The contours of the Labour party are changing. Previous Labour conferences since the mid-1990s were largely a stage-managed cult of the personality where serious policy discussion was stifled. At Manchester the mood was still supportive of the leadership, but distinctly conditional on demands being met for a shift in policy. And the voice coming through for the first time in more than a decade was that of the radical left.

Two factors lie behind this. The financial meltdown of the past few months has ended the deregulatory, privatising, free-market agenda that has dominated western capitalism since the 1980s and has starkly reemphasised the power and relevance of the state in stabilising modern economies. The new financial architecture will require a more regulated structure. Some radical demands were strongly pressed at Manchester. As a result, Alistair Darling promised to bring forward quickly new proposals for banking regulation when parliament returns.

Paradoxically, President Bush’s nationalisation of some of the central pillars of US capitalism - AIG as well as Freddie Mac and Fannie Mae - has reinforced these demands for state intervention. Of course Wall Street regards this process as a disagreeable but temporary necessity before normal service resumes and the markets roar off again. But the mood is shifting in both North America and Europe and a more robust supervisory state is likely to play a permanent role. The days of flimsy light-touch regulation and alleged market self-correction are over. This tilts the centre of political gravity to the left.

A second factor behind this shift is fear of a Tory return. For Labour to have a fighting chance at the next election, radical demands surfaced at Manchester for significant policy change. Not just a crackdown on short-selling, but action against speculators in general. Not just providing local authorities with social grants to build 2,500 social housing units, but allowing them to borrow against their housing stock as collateral to launch a housebuilding programme for the 1.7m applicants on waiting lists. Not just more money for the poor for energy efficiency, but a windfall tax on enormous oil and gas company profits to help the poorest pay soaring energy bills now.

For the first time for years at a Labour conference, resolutions were carried in favour not only of the windfall tax but also of a cap on energy prices and for a much tougher regulator. Calls were made to think again about a public sector role. Radical motions were also carried removing the UK opt-out of the working time directive limiting working hours to 48 per week. Repudiation of the City bonus culture was vigorously supported, a demand acknowledged by both Darling and Gordon Brown.

The effect of all this should not be exaggerated. It won’t lead to instant changes of government policy, not least because the procedures devised by the party establishment slow down or dissipate initiatives from the conference floor. But the mood and content of the agenda displayed a strong radical edge, in contrast to the policy torpor of the past decade. It was made repeatedly clear that the party wanted unity in the face of the Tory threat, but the quid pro quo was a significant shift of policy to the left.

After the Blairite interregnum the party is clearly returning to its normal political structures, reflecting its left and right wings. The media were so focused on David Miliband’s ambitions that this much more fundamental point was lost. It led to obsession with all the personal nuances of his speech and almost complete neglect of its content, which was far more significant.

On every point of foreign policy he stuck rigidly to the American line. In Afghanistan he demanded the defeat of the Taliban, without seeming to realise that long-term stabilisation of the country is impossible without negotiation with them. He denounced (rightly) the appalling atrocity at the Marriott hotel in Islamabad, without appearing to accept that it was provoked by President Zardari’s overclose relationship with the United States. He condemned Russian interference in Georgia but neglected the main pressure that gave rise to it: the encirclement of Russia through the US-inspired movement of Nato bases up to Russian borders. And he made no mention of Palestine at all, because the Americans show little interest in resolving the issue.

There are now clear differences of emphasis between left and right within the party, not only on foreign policy but also on welfare reform, civil liberties and housing and energy policy. The real meaning of the 2008 conference is that the party manifestly wants a shift to the left, not as an ideological indulgence but as a condition for winning back the huge losses of Labour support. For that reason it is likely to be heeded by the leadership.

The reemergence of the Labour left can be dismissed as a return to the old tunes of the 1980s. It is nothing of the kind. The collapse of the prevailing model of finance capitalism - that markets left to themselves can solve all problems - calls out for fresh thinking which is unlikely to come from the right since it’s their model. That must be the role for the left. The message from the conference is that the party wants them to get on with it.

Michael Meacher is a former Labour environment minister

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