Labour is still the only political show in town

As Enoch Powell once observed, all political careers end in failure. Yet Tony Blair's is a very peculiar kind of failure. He is the first Labour leader to win three consecutive terms. If Harold Wilson can be hailed as the winner of four elections - two of them by wafer-thin majorities, a third as the largest party in a hung parliament - then Mr Blair certainly deserves credit for three very clear victories. Even so, Labour's losses on election night - and its very low share of the overall popular vote - were surely his personal responsibility. He had taken Labour into an illegal war, and Labour MPs, many of whom had vigorously opposed the Iraq adventure, paid the price. This was the dog whistle, sounded mainly by the Liberal Democrats, that the voters heard most clearly. The dog whistle on immigration, from Michael Howard and his Australian spin-doctor Lynton Crosby, seemed to help the Tories only a little.

The message that Labour leaders should heed is that the British are more liberal and more engaged than most pundits give them credit for. This election should also serve notice that Labour voters in working-class areas, particularly in the cities of the north and Midlands, can no longer be taken for granted. New Labour has always taken the view that these voters need not be wooed - as the middle classes of the southern suburbs should be wooed - because they have nowhere else to go. And true enough, they will not go to the Tories. But as some remarkable swings in this election showed, they can and will go to the Liberal Democrats.

The paradox here is that Labour has delivered far more to ordinary working-class families - or "hard-working families", as its leaders like to call them - than Liberal Democrat policies ever would. Gordon Brown's complex system of tax credits both for families with children and for old-age pensioners has been carefully targeted at the poor. But new Labour has in effect started to abandon an important strand of its tradition: the belief that the welfare state works best if everybody benefits, regardless of income. Universal services, it was argued, kept the middle classes on board and also enhanced social solidarity. Labour - by, for example, introducing means-tested university tuition fees, continuing to erode the basic state pension and introducing charges for personal care for the elderly - has chosen to confine free services to those who need them most.

The Liberal Democrats, by contrast, propose to revive the old middle-class welfare state, restoring free personal care for the elderly and free higher education, and increasing the basic state pension for the over-75s. Their policies, if implemented, would result in an enormous shift of resources from poor to rich, despite their proposal for a 50 per cent rate of income tax. In this election, the Liberal Democrats stole ground to the left of Labour - capitalising mainly on their opposition to the Iraq war - but they stole it largely on false pretences.

The problem for Labour is one of tone, more than substance. Mr Blair and his allies have often seemed almost perversely determined to upset every natural Labour constituency: not just the northern working classes, but also the north London liberals, the pacifists, the supporters of comprehensive education, the public sector professionals such as teachers and doctors.

The Prime Minister has spent a decade making Labour acceptable to the suburban middle classes of the English south-east. But these have proved fickle allies; if the swings in some of the London suburbs had been repeated across the country, Labour might well have lost its majority. The need now is to make the party acceptable once more to its traditional supporters, from whom it derives its identity and its confidence as a party. This is a matter not so much of explaining its policies better, but of conveying the idea that it is on their side and shares their concerns.

This election campaign has revealed a country in a sul- len mood. No party can take much comfort. Labour lost votes, but the losses (fortunately for the government) went nowhere in particular. The beneficiaries ranged from the Greens to the British National Party, from George Galloway to an ex-Labour stalwart in Blaenau Gwent who stood as an independent because he resented an outsider being parachuted in as the official candidate. Neither the Tories nor the Liberal Democrats offered an alternative that inspired, or even made much coherent sense. Labour is still the only political show in town. But it needs to get the blood coursing through its veins again. Mr Blair is not the man for that job.

Full circle in Enfield Southgate

So were you still up for Twigg? Eight years ago, the most memorable moment of the election campaign, for many, was the defeat in Enfield Southgate of Michael Portillo, a minister who, in his harsh enthusiasm for all things Thatcherite, represented everything that people most disliked about the Tories. Mr Portillo just looked astonished; Labour's victor, Stephen Twigg, looked like a fifth-former who had just thrown a stink bomb into the headmaster's study. This time, Mr Twigg looked older, sadder and plumper as he heard from the returning officer that he had lost the seat. He had become a Blairite schools minister, and very much a member of the establishment. Meanwhile, Mr Portillo had undergone a much-publicised conversion and, while remaining a Tory, discovered a softer side to himself and even joined the New Statesman's team of critics. As someone once said, it's a funny old world.