We now have two thirds of the results of the British local government elections and we are waiting for the outcome of the London Mayoral contest.

Expectations of New Labour success were so low that anything better than 100 council seat losses was going to be regarded as a good result for Labour - of course, the survival of Mayor Livingstone might still allow some face-saving.

In fact, New Labour did much worse in the country at large. The small parties did not do well and the Tories made inroads into the North from which they had been effectively excluded since the landslide to New Labour in 1997.

With only two thirds of results declared, New Labour was already down by 163 local council seats and the voting was (at this stage) 44% Tory, 25% Liberal Democrat and an appalling 24% for New Labour on a 35% turnout (much the same as last year).

The battle for London is essentially a struggle between Tory suburbs (Johnson) and New Labour inner city (Livingstone). Elsewhere the polling is taken as referendum on Gordon Brown and David Cameron as Party Leaders.

As we write, Livingstone and Johnson are neck and neck but a win for Livingstone, an old political enemy of Brown’s, may suggest that a strong traditional labour and left wing position in the cities might do better electorally than New Labour’s neo-conservatism.

Many Labour voters and activists have still not fully understood the degree to which New Labour represents traditional, even radical, conservative space on the political compass.

They have remained naively seduced by a common tribal history into believing that when they vote Labour, they are voting for a party of the centre-left.

But forget the ‘spin’ from either side, what is really happening here is that normal politics is resuming. The Tories are learning to recapture the soft centre ground and economics has become an issue as anxieties drive people back to more traditional left and right positions.

The Left, in this context, is split between authoritarian (New Labour) and libertarian (Liberal Democrat) parties of now equal strength, whereas a Tory nationalist and a Tory libertarian can still feel tolerably happy within Cameron's Party.

Cameron has thus not really moved to the Left at all (despite some attempts to portray him as doing so), he has merely embraced the strong libertarian element in society which shares its space with an important part of the Left.

The story now is that New Labour has lost working class votes on economic matters [the 10p tax rate is only one part of this general distrust] while left-libertarian voters have abstained or are effectively on strike.

This has pushed New Labour into third or near-third place, depending on the final result.

Meanwhile, anecdotal evidence suggests that union militancy is growing - especially under the new Unite banner. Many left-libertarian activists are migrating into the Green Party (especially in London) or into a vague sort of limbo where the talk is of new movements and parties.

Although there are a few old soldiers involved in this world of street protest and grassroots discussion, the truth is that the Generation of 68 is now thoroughly past it and seen, quite rightly, as history. 

This new liveliness on the Left is coming almost entirely from students and under-30s.  There are similar movements in Europe.

New Labour is now squeezed on two fronts – it no longer convinces on the Right and patience has run out on the Left. It would seem that triangulation can last for a period but when it breaks down, it really does break down completely.

On the one side, the centre ground will find further reasons to move to the Tories or to the Liberal Democrats if New Labour appears to concede too much to the workerist Left.

On the other, while workers will come home to New Labour if they get economic concessions, the libertarian Left is strongly tempted to other solutions rather than remain with a failed New Labour project.

In some ways, the trades unions have the greatest problem of all - no different from that in other countries where balancing the need to deal with the establishment and with street ideological movements are perennial choices.

The squaring of street rebellion, worker demands and the good governance of the State is far more serious in Cairo than in London - but that does not make it trivial in London.

This will eventually lead to a Tory Government because all three of the players, 'street', trades unions and political establishment, not merely distrust each other but are now all making excessive demands on each other.

Can Gordon Brown recover ground? He can patch things up here and there. Perhaps the economic down turn will not be so bad and will hit only people who will vote Tory in any case. Perhaps the Tory and Liberal Democrat leaderships will implode.

Anything is possible in politics. But the fundamentals do not look good and it is not entirely his fault. He was left a poisoned chalice by his predecessor (though the Blairites will never admit to this) and he has fallen between stools. 

He could have maintained an authoritarian stance and treated the Left like dirt (as Blair did) or he could have used the opportunity to organize a 'new' New Labour coalition.

A re-triangulation of the Party could have taken libertarian ground from Cameron and from the Liberal Democrats and re-engaged the working population in the Labour Project before the trades unions did.

The economic crisis, Iraq and Afghanistan could have been opportunities for dramatic acts to establish a new ‘ten year vision’. Sadly, Gordon Brown raised expectations and then fell back into the Blair model, only more so. 

Without Blair's authority or charisma, he permitted internal factionalism to emerge and took the Party for granted (although Blair’s neglect had already brought it to the edge of organizational and financial implosion).

The only thing that can save him now is if all the people treated like dirt by Blair decide to forgive and forget and if all workers decide to make economic sacrifices. It is just not going to happen like that.

So, in less than a year, Brown has squandered Blair’s legacy, always the legacy of a master illusionist in any case. Like the banking system, Blairism required a willing suspension of belief.

The Tories are now back in pole position, they are moving North again, the ‘progressives’ are split into authoritarian and libertarian camps and are about to go to war with one another and the economy is decidedly dodgy. The Prime Minister should probably resign.

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