Eastleigh was never going to be a Labour win, but it would have done a good deal better if people knew what Labour really stood for compared to the other parties, particularly on the economy.
The one central issue on which all others turn is how to handle the deficit, yet here Labour continues to represent merely a pale shadow of Tory policy.
There are still far too many senior figures from the discredited new Labour network who continue to repeat the mantra of "financial discipline" - as if we hadn't had a bellyful of this already from George Osborne.
Seventy per cent of cuts are still to come, yet we have nothing but an imminent triple-dip recession to show for it.
Labour pays lip service to a growth strategy without giving any idea how it might seriously be achieved, since merely tweaking the Osborne cuts agenda - cutting less far, less fast - is just a recipe for economic decline, but a bit more slowly than the Tories.
The problem is not, as some in Labour seem to think, simply changing the definition of inflation (including assets as well as consumer prices) or enhancing productivity (when the economy's contracting and joblessness is sky-high) or redefining "property-owning democracy" (when poverty is fast rising) or funding a capital endowment for citizens at 18 (when they can't get jobs).
It's about something much more fundamental than that - whether the obsession with balanced budgeting is really sensible when it leads straight to stagnation and whether tolerance of sky-high unemployment as a semi-permanent part of the landscape isn't a "price worth paying" but rather an economic abomination to be avoided at all costs.
What Labour needs now to make clear beyond any doubt is that the Osborne massacre of the innocent isn't inevitable and that killing a few less and doing it in a slower and more kindly fashion is no answer either.
The only way to deal with the deficit in the pit of a deepening recession is through a huge programme of public investment where it is sorely needed - social housing, improved infrastructure, a low-carbon economy. This should be funded by quantitative easing (instead of throwing the money at the banks), taxation of the ultra-rich (who caused the recession and have contributed nothing to remedying it), instructing RBS and Lloyds (after all, we own them) to prioritise lending to major agreed manufacturing projects or borrowing at rock-bottom interest rates to generate a million jobs within two years.
Take your pick - more Osborne, more new Labour or something the voters of Eastleigh might well have gone for rather than Ukip.
The consequences of the government's insane, counter-productive, self-defeating orgy of endless cutting are now beginning to be evaluated with some clarity for a decade hence.
The Resolution Foundation, which specialises in income analysis, has calculated that on present plans families on low or average incomes will be no better off in 2017 than in 1997, and that it may well be 2023 before their earnings return to 2008 pre-crash levels.
Moreover the Institute for Fiscal Studies (IFS) has estimated that job losses in the public sector, already 300,000 since 2010, will quadruple to about 1.2 million by 2017-8, a third more even than that predicted by the Office for Budgetary Responsibility.
The IFS has also shown that continuing with cuts of this magnitude for such an extended period, which is historically unprecedented, will dramatically change the shape of the state.
Despite these horrendous cuts the deficit is not decreasing but is still actually growing because the fall in tax receipts due to economic stagnation exceeds the public spending cutbacks.
So it seems as if the Tory aim of all this fiscal agony isn't reduction of the deficit at all, but rather the downgrading of the state once and for all to one gigantic privatised marketplace.
The implications of this contagion have yet to be fully realised.
With the eurozone now voluntarily imposing upon itself similar contraction to that adopted by the Cameron government, a desert of unemployment stretches forward at least till the middle 2020s.
The vision of home ownership, the dream of the "squeezed middle," recedes out of sight, with the 2011 census already showing a drop of 0.8 million homebuyers with mortgages compared with a decade previously.
University education, the preferred career route to upward mobility, is being closed down for those families on lower incomes by the sharp rise in tuition fees and the fear of unpayable debts.
The issue is how long this can continue without an explosion.
Defence Secretary Philip Hammond is now trying to head off any further defence cuts by loading even bigger cuts of to the welfare system.
That could mean that tax credits and housing and other benefits for people of working age, already capped at a maximum increase of 1 per cent for the next three years, could be frozen altogether and/or more disability and carers' benefits which at present cost £20.8 billion annually could be means tested.
What is not on the government's radar screen is taxing the rich, even though that is eminently deserved and the least painful way to raise significant extra cash.
More than half of the £3.7bn raised from capital gains tax last year was paid by just 3,000 people realising capital gains of more than £1m.
Why not raise the rate of capital gains tax from its present incongruous 28 per cent to the 40 per cent rate which prevailed throughout the Thatcher era?
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