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Deborah Orr: A collapse that is long overdue

Labour deserves its fate. But the people it was supposed to represent do not

Could Hazel Blears be showing some small sign of comprehension? Resigning from her ludicrous cabinet post of "Communities Secretary", she says she wants to return "to the grassroots" and to "help the Labour Party reconnect with the British people". Is it dawning at last? Does Blears actually grasp that it is not just this Government, not just Gordon Brown, but Labour that is finished, perhaps forever?

It is all too fitting that the long- overdue collapse of this Government has been precipitated by the expenses scandal. Conservatives may have claimed for moat-cleaning and servants quarters. Their leader may have paid off the mortgage on one home, while leaving the taxpayer to pay the mortgage interest on another. But a sense of entitlement and a cavalier attitude to the subsidy of the privileged by the masses is the essence of Conservatism. Labour is supposed to challenge such attitudes, not lustily embrace them.

Blears, of course, was exposed early on as a "flipper". She paid no capital gains tax on flats she had previously designated as "second homes", seemingly oblivious to the notion that if you believe in progressive taxation, then you are glad to pay your share. Labour politicians should have used their position to abolish exemption from tax on unearned income, not to take sneaky advantage of it.

Insisting that she had done nothing wrong, Blears still tried to buy her way out of trouble. She wrote out a cheque for £13,000 and waved it in the faces of the nation. Did she not realise that a person working full-time on Labour's much-vaunted minimum wage earns less than that in a year, and still pays tax and national insurance on it? Did she not understand that people lie awake at night, wracked with worry over how they are going to pay back a loan-shark's grossly inflated £130? She and so many of her colleagues have a great deal of reconnecting to do.

Yet her resignation speech was still full of cant. Blears also claimed: "My politics has always been rooted in the belief that ordinary people are capable of extraordinary things." That's not a belief, it's a fact. And anyway, you don't help "ordinary people" to achieve "extraordinary things" by making it so damned difficult for them even to get on with the ordinary things.

Nevertheless, as an "ordinary" person, under Labour, you were invited to apply for a "tax credit" if you did something as ordinary as start a family, even if your employer was rolling in it. This travesty of a situation was actually admired by Labour's supporters, and held up as a proof of the party's progressive intent. Repulsive.

Now, 30 years on from the dawn of their last "renewal", Labour is preparing to start staggering around the wilderness again. Its politicians deserve their fate, even though so many of them are ultra-keen to avoid it, by securing for themselves a seat in the Lords, of all places. But the people that they were supposed to represent do not.

And those people are even more invisible now than they were three decades ago. They are working under contract or for an agency, detached from the culture, security and profits of the organisations for which they provide essential services, and utterly powerless to do anything but accept what little they are given – or sign on.

The most picturesque – and visually memorable – aspect of Labour's previous collapse was the Winter of Discontent, in which the most modestly paid of public sector workers rebelled against a pay freeze that had been imposed on them by the Government for several high-inflation years.

Billed as an example of how Labour could not control the unions, it was much more complicated than that. Powerful unions did secure large pay rises for their members in the private sector. The strikers of 1978-79 saw none of this largesse and were as furious about that as the most red-blooded proto-Thatcherite. But while the power of the unions was curbed – and needed to be – the powerlessness of the low-paid was never addressed, not by the Conservatives, not by Labour.

The nearest Labour ever came to arguing that having a large chunk of poverty-stricken and disenfranchised people milling round society was corrosive and destabilising was the introduction of its patronisingly paternalistic – and failed – plan to "lift" millions of children out of poverty. The rhetoric was that "hard-working families" would be supported by "making work pay". Yet beyond the pitiful minimum wage there was little or no attempt to "make work pay", except the "temporary" 10p tax band.

Poverty was merely subsidised by Labour, through the machinations of an inefficient state that knew that our burgeoning social problems – educational failure, parental abuse, violent criminality – were hugely exacerbated by lack of personal prosperity, but were too gutless to make a moral case for genuine fair pay and therefore a measure of independence from Labour's ghastly, intrusive, self- serving bureaucratic schemes.

And poverty was subsidised so badly too. There was negligible investment in an expanded housing infrastructure that would make it easier to live modestly and well, or in public transport infrastructure that would make it possible to travel and work cheaply and efficiently. Those things are more desperately needed now than ever, but the great, stupid, spending spree is over.

I don't actually understand why anyone would wish to step forward and run the country now, it is so totally screwed up. I can't understand why the left keeps arguing for huge public spending projects when there so clearly is no more money. I can't understand why economists seem to believe that rising house prices are a sign of "recovery", when actually they are a sign that the economy is not "rebalancing".

I can't understand where Brown finds the resolve every morning to get out of bed and face the day. I can't understand why there is so little realisation of how tragic and divisive the last 30 years have been, and what desperately few options are left to us. It's not just the Government that's in meltdown. It's the whole bloody shebang, and it will take another 30 years or so to fix it. Well done, Labour.