Neal Lawson: Why we think the Prime Minister should go now

The problem with New Labour is that it is neither new enough nor Labour enough

At last the Labour Party is starting to have a debate about its political future. Yesterday the Prime Minster said that the politics of the Compass group would lose Labour the next election. Let's be clear. Labour almost lost the last one.

A whole string of super-marginal seats now stand on the precipice of a Conservative revival. The strength of the economy meant that New Labour under-performed in last year's general election. That was a consequence of the Iraq war and unpopular domestic policies such as tuition fees and the commercialisation of our schools and hospitals. Last year's 36 per cent of the vote turned into 26 per cent in last week's local elections. With Labour Party membership at a record low and falling fast and the trust and the respect of the electorate melting away, the call to stick with Blairism up to the wire of the next election can only make matters worse.

The situation is also made worse by instability at the top. This is a direct result of the announcement, now 18 months ago that the PM would not serve a full third term. No organisation can be effectively managed if everyone is thinking about who will lead it next.

Events of the past week have led to a shift in the Prime Minister's position. His statement to Labour MPs last night that he would allow "ample time" for his successor to take over before the next election is a step in the right direction -- but probably needs to be formalised.

The debate is about a change of leader but more importantly it is about a change of political direction. That's why the party and the Government need a timetable that allows the successor enough time to change Labour's direction.

But does this process of renewal mean that we are set to lose? Far from it. The problem with New Labour is that it is neither new enough nor Labour enough. It isn't true enough to our core values of equality, liberty and solidarity. But neither is it sufficiently in tune with the times. Blairism is stuck in the groove of 1994 when the world has moved on.

Attempts to paint Compass into an "old Labour" corner just won't wash. Yes, we believe in the values of equality, liberty and solidarity - but we are the modern left. We were formed only in 2004, to encourage renewal around a clear set of left values adapted for modern times.

We want to see democracy extended so that people can take control of their lives and their world as citizens not just as consumers. We welcome the end of deference and a more complex world and know that democracy must be localised. We support the growing emphasis on the politics of wellbeing and a "post-materialist" agenda that values both the environment and greater equality. We want to see people gain more control over their working lives

This is both a radical and hugely popular agenda. Ultimately Mr Blair wants to stay in power for long enough to entrench his commercialisation agenda and stop the democratic left politics of Compass flourishing.

What parents want is a local comprehensive that is good enough. They know that competition between schools means that it is the heads that pick the best children, not the parents that pick where they want their children to go. Patients want to know that doctors and nurses are putting their health interests first and are not distorting the service they offer to beat-off competition from the hospital down the road.

Public sector workers and the Government should be on the same plane - working together. Not least because these services do need to be modernised and personalised. This cannot be done through competition, but only through the co-operation of employees and users.

People want our democracy renewed. The relationship between government and parliament and parliament and the people needs to be rebuilt on the basis of trust. It is too late for this to happen under Mr Blair's premiership - not least because of the war in Iraq.

Uncertainty has been locked into the Labour Party since Mr Blair said he was leaving in October 2004. It will only be released when he eventually goes, having helped pull Labour back from the disaster of the 1980s. But times have changed and our politics need to change with them. The leadership issue will go up and it will go down but it will not go away.

There is an opportunity to recast the progressive consensus forged in 1997 around the opportunities and challenges we face in 2006, but that can only happen around a new leader. And it must happen before David Cameron becomes too strong. Labour should be confident that a modern left politics can be both popular and radical. Let the debate begin.

Neal Lawson is chair of Compass, a left-of-centre pressure group, and was an adviser to Gordon Brown