New Labour complete journey to become centre-right party

There is an irreconcilable conflict tearing at the heart of the Labour Party and it can no longer be truthfully said that New Labour is the party of the Left. Bit by bit, New Labour has chipped away at its traditional leftist policies on education, health, civil liberties, wealth redistribution and law and order until very little remains.

Yesterday, one of the last bastions of the Left fell. James Purnell's Green Paper on welfare reform went further even than the Conservative government in the 1980's would have dared. At long last, there is to be a concerted effort to do something about the scandalously high number of incapacity benefit claimants (2.5 million) and to tackle the problem of those in society who would prefer to claim the dole rather than accept available work. With this announcement, it can be said that the Conservatives - in Westminster, at least - have won the ideological argument. Certainly, James Purnell is being hugged by centre-right commentators as one of their own.

The battle, however, is not yet done. For the unions, who find themselves for the first time in a long tim holding the whip-hand over the Labour Party, this latest lurch to the right must have been a slap in the face. The welfare of workers, the unemployed and the incapacitated goes to the heart of the very meaning of the labour movement.

The unions and the Labour Party will sit down for their well-publicised pow-wow next week to discuss future policy, where the unions are, apparently, to present a list of 130 policy changes that they would like to see implemented. They have not spelled out their implicit threat to withdraw funding from the Labour Party if their "requests" are not met simply because they have not needed to.

The dispute between the unions and the Labour Government is likely to be a slow-burner at first as the arguments are played out behind closed doors and is only likely to spill over into the public domain come the Autumn. Neither side will be willing to back down but one must ultimately prevail. The result will be a choice between financial or electoral meltdown as the Government is acutely aware that any union dictated leftwards turn is likely to prove a disaster with those voters that New Labour need to retain most.

The debate will be a vicious one as the two sides fight for the soul of the Labour Party. There are likely to be casualties on both sides before the dust clears and the battle is done. David Cameron must be rubbing his hands at the prospect.