Lord Falconer: People are fed up with the Government. We need to make changes

Will Lord Mandelson leave the Lords and be a candidate for the Commons at the next general election? In truth, I have no idea. His dominance in the Lords over all comers makes it understandable that the House in which most major events in politics happen would like to have him. And it is understandable some would like to see him back in the Commons.

But there are a number of more important things for Labour to be thinking about before we get to this point. The message of the polls and the recent Norwich by-election is that we have to change, if we want to escape the fatalism that grips the party. And if we do change, the Tories are vulnerable.

The current opinion polling over the last month or so produces a result of Tories 40 per cent, Labour 25 per cent and Liberal Democrats 19 per cent. A year ago the Tories were on 45 per cent and we were on 26 per cent. So we remain dismally unpopular – but doubts grow about the Tories.

These figures match the mood in the country. People are fed up and impatient with what they perceive to be a disconnected government, so they are thinking they might as well try the alternative, although it looks rather uninviting.

But if we are beaten, then so are the people who depend on us: the poorest in our society, and those who seek a progressive alternative to the stifling conservatism of David Cameron.

The public are right to want us to change, so that we have direction and definition. Are we tough on crime, or are we liberal? Are we in favour of reform of the public services? Are we supportive of the Afghanistan intervention, or do we want to get out? Do we accept the need for serious public expenditure cuts, or do we intend to continue spending as before?

We must remember that the poor are the worst hit by the recession. They want change and understanding. They will be hard to convince without change which is seen or felt. Words are not enough.

And for those doubtful middle classes to return to the fold, we need to reflect both their values and their concerns. Their values are decent and fair. Their concerns are a faltering economy and unreliable public services. We need to identify our priorities on public services – but we are losing the debate over cuts.

We must show that we remain committed to our core supporters and to the middle-class voters, whether skilled workers or the professional classes. And to do this, we must change.

Firstly, we must conduct a review of public expenditure in which we identify our priorities (jobs, health, education, properly equipped armed forces) and we identify in some detail how we deliver on those priorities. Make no mistake: this will involve cuts in some places. And the losers could coalesce against us. But we must restore the sense that we understand the harsh reality of public finances, and remain committed to progressive causes.

Secondly, we must show we understand that it is the poorest who suffer most from the recession. We should use central government help to reduce social housing rents. Housing association rents will probably go down anyway from April next year, and there would be savings in housing benefit across the board. This help impacts most on those on who the recession impacts most.

We have to change or our voice will not be heard in the forthcoming election. And we need to be heard. The voters must see the Tories' failure to develop a green agenda beyond David Cameron being photographed on a sledge, their fevered desire to shrink the state and, most crucially, their lack of focus on the real losers in the economic downturn and failing to take steps to avoid the creation of long-term unemployment, particularly among the young.

If we don't listen and change, then we will lose the next election. We might lose it even if we do listen and change, but we will at least be in a position to keep the argument for progressive politics strong and alive, and influence the direction of British politics for the next generation.

Lord Falconer is the former Lord Chancellor