are helped to live independent lives through a personal budget. They are assigned an advisor to identify goals and how to best use the budget to buy goods and services which will help them achieve these aims. "Co-delivery" would help people to help themselves.

At the heart of pioneering a new approach service delivery, we also need new finance mechanisms to help tackle the widening gap between rich and poor. This should include lifelong accounts developed jointly between the individual and contributed to through government funding. A return to mutual forms of saving and investment, including local and regional investment banks, must also be considered. And the development of microcredit should be utilised as a way to provide acceptable rates of interest to millions of people caught up through exploitative levels of APR, as well as an engine for bottom-up job creation.

And at the centre of all this, we must refocus politics on core issues that matter most to people. Taking on the challenges of an ageing population and affordable retirement, and mobilising civil society through volunteering (including direct support to the million young people out of work and training) will require engagement, creative thinking and determination.

By placing the power of government behind innovative and mutual self-help and successful political campaigning, it would be possible to foster a new spirit of engagement with the political process. Above all, we need to think again as to how best to touch those who feel alienated not only from politics but from the process of public life and decision-taking. In other words, from the society in which they live.

In Defence of Politics Revisited, by David Blunkett MP with a foreword by Ed Miliband MP, is available in full on his website