I first realised it when I saw the pictures of Alastair Campbell. The great Alastair Campbell. The man who used to decide who in the political playground everyone should pick on. One of the truly brilliant operators of the past 30 years, the man who worked the inside to win three general elections. And there he was, reduced to standing on the steps of Labour's conference centre handing out stickers calling for unity.

Handing out stickers, as if he was secretary of Yeovil Young Socialists. With John Prescott for goodness sake. And Glenys Kinnock. Not even Neil Kinnock.

I understood it then. All those people who think that Tony Blair is sitting in an airport lounge somewhere, tanned, rested, laughing at Gordon Brown's troubles, are wrong. For Tony Blair this isn't a comedy, it's a tragedy. Or as David Miliband might put it - for Tony Blair a tragedy this is.

For what we are witnessing here in Manchester is not the beginning of the end of Gordon Brown. It is the beginning of the end of new Labour.

The reason I write this is because the moment new Labour has arrived at is a moment I recognise.

Almost exactly ten years ago, when I was working at Conservative Central Office, my colleague Andrew Cooper and I produced a document entitled Kitchen Table Conservatives. Born out of frustration with the failure of the Tory party to grasp the meaning of its defeat in 1997, the paper was a call, perhaps the first, for the party to modernise.

It started with a simple proposition - it wasn't enough for the party to understand that voters had lost faith in us. We had to do something far harder. We had to accept deep within us that this loss of faith was justified. “Recovery,” we argued, “cannot begin until we understand that a lot of things people said about us before the election were true. That is why the perceptions have been hard to shift. We were out touch. We had stopped listening. We were undisciplined and divided. We didn't have any clear idea of the direction in which we wanted to take Britain.” The context of politics had changed utterly, “but we carried on regardless”. And voters would not turn to the Tories again until they could see that at last we had got their message.

Listening to the speeches and talking to Labour politicians at the conference I can see that they have reached a very similar stage. They have a hazy grasp of what the voters think about them. But they think the voters are wrong.

Perhaps I can help them. The voters are not wrong. And thinking, even secretly, that they are wrong never, ever, ever, ever works. It never works. It never works.

Let's start with this. It is not the economy, stupid. In 1992 James Carville, Bill Clinton's campaign guru, put up a sign in his campaign HQ. It was intended to focus Clinton's staff on the key issue. It read: “It's the economy, stupid.” This has become a golden rule in politics. Many politicians are economic determinists believing that political fortunes invariably follow economic ones.

Yet what was true in 1992 in America is not always true. I remember watching Michael Heseltine explain in 1997 why the Conservatives would win the election because Britain was booming. It turned out that instead Britain was booing. Labour needs to understand that Carville's sign is not true here and now.

Labour did not become unpopular because of the economic crisis. Simple polling will show you that I am right. A big majority of swing voters say that they do not believe Britain's economic troubles are the fault of Gordon Brown. And Labour's difficulties began long before those of the economy.

So if it isn't the economy, what is it? Ten years ago in our kitchen table Conservative paper, written at a moment when Tony Blair was more than 15 points ahead in the polls, Andrew and I thought we could see three failings that might eventually make Labour unpopular.

The first was that Labour was spending a great deal of money on public services without reforming them. At the time this was shrewd - the public didn't want market reforms and they did want more spent. There was, however, a small problem: spending more without proper reform would not work. The improvements would not live up to voters expectations. And they would become angry. They wouldn't blame themselves for this failure - remembering their resistance to reform - they would blame Labour. And there would be a change in mood. Fury at Labour, greater acceptance of reform and a change in attitude toward government spending.

The second failing was that Labour believed “there is a political solution to every problem”. They couldn't see a social issue without intervening. This made good headlines in the short term, but in the long term would stoke an anti-politician feeling. People would believe new Labour had betrayed them and had turned out to be just another bunch of politicians.

And finally there was this: “When people begin to feel really let down by the Labour Government, it is likely that the one thing they will most loathe is the slick over-packaging.”

I think this decade-old analysis is a pretty good summary of where new Labour now is. The reason why I point out that we came up with it years ago is not to make us sound clever. It is to fortify my argument that the Government's current difficulties are not a passing economic phase, and that a speech of his life or a photocall with a banana, or even two bananas, will not save them. The problem lies deep, deep in the history of new Labour. And it will not go away until voters think Labour has changed fundamentally.

If you doubt this, consider what happened last summer. When Gordon Brown became Prime Minister there was a brief period in which voters accepted that perhaps he represented change. Labour's popularity soared. Then it dawned on the electorate that Brown was not change and their popularity plummeted.

So to win again, Labour has to change. And to change it has to accept that voters criticism of their failings - on public services, on spin, on all their tiny micro-interventions - are not only a fact of political life but fair and reasonable.

And that is why the national mood is so threatening for new Labour. That is why Tony Blair is not laughing. For new Labour politicians the change is hard: they have to be self-critical, abandon favourite clap lines, accept attacks they have previously regarded as insufferable.

Meanwhile, it is the Left that looks tanned, rested and sitting there laughing. Because for them, you see, accepting new Labour's mistakes is easy.

daniel.finkelstein@thetimes.co.uk

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