Labour has 'no God-given right to exist' and could do 'even worse' at next election, Liz Kendall warns

Ms Kendall has positioned herself as the 'candidate of change' in what is expected to be a three-horse race against Andy Burnham and Yvette Cooper

Liz Kendall set out her approach as a Labour leader, pledging to spend 2 per cent of GDP on defence (Rex)

Liz Kendall, the Blairite candidate in the Labour leadership contest, issued a stark warning that the party has “no God-given right to exist” as she warned that it could do “even worse” at the 2020 election than in this month’s “catastrophic defeat.”

The mountain facing the party was illustrated when John Curtice, the leading psephologist, said a Labour victory at the 2020 election was “improbable.” He calculated that Labour would need a huge 12.5 per cent lead over the Conservatives to regain power if the Scottish National Party maintained its support north of the border.

Ms Kendall, an MP for only five years, positioned herself as the “candidate of change” in what is expected to be a three-horse race against Andy Burnham and Yvette Cooper, who were both Cabinet ministers in the previous Labour Government.

Unveiling her platform in a speech to Westminster journalists, Ms Kendall made a surprise move to outflank the Tories on defence. She said Labour would ensure the UK met the Nato target to spend 2 per cent of GDP on defence – a pledge that David Cameron and George Osborne have refused to make as they plan further spending cuts. She said: “Under my leadership, Labour will no longer stand idly by while the Prime Minister weakens our country and allows the world to become less secure.”

Ms Kendall disowned the agenda pursued under Ed Miliband’s leadership, saying it was a “fantasy” that the British public had shifted to the left. “I want to lead a Labour Party that’s genuinely as passionate about wealth creation as we are about wealth distribution,” she said.

Arguing for radical public service reforms, she said she would not “waste time obsessing about school structures”, adding: “If a school is providing a great education—whether it’s a local authority, academy or free school – we will back it up. Full stop.” She criticised Mr Miliband’s pledge of an energy price freeze and cut in university tuition fees.

Criticising trade union bosses, Ms Kendall said: “This election can't be about who the general secretaries say impresses them most, or who makes the Labour Party comfortable, or who is the best candidate in 2015. It must be about who has got the best chance of winning and changing the country in 2020. That means facing up to the depth of our defeat and the scale of change needed. This defeat was epic, we lost by a magnitude few predicted or imagined.”

She said labels like “Blairite” belonged to the past and described herself as “a moderniser who is true to our [Labour] values.”

Ms Kendall argued: “We don’t just need to change a little bit here or there where it’s easy….We need a completely different approach.”