John McTernan: Scotland still awaits its New Labour epiphany

SO, NEW Labour died on 6 May 2010. A private ceremony will be held at Millbank Tower. No flowers. Donations to the leadership candidate of your choice.

With his characteristic flair for making a headline – and, incidentally, publicising his memoirs – Peter Mandelson has declared the end of the political project with which he is synonymous. One might argue with the date he has chosen. Electorally, New Labour probably died in autumn 2007 when, after the election that never happened, support slumped to 28 per cent and never recovered. Emotionally, it probably died when Britain invaded Iraq. As Ed Miliband has said, that ruptured the relationship between New Labour and the public, creating a wound that hasn't yet healed. But before we move on, it's worth reflecting on the legacy of New Labour.

The greatest political legacy is to not only change your country, but also to change your political opponents. Margaret Thatcher achieved this. Her settlement on union laws and privatisation – however brutally achieved – was accepted by Blair and Brown. In a similar way, the social settlement established by New Labour has had to be accepted by Cameron. The symbol of this is civil partnerships for gay men and lesbians. Whenever Tony Blair talked of this reform he raised the hair on the back of your neck – he was so personally committed. And Cameron, whose party introduced the homophobic Section 28, has had to embrace this as an irreversible and humanising change. Even more significantly, the failure of the Tories to gain a majority in the general election was a tribute to the impact of New Labour. Against a tired government, with a deeply unpopular leader, aiming for an unprecedented fourth Labour term in a row in the middle of a recession, Cameron failed to seal the deal. Why? Because Blair had moved the centre ground of so substantially to the left that Cameron was unable fully to bring his party to the centre. Successive defeats had driven the Tories down to a core of ideological warriors and, for all his presentational reforms, Cameron had not had his Clause IV moment – confronting and transforming his party. Ironically, his failure to get a majority gave him just such an opportunity. The coalition with the Liberal Democrats not only gave the Tories a majority, it frog-marched them to the centre. It was, in a real sense the Clause IV moment David Cameron needed.

What, though, of the lasting policy legacy? Three broad positives, and one huge negative are worth reflecting on. First, New Labour transformed the world of work. There was a twin strategy underpinning this success. Blair extended employment rights: establishing the right to join a trade union and for unions to organise in workplaces; a guarantee of four weeks' leave for all and a guarantee of Bank Holidays on top for vulnerable workers; and family-friendly flexible working to allow parents to balance work and caring responsibilities. All these new rights were achieved while growing employment year on year – refuting the right-wing assertion that jobs growth can only be achieved at workers' expense.

Second, Labour transformed public services with a fundamental and irreversible shift of power from professionals to working people. Free choice of school or hospital. Competition between public, private and voluntary providers. Tough targets for outcomes. League tables and detailed public information on performance. Budgets held by individuals. Taken together, these policies have radically improved health and education.

But only, of course, in England. Scotland awaits its own New Labour moment. And as one who has used schools and hospitals in both countries, I say it can't come a moment too soon. If LA is known for smog, Scottish public services should be renowned for smug. Judging by the policies being promoted by the Tories the successes of Milburn and Reid in health and Adonis in education will be fully maintained by their Tory successors.

Third, Blair captured and occupied the vital ground of law and order. Tough on crime, tough on the causes of crime was a great soundbite, but an even greater strategy. More police with increased powers. New offences for anti-social behaviour combined with early intervention in chaotic families. More prisons – with private competition to drive down costs. A mixture that meant that the outgoing Labour government was the first since the war to hand over to its successors a lower crime rate than the one it inherited. These policies weren't popular with liberal elites but they resonated with the public as they directly addressed "street issues". It is interesting to see the Tory response. The first third-party group to attack the government are the chief constables. It has come to something when the police are fighting to keep powers given by a Labour government. A more slow-burn issue is the abolition of ID cards. The first were to be given to foreign workers. They would have provided an instant way to identify illegal workers. It's not clear the majority of the public will be happy when they realise that the coalition are dismantling a key barrier to preventing illegal immigration.

This, though, links to New Labour's biggest failure. Despite the tough talk there is no doubt Blair and Brown failed to be sufficiently firm but fair on immigration and welfare. Late in the day an Australian-style points based system was introduced. But, tellingly, when Labour policy was set out to focus groups they responded – "that's really good, when did David Cameron announce that?" And, by the end of last year, 40 per cent of voters identified Labour as standing for immigrants and lone parents. On welfare, the squeezed middle ended up asking: "Why do I have to get up early to pay taxes to support those people upstairs who keep me awake at night?"

Moving on from New Labour means keeping the strengths, but dealing directly with the negative. And that, in truth, was what Mandelson was talking about. While burying New Labour, he also proclaimed the need for the next phase – New New Labour.

It was a deliberate, feline intervention in the Labour leadership campaign. The last 16 years, he was saying, have not been a dead end. The future will not repudiate the past, it will build on it. New Labour is dead, long live New Labour.