The rivals who can no longer be ignored: Labour must recognise the threat posed by growing support for the Liberal Democrats, argues Peter Mandelson

AT A MEETING of Labour's National Executive after the Newbury by-election in May, one member expressed alarm at the party's failure to stop its supporters deserting to the Liberal Democrats. A proper inquiry was needed into Labour's disappointing result. To my knowledge, no such investigation took place, but, none the less, it was decided that Christchurch would be different.

In this second by-election, greater staffing, two political 'minders' instead of one, back-up from Walworth Road and more money were assigned to stop defections to the Liberal Democrats. Labour's battle plan was to attack the Tories and the Lib Dems equally and vigorously. The campaign team did their job energetically. The effort was well-directed and executed. But it was futile. Labour won 1,453 votes, a handful more than in Newbury, having started from a higher share of the 1992 poll.

It does not take great nous to understand why. Labour voters wanted to defeat the Tory candidate and in this seat they had the chance to do so.

Of course, the Lib Dems have been lucky to fight by-elections in two constituencies where Labour was particularly weak by southern standards. In future by-elections, where the two opposition parties are more equal, the result is expected to be very different. And any tactical voting on this scale will not be seen in the general election.

Should Labour's political strategists, therefore, take a relaxed view of both by-election results, in the expectation that the Government will keep digging its own grave and ease Labour's route into power?

I suggest not. Labour needs to recognise that the electoral climate is changing fast and that the party is facing fiercer competition, whatever its current opinion poll lead might indicate. It needs to step up a gear to avoid falling behind.

There is the obvious point that the Conservative government might yet engineer a political turnabout. With fresh direction, an outbreak of traditional Tory unity and a Kenneth Clarke- or David Hunt-led dive for the centre ground, they could succeed in staging a recovery.

More worrying is the upsurge of Liberal Democrat support in the country as a whole. Labour can live with this as long as the Lib Dems are eroding Tory votes. But if Lib Dem support becomes uncomfortably high, a more evenly divided opposition in certain seats could help the Tory get back. And if, heaven forbid, the Lib Dem surge increases, Labour could be in trouble in a number of important seats.

In southern England, Labour's support, according to the polls, is already lower than the Liberal Democrats'. This loss of ground cannot be ignored if Labour is to be sure of gaining the seats in Essex, Kent, Berkshire, Hampshire, Wiltshire and Gloucestershire it needs in order to form a government.

Better local tactics and campaigning methods are needed to expose the fraudulent and fragile basis of Liberal Democrat support. For example, Labour should focus on its record on local councils and 'pavement' politics, as well as challenging the Liberal Democrats' lack of scruple in what they say to different people as they garner votes from any quarter. But, to be successful, these tactics must be more clearly linked to Labour's wider efforts to modernise its policies and strengthen its appeal among 'floating' voters.

While some voters are turning to the Liberal Democrats out of new-found loyalty, most are doing so because they have no traditional bonds with Labour and are not yet happy with the party's policies and style. Few are backing the Lib Dems out of genuine conviction. Their confidence in Labour's direction must be bolstered.

New social and welfare policies being developed by the Social Justice Commission are an important part of the strategy, as are the government and constitutional reforms advocated by John Smith. In this respect, we must practise what we preach, hence the critical importance of Mr Smith's proposals for replacing the trade union block vote with one member one vote. Labour's toughness on crime as well as the causes of crime is also finding a huge echo in every community throughout the South.

Of central importance is the new thinking about taxation and economic policy. 'We do not look for increased opportunities to tax. We will not tax unless we increase opportunities for people,' said Gordon Brown last week. Tens of thousands of voters in the South, as well as elsewhere, will withhold their support until they are persuaded that Labour, in governing sensibly and efficiently, will not tax or spend more for the sake of it.

What's lacking in Labour's approach is not the policies but success in spelling out the basic themes and messages underlying them.

In both Newbury and Christchurch, many voters felt, and said, that they were hearing from Labour for the first time. This demands a higher level of year-round campaigning in key seats. It also requires more concerted national communications by the party, to lay the foundations for further policy detail nearer the election.

Labour's policies are as relevant and needed in the South as elsewhere. When voters hear them, they like them and will support them in the knowledge that, unlike the Liberal Democrats, only Labour will have the chance to implement them.

The writer is the Labour MP for Hartlepool.