John Rentoul: Purnell's flight shows his party's plight

The decision of one of its stars to quit politics suggests that Labour is facing a crisis of self-confidence

James Purnell's decision to leave the Commons is bad news. It is a small jolt to the kaleidoscope of personalities vying for political leadership over this

decade. Purnell himself was always detached from the suggestion that he might be a future prime minister. He didn't mind the compliment, but nor did he seem consumed by ambition. I thought he might be David Miliband's shadow chancellor, and guide Labour's re-renewal, but that he did not want to be leader himself.

His departure is more important for what it says about the decrepit state of Labour in general and its modernising wing in particular. Purnell implies that he thinks the party is condemned to another long stretch out of power – although he denies that this is his view. He also implies that he thinks the centrist wing of the party will be crushed by the forces of Harmanist-Ballsism after inevitable defeat in May. He accompanied Tony Blair for much of his long march to super-electability, and presumably has no desire to do that all over again.

Put another way, his stepping down does not change much the shape of this year's Labour leadership contest, but it shines an unforgiving light on the party's underlying problems, whoever the new leader might be.

His departure has already been reported as a blow to David Miliband, the favourite. Indeed, it may briefly make the Foreign Secretary look more isolated. And I understand that the two exchanged unhappy words last week. I am not sure how much notice Purnell gave his friend of his announcement, if any. But paradoxically, his departure may also help Miliband, by making it easier for him to present himself as Not-a-Blairite. But that takes us to the heart of Labour's problem. The party is paralysed by its feelings towards its most successful leader. Worse than that, it suffers horribly from believing two contradictory things: one, that New Labour was a dreadful sell-out to Tory values; two, that beating the Tories at their own game for more than a decade was the best fun the party ever had.

The best guess at the moment is that there will be a leadership contest in the summer or a bit later between David Miliband, Ed Balls and Jon Cruddas. That is on the assumption that David Cameron wins a majority. In that situation I do not believe that Gordon Brown would want to stay around, despite recent reports that he might "go on and on" in order to ease the succession of his preferred candidate, the Secretary of State for Schools. He would not want to do even one Prime Minister's Questions as leader of a defeated opposition. But Harriet Harman is another matter, as the great Alan Watkins notes on page 47. I am told that nothing would please her more than to step into Margaret Beckett's shoes and serve as acting leader until a permanent replacement is chosen. Here the calculations become more intricate than anything on Jane Austen's "square inch of carved ivory", and possibly less relevant to the affairs of the nation.

Harman would have no interest in promoting Balls's chance of winning the leadership, I understand, having recently indicated that she thinks David Miliband is the best option. But if Balls and his supporters decide that Yvette Cooper is a better bet than her husband, her position would be interesting. Cooper is an unlikely candidate, but she cannot be ruled out – and not just because I used to work with her as a leader writer at The Independent.

These calculations are fascinating enough. But there is another set of reckonings, because – parlous though the state of the Labour Party may be – the opinion polls continue to suggest that a hung parliament is a real possibility. The average 10-point lead is not enough to give Cameron firm hopes of a majority, even if it seems obvious to Purnell that the voters have made up their mind about Brown just as firmly as they had about Neil Kinnock (and in defiance of the opinion polls) in 1992.

In that situation it is possible that Alan Johnson, the Home Secretary, might be a player. I don't think he would be interested in the worst job in the world ("What, dental hygienist?" said a colleague once, and I had to explain I meant Leader of the Opposition) with a view to possibly becoming prime minister in 2014. But he might be interested in the more immediate challenge of multi-party politics. It cannot hurt that he has recently repeated his support for proportional representation – as opposed to what the Liberal Democrats grudgingly describe as the "pigeon-step reform" of the alternative vote advocated by Gordon Brown.

Yet these are issues of personality and organisation rather than of substance. Purnell has an engaging personality, although he didn't want to make a cult of it; he is not interested in organising; but he was good at substance.

David Blunkett tells the story of leading cabinet opposition to the Millennium Dome, at the dawn of the New Labour years. There was one person who explained what was wrong with the visitor numbers on which the plans were based, and who predicted correctly what the numbers would be. That was Tony Blair's special adviser on culture, media and sport, James Purnell, 27. The same man who went on to be a very good but sadly short-lived Secretary of State for Work and Pensions; had he been there earlier and longer, some of Labour's failure on welfare reform might have been remedied.

So it is on the substance of Labour's pathological loss of self-confidence that his departure sheds most light. He resigned from the Cabinet in protest at Brown's disastrous distancing from his predecessor. Purnell's leaving the stage implies that he does not believe that anyone can turn the party round in the foreseeable future. It is a fair point. You do not have to be an admirer of the former prime minister (although it helps) to recognise that the party's deep ambivalence towards him, and his political strategy which won three elections, puts it in a bit of a bind.

John Rentoul blogs at www.independent.co.uk/eagleeye