The North-South divide that could scupper Labour's re-election hopes

The New Labour leader to be elected tomorrow will be warned that he will inherit a disastrous loss of support in the south of England which could scupper the party's hopes of an early return to power.

New research shows that Labour faces "crippling weaknesses" in the south and Midlands, where the party won only 49 of the 302 seats at this year's general election and the Conservatives are firmly in the ascendancy.

Voters in the south no longer see Labour as the party of fairness and believe they get "little or nothing" back from government from their taxes, a report to be published next month will argue. This suggests that Labour will not automatically reap electoral rewards from the spending cuts to be imposed by the Coalition Government.

Southern Discomfort Again warns that Labour faces a repeat of the unpopularity in the south which kept it out of power in the early 1990s. It argues that Labour's biggest problem is not the loss of its "core vote", as Ed Miliband has highlighted during the leadership election, but its need to woo the middle classes, as his brother and main rival David has claimed.

The pamphlet, by the Labour-affiliated Fabian Society and Policy Network thinktank, admits Labour has lost ground among the DE bottom social group but says it will only restore its electoral fortunes if it performs better among white-collar and skilled workers, who are strongly represented in marginal seats in the South and Midlands.

"Arguing that Labour should concentrate on mobilising its traditional support ignores the reality that the DEs now amount to no more than a quarter of the electorate, while the C2s and C1s make up nearly half," says the report by Patrick Diamond – a former Downing Street policy adviser under Tony Blair and Gordon Brown – and Lord Radice, a Labour peer who chronicled the party's "southern discomfort" in the 1990s.

Although some Labour figures have portrayed its election result this year as better than expected, the authors insist it was among the worst in the party's history. "We need to understand why the party performed so disastrously, and why the 1997 coalition unravelled in such spectacular fashion," they say.

Polling by YouGov for the study found that only one in three (32 per cent) of southern voters were clear about what Labour stood for today. In contrast, two out of three (66 per cent) understood what the Tories represented after David Cameron's drive to "detoxify" his party's brand. Thesevoters had a clearer picture of the Liberal Democrats than Labour.

In 1992, floating voters were aspirant and upwardly mobile, but today the group is more cautious about their prospects, naming their priorities as security and a better future for their children. Only 15 per cent are confident their children will be able to buy their own home and 17 per cent confident their sons and daughters will fulfil their educational potential without building up large debts. Only 37 per cent are confident of having a good standard of living in retirement.

Worryingly for Labour, the research found that the Tories are ahead of the party on economic competence and making "fair cuts", as the Coalition Government has pledged. Some 47 per cent of voters in the south believe that public spending under Labour was largely wasted and did not improve services. Labour is seen as closer to benefit claimants, immigrants and the trade unions, while the Tories are regarded as closer to homeowners, the middle class and people in the south.

"If Labour does not restore is reputation on the key issue of economic competence, it will not earn the right to be heard on its wider aspirations for a better society," the report warns.

"Only on the basis of listening carefully will Labour find a path back to power. This does not mean replacing policymaking with focus groups or slavishly pursuing the opinions of key voters, but until we listen to what the electorate are saying, the party will never assemble an election-winning coalition."