What odds a full house - three Levys and two Blairs? Or better still, a royal flush: an ace (Blair), king (Levy), queen (Turner) . . . ? The conflation of two tawdry stories on the same day has become a habit for this administration. It happened again shortly before Christmas - Blair was questioned in the loans-for-honours inquiry; on the same day came the hideous announcement that the government had stopped the Serious Fraud Office investigation into alleged bribes involving BAE Systems and Saudi Arabia.

One word links all these events: money. New Labour has never quite been able to handle it. Ministers are titillated, frightened and occasionally ashamed by its temptations. The levels of personal corruption are still relatively low compared to other countries (although the difference is not as marked as is portrayed). What matters more is the moral and corporate corruption of this government. It seeps into every corner, rendering dispassionate decision-making extremely difficult.

The roots of this are threefold. It was a political requirement to embrace the City in order to establish economic credentials. It was systemic. Ministers believed major public services, such as building hospitals, could no longer be funded through public money. And it was human nature.

Peter Mandelson was nothing if not candid when he noted that new Labour was seriously relaxed about people becoming very rich. Thus begat snuggling up with Ecclestone, the Hindujas, Mittal, Anschutz and others. Some stayed the course; others dispensed with the government at a time of their choosing. Ministers visited ranches and partied. The link in many of Labour's financial relationships was Lord Levy, a man who in his nature is perhaps closer to the Prime Minister than anyone else. The denouement to this saga may be some time off. More arrests could take place. Blair might be seen again by Yates of the Yard. But the damage is done.

What matters now is that Gordon Brown learns the broader lessons. Labour needs to raise large amounts of funds, but as Jon Cruddas points out (page 24), it could do better than it thinks by reviving itself as a grass-roots movement. It is right and proper for ministers to be seen to be embracing the business ethic, but as chief executives know, respect is earned through tough negotiation, not Blairite supplication.

This is where gambling comes in. Is betting a malign force that should be kept at bay? Or is it, as Tessa Jowell insists, a mainstream leisure activity? The answer is "a bit of both". The methods of gambling may change - online replacing many on-street bookies, Lottery replacing the Pools - but the social consequences remain the same. Total stakes have shot up from £7bn in 1996 to more than £50bn in 2005. "Problem gamblers" number 300,000, but as casinos proliferate, so this figure, too, will rise.

"And what of the money?" ministers inevitably ask. Gambling is a short-term cash cow for the Treasury. In America, for all the international glitz of Las Vegas, gambling is much more tightly regulated than in Australia (the global leader) or the UK (catching up fast). Yet a recent study from the University of Illinois is illuminating. Every $46 of economic "benefit", from tax revenues to local regeneration, produces $289 in social cost, such as alcoholism and family break-up. Those celebrating in Manchester, and fuming in Blackpool and London, might have cause to think again.

Labour should not be a party that revels in prohibition. But nor should it ever forget its social mission. Pandering to American tycoons or South Africans who made their money with Sun City during apartheid epitomises everything that has gone wrong. It will be hard for MPs to vote down the casino plans forthwith, but they should certainly prevent any further expansion.

If it is to restore any credibility, the new Brown administration must remember the events of 30 January 2007. Rather than accusing critics of being snobs, as Jowell did in countering those concerned by gambling, they should consider the following: do they really want to preside over a Britain whose parties are funded by a few billionaires, and whose cities depend on slot machines for their revival?

Why the good people have gone

In a criminal justice world where tabloid clamours set the ministerial agenda, it is hard to come by rational public figures. Those who do take up the challenge tend to be tossed aside when the going gets tough. The departure of Rod Morgan as head of the Youth Justice Board is terrible news for Britain's most vulnerable children. He is not alone. A number of the more intelligent and rational people working behind the scenes have quit in frustration.

Morgan has been an outspoken advocate of progressive values in the youth justice system, arguing that the emphasis should be on rehabilitating troublesome children rather than punishing them. But his agenda did not square with that of the Home Office, and he was quietly informed that his contract would not be renewed.

The statistics are shaming. The number of children in custody has doubled over the past decade; four out of ten have been in care, and 3,000 suffer from psychiatric disorders. Instead of supporting the YJB, set up to oversee the system in England and Wales independently, the government now seeks to render it toothless. It speaks volumes that John Reid did not even meet Morgan during his tenure.

A new Brown government has a chance to transform Britain's attitude towards young people. It should begin by shifting responsibility for youth justice from the Home Office to the Department for Education. It requires courage to face down the baying mob. Will it have it?