New Labour era is over, says former Blair adviser

The New Labour era is over and the party needs a new approach to combat a revived Conservative Party, a leading Blairite has said.

Patrick Diamond, a former Downing Street policy adviser, says that Labour must work out "what comes after New Labour" in order to set the agenda in the new period of British politics that began with the election of David Cameron as Tory leader. He calls for a more redistributive tax policy to reduce the financial burden on the low-paid.

His call came amid signs of differences between Mr Blair and Gordon Brown, the man most likely to succeed him as Prime Minister, over how to respond to Mr Cameron's election. Downing Street wants to hold its fire because his policies are so unknown, but the Brown team is keen to paint him as a traditional Tory committed to spending cuts who is trying to "rebrand" his party, not change it.

In a Fabian Society pamphlet, Mr Diamond urges Labour ministers to resist the temptation to "defend every dot and comma of New Labour's record", arguing that a candid debate about the successes and shortcomings of Labour's record since 1997 is essential for the party to find the "new ideas and fresh policy energy which are badly needed".

As Mr Cameron tries to invade Labour's traditional ground on social justice, Mr Diamond says that Labour must show this is incompatible with the Tories' "minimal state" Thatcherite ideology.

But he argues that Labour will need to be clearer about its vision to inspire voters and win the argument that giving people more control over their lives depends on an "enabling state" which breaks down inequalities and the barriers to people fulfilling their potential.

Controversially, the former Blair aide calls on Labour to address head-on the issue of tax, which is regarded as a no-go area by both Mr Blair and Mr Brown. Mr Diamond says Labour should challenge the Tories' interest in a flat rate of income tax by introducing progressive reforms to reduce taxes for the worst-off.

He writes: "The tax system is deeply iniquitous because of the burden it imposes on the lowest paid. The rich enjoy generous tax relief. The poor pay a high proportion of their income in indirect taxes, and the worst-off pay the highest marginal rates."

The pamphlet also warns that Mr Blair's plans to promote choice in education could "further erode the position of the least advantaged" unless the Prime Minister's reforms are more clearly rooted in a social equality agenda. It calls for education to be given priority over health in the next government-wide spending review.