Jon Cruddas: Stop these rogue elements rampaging on the Labour right

right-wing factions can be dangerous things. Just ask the Pope: recently, Benedict XVI overturned the excommunication of four bishops, which many people saw as a deliberate political move, aimed at appeasing traditional elements of the church. But there’s a problem: one of the four bishops, Richard Williamson, is a notable Holocaust denier, so the Vatican has tried to distance the Holy Father from this part of the controversy by claiming he didn’t know about Williamson’s views. Another problem: where does this leave the doctrine of Papal Infallibility, first stated in 1870?

In the Labour Party, it’s the doctrine of “Market Infallibility” that’s triggered manoeuvrings on the right, and is now causing plenty of trouble. Since the weekend, the press has been awash with precise briefings against Harriet Harman for having the temerity to develop a policy agenda of her own, flagged up by her hard line on City bonuses – hardly seditious, in the current climate. Last week, anyone sympathising with strikers in the energy sector was dismissed as xenophobic, protectionist and anti-European. The attacks are aimed not just at anyone remotely of the left, but Gordon Brown and his allies; in the midst of renewed leadership gossip. For example, some of those who threw David Miliband in front of a train last year are generously offering to help Alan Johnson out of his siding.

It’s easy to miss the political context behind the tittle-tattle, but there is one. In another newspaper yesterday, Tony Blair’s former speechwriter Philip Collins crystallised the politics that runs with the poison in an article headlined “Labour’s positioning has left it left of sensible”. The thesis was simple enough: Brown has crashed in the polls because he has turned down the volume on Blairite public service “reform”; is lukewarm on “freeing schools from the control of local authorities”, and has failed to grasp that “Labour was never going to win on the economy”.

The solution: hit the rewind button by reactivating an agenda that the recession looks to have all but killed, and hope that people can focus on something other than jobs, repossessions and banking failure. No, I don’t get it either, but to his credit Phil doesn’t hide behind anonymous briefings.

Power is draining away from those who are briefing the press; there’s a painful sense of loss, mixed with a dreary nostalgia – not for the idealistic, gently social-democratic Blairism of 1997, but the market-obsessed version that kicked in around 2001.

The ashes of this approach are all around us. Rather than “reforming” the public sector, New Labour’s beloved Private Finance Initiatives are being squeezed out of existence by the credit crunch. The old wonkish talk about “personalising” services, squashing Local Education Authorities and using the alleged dynamism of private firms, won’t just founder against the current public mood, but actively contradict it. The global crisis is immovably in the political foreground, and Labour needs to come up with credible answers to the great issues of our time. As ever, “it’s the economy, stupid”.

This is not an argument exclusive to the left. Listen to the Australian Prime Minister Kevin Rudd, whose election campaign was advised by Alan Milburn. He talks about the end of “free-market fundamentalism, extreme capitalism and excessive greed”, and the death of “the economic orthodoxy of our time”. Charles Clarke – no radical leftie – recently said: “The grand story is very clear: 30 years of Thatcher/Reagan, tempered by Clinton/Blair, are over.”

Plenty of Labour people know what that means: a new, thoroughly modernised agenda. We need to talk about not just fair pay, but fair taxes, and urgently address insecurity at work. Our reaction to the financial crisis should be proactive; we should make the case for remutualising some banks. Instead of the craven decision on the third Heathrow runway, we should be advocating a jobs-creating Green New Deal. These are the priorities the moment demands; the politics of the past won’t do.

The Labour Right has a noble history – as a source of reliability, honesty and dependability for the leadership. It has usually understood changing times. But a rogue element has developed since the departure of Tony Blair. Their personal attacks, anonymous briefings and confused diagnoses are symptomatic of an inability – or simple refusal – to grasp the end of an era. With echoes of current events in the Vatican, the Doctrine of Market Infallibility is collapsing: as Blair used to say, “we should leave the past to those who live in it”.

Jon Cruddas is the Labour MP for Dagenham