Believe it or not, I rejoiced at Peter Mandelson’s return to government. Asked to comment on his reincarnation by half a dozen radio and television programmes, I appeared on BBC News 24 and applauded his appointment — after which the other invitations were withdrawn.

I assumed that the Prime Minister had recognised Lord Mandelson’s talent without feeling any obligation to endorse his more outré definition of social democracy as represented by his enthusiasm for millionaires — not just their company but also their proliferation. Gordon Brown, I thought, does not share his ideological view. And I assumed that the Prime Minister realised that Labour’s hopes of salvation depend on the Government demonstrating that it believes in something — not that it is grubbing about for an illusory ragbag of votes from people whose concerns are as shortsighted as they are selfish. I am begining to fear that I was wrong.

My anxiety was aroused by the Government’s policy relaunch relying so heavily on “the choice agenda” for public services, which the Prime Minister rightly derided a couple of years ago. My nerves were calmed, by Liam Byrne, the Chief Secretary to the Treasury, expressing his determination to prevent “pushy parents” (like him) cornering a disproportionate share of national resources. His prescription for protecting the weak and vulnerable from the “sharp elbows” of the middle classes was not altogether convincing. But at least he recognised the problem.

The glimmer of hope was extinguished when the speech that John Denham, the Secretary of State for Communities, was to make on “public attitudes to inequality” appeared on the website of the Fabian Society. People in John Denham’s office claim that the speech — as prepared and given to the Fabian press office — was never made. Unfortunately they have no record of what Mr Denham actually said. They brush aside the suggestion than he changed the text after newspapers reported that he was going to attack Harriet Harman’s Equality Bill — a claim that is hard to justify with reference to the context.

But the charge against him is much more serious than opening up a split in the Cabinet. The opinions expressed in the draft speech represent an abdication from the principles of social democracy. Until noon on Wednesday, when the press turned ugly, they were his considered view. Not, it must be said, a carefully considered view. Intellectual confusion is the best plea in mitigation that Mr Denham could offer. But some of his ideas are clear enough. In one particular he was explicit: “The Left needs to stop holding up egalitarianism as the ideal.” That assertion misses a fundamental question. If we no longer believe in a more equal society, what is the Labour Party for?

I cannot recall any other minister making the point so plainly. Tony Blair refused to express regret that the gap between rich and poor was widening. But, usually, what Tony Crosland called “the distancing factors” — city technology colleges creating a hierarchy of esteem to replace the grammar schools’ hierarchy of notional ability; the internal market in healthcare, which clearly favours the self-confident and articulate; and student loans which (unlike a graduate tax) are a deterrent to working-class students — are dressed up as a new definition of “fairness”. We all believe in fairness and define it according to taste.

The survey on which Mr Denham built his theories concludes that the public “differentiates between those who are disadvantaged despite the effort they have made and those who have not made the effort” — a distinction between the deserving and undeserving poor that was discarded from social policy when Lloyd George and Winston Churchill introduced health and unemployment insurance a hundred years ago.

Mr Denham supports what he calls the “hard-nosed sense of fairness” and then sounds “the death knell for the purely needs-based approach to fairness”. Ignoring the needs of the undeserving poor is not even in the interests of “sharp-elbowed pushy parents”. Mr Denham also refers to the general concern about the social diseases that infest our society: petty crime, drug abuse and under-age pregnancies. There is a direct correlation — irrefutably established — between their incidence and the social and economic divisions in society. Social diseases are more prevalent in Britain than in any other European country except Portugal. Only Portugal is more unequal than Britain.

Mr Denham is frank about why he has come to his conclusion about egalitarianism. “The number of people who sign up to the traditional egalitarian view of society is simply too small to construct a strong, viable and inclusive electoral coalition.” Forget the idea that politicians with strong beliefs campaign for what they think right. Read the opinion polls. Consult the focus groups. We shall fight them on the beaches, we shall fight them on the landing grounds — assuming the idea is supported by a strong, viable and inclusive electoral coalition.

The cynicism, particularly coming from a minister in whom many of us have placed our hopes of principled government, is bad enough. But the political myopia is worse. It is the failure to possess a guiding conviction that has got Labour into its present mess. At a time when the word was acceptable, Harold Wilson said that the party was a “crusade or it was nothing”. That is still the choice before us.

Mr Denham will say in his own defence that he does have a vision of the good society and that all he asks for is “a more nuanced view of fairness and equality” — the verb “to nuance” being one of new Labour’s many contributions to the English language. He is bright enough to know that “nuancing” always turns into capitulation. It begins with David Blunkett telling the Parliamentary Labour Party that the Tory Government’s proposal for school league tables is wrong but popular and must be combated by Labour producing its more acceptable version of school regulation. It ends with Labour imposing more draconian controls on schools than the Tories contemplated. There is a time to say: “Here I stand. I can do no other.”

Labour will be reborn whatever happens next spring. The rank and file will bring social democracy back to life. But we need not wait until then. Re-establishing the party’s reputation as a party of principle provides the best hope of winning the next election. Floating voters like politicians with unnegotiable convictions. John Denham is one of the ministers who ought, and was expected to be, one of them. It is not too late for the Government, for Labour or for him.

Roy Hattersley was deputy leader of the Labour Party, 1983-92

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