Gerry Hassan: Labour's rejuvenation can begin with a leap of faith

The condition of British Labour may seem a distant subject to many Scots. We after all have a SNP majority government and our politics now march to a different beat. Despite everything, British Labour still matters.

It is the majority Scots party at Westminster, winning 41 out of 59 seats only last year. And British politics still matter, for as long as Scotland remains part of the UK.

There is a strange atmosphere in what used to be called "the people's party". Ed Miliband's leadership has gone through the political extremes in one week, aided by a disastrous Prime Minister's Questions, then a victorious one. David Miliband's victory speech that never was found its way into the press. As did Ed Balls's political notes from his time in office.

Tony Blair made it known that he supports the coalition's public sector reforms while Alan Milburn castigates the NHS English reforms for retreating in the face of resistance.

What is going wrong for Labour, some will ask? The latest YouGov poll has Labour 6 per cent ahead which would give the party an overall majority of 62. Other polls have a much narrower party lead which many see as unconvincing.

Ed Miliband's approval ratings don't help - a 30 per cent satisfaction rating which is declining, and a public who think that the party choose the wrong brother for leader. This influences some in Labour to play their "ditch the leader" fantasy, something well known to Blair and Brown watchers, but which the party never acts upon.

A longer view is needed in all of this. The party is still in deep shock and in the shadow of the Blair/Brown years, unable to come to terms with the pluses and minuses of New Labour, namely three election victories, numerous successes, as well as host of failures.

There is a denial of unpalatable truths in parts of Labour. Take last year's election. Labour was seen as the party of rip-off Britain, of immigrants, poor people and single parents. Pointing this out doesn't make one Alf Garnett; Labour can't win if it is seen to represent such a welfarist minority.

Today people may have mounting disquiet of the Con/Lib Dem coalition public spending cuts, but Labour have failed to make major political capital on this terrain. When asked this week who they blame for the cuts, voters answered 40 per cent Labour, 24 per cent Con/Lib Dem coalition, 24 per cent both. This picture has been constant for the past year, and, until it changes, Labour's attack will not hit home.

The party's internal debate is slowly moving on to new ground and the debate between "Blue Labour" and "Purple Labour". The former is associated with Maurice Glasman and London Citizens, and seen as Labour's response to "Red Toryism". This politics invokes authority, tradition, respect and patriotism - qualities many felt Labour in the hands of polytechnic lecturers trashed.

"Purple Labour" is connected to the "Progress" moderniser group who used to be seen as the advance guard of Blairite stormtroopers who wanted to marketise and outsource everything. They see the party's future as hugging the centre ground, talking about aspirations, and addressing voter anxieties on issues such as law and order and immigration.

A final perspective is provided by the "red-green Labour" of "Compass" which believes that Labour has to become the champion of hard-working families and "the squeezed middle" - people on average and just above average incomes who have barely seen their living standards rise this last decade, and will see them fall over the next few years. "Compass" want to address insecurity, inequality and challenge the City of London; it is a convincing critique of what's wrong, less a plausible politics of the future. None of these perspectives are the finished article. For Labour to come out fighting it will have to present a convincing story of its past, present and future.

For a start, it is going to have to come to terms with the most successful period in its history: New Labour. Tony Blair and this period confuse, anger and infuriate the main body of Labour opinion. The former prime minister doesn't help matters with his self-aggrandising, money-loving, power-worshipping view of the world - a kind of transatlantic version of Berlusconi.

Labour has to be able to see past the sinner and the rather pathetic figure of Blair today. It has to be able to tell a convincing story to itself and voters about its 13 years in office. What went right? The record investment in health and education, a public realm transformed and a country which cared about its most vulnerable. And about what went wrong? The foreign adventures, flaunting of wealth and all sorts of rather seedy, disreputable public figures.

It has to weave a plausible narrative which celebrates the good times, while apologising and learning from its mistakes. If Labour can't embrace its most successful period in its entire history, voters will interpret this as a party uncomfortable in its own skin, and unsure of its future. The fact that this basic, fundamental point could be seen as pro-Blairite shows the confusion the party is in.

How does Labour become more outward, future-focused and leave its comfort zones? It can only do so by answering the question: what would a Labour Britain look like which is different from 2010 - after 13 years of office?

Who does Labour seek to speak for and give voice to? Who are Labour people? It cannot be the minority ghettos of those left behind, or the siren voices of the public sector vanguard. Can the "squeezed middle" identify with Labour when they fear increased taxes, regulation and interference, and unsustainable public spending? Many don't trust Labour.

Finding this account of a Labour nation, a land inhabited by animated, hopeful Labour people, and coming to terms with New Labour, isn't going to be easy. The party's wounds and pains from the Blair and Brown years still go deep.

Ed Miliband's leadership has so far been a transitional affair, shaped by the fag end of this era. He comes across as a lonely figure and leader, surrounded by shadow Cabinet ministers who didn't vote for him, and without the presence of respected advisers in the way that Blair had Campbell and Mandelson.

All of this impacts on the state of British and Scottish politics. The coalition government will become more unpopular as cuts bite. And, who knows, Alex Salmond's "big tent" politics may spring a few leaks as well.

There is the distinct chance despite the scale of Labour's rejection last year when it won the second lowest vote in its history that it could win the next election. The parliamentary arithmetic looks benignly on Labour.

However, until Blair, Labour was notoriously bad at winning elections and making the political weather. If it wants to win, it is going to have to snap out of its comforting stories and become the party of the future and change, not opposition and conservatism. And that requires a leap as big as the one which produced New Labour nearly 20 years ago.