Considered an extremely safe Labour seat, it had been held for 34 years by Gwyneth Dunwoody, the longest-serving female MP, until her death earlier this year.

The 17.6 percent swing to the Conservatives came despite Labour doing everything possible to maximise its advantage, including selecting Dunwoody’s daughter, Tamsin, as its candidate.

Only two weeks before, the Brown government had announced a £2.7 billion tax cut package, designed to placate voters’ anger over its decision to abolish the 10 pence tax band, which hit more than 5 million low earners.

Despite this, with turnout a relatively high 58.2 percent, the Conservative Party candidate Edward Timpson took 20,539 votes, up from 14,162 in the 2005 general election. Labour’s vote collapsed by almost half, from 21,240 to 12,679. Its sole consolation was that it was not beaten into third place by the Liberal Democrats, whose vote also fell, from 8,083 to 6,040.

“This was a classic ‘send a message’ by-election, and a sad one for us,” said Labour’s Steve McCabe.

The result is far more than that. The Financial Times opined: “Although Crewe is depicted as a traditional Labour stronghold, its make-up is more complex, part ‘true blue Cheshire,’ part working class. Labour’s unbroken hold over it was both a tribute to Gwyneth Dunwoody, its popular local MP, and New Labour’s ability to straddle the political centre ground. The loss by Dunwoody’s daughter Tamsin is a sign that the alliance that swept Labour to power is fragmenting.”

But Labour has not only lost the support of those “swing” voters—many previously Conservative supporters—that gave it its landslide victory in 1997 and has since maintained it in power. What marks out the result in Crewe is the extent to which former Labour voters switched directly to the Tories.

Reports in the days and weeks before the by-election were filled with personal accounts of long-time Labour supporters stating that for the first time in their lives they would vote Conservative.

This dramatic sea-change confirms that Labour is considered so opposed to the concerns and interests of working people that even the Conservatives appear attractive by comparison. Many of those interviewed remembered bitterly the period of the Thatcher Conservative government, but they were even more hostile to Labour’s 11 years in office.

Writing in the Guardian on Labour’s expected defeat, the pro-New Labour columnist Polly Toynbee cited recent research by Professor Tony Travers of the London School of Economics on the May 1 elections in London.

His analysis found that “the white working class has abandoned Labour. All Labour’s signals have been wrong for them,” she cited, adding, “Travers finds many millions of middle- and low-paid people who are young or middle-aged are right to feel Labour has done nothing for them—because those without children at home have had nothing, and they know it. They pay too much tax, they start paying tax on very low incomes, the minimum wage is very low, public sector pay is screwed down for five years—and then they see Labour ‘celebrating’ the mega-rewards of the rich. It may be daft to vote Tory in their anger, but they are not the deserters: Labour has deserted them.”

Such an appraisal should not come as a revelation. A central premise of the “New Labour” project initiated by Tony Blair and Gordon Brown was that it did not matter how far the party removed itself from its traditional working class constituency, or how right-wing it became, working people would remain loyal because they had nowhere else to go.

For years, the likes of Toynbee bought into this claim. Now, so completely has Labour effaced the old distinctions between itself and the Conservatives—becoming for an entire period the preferred party of the City of London and the super-rich—that the former taboo on “switching sides” no longer applies.

According to reports, the Conservative campaign plan changed as this became apparent. The Financial Times reported that the Tories had “sensed a fundamental shift in Crewe. At first, their campaign plan was aimed at voters in Nantwich and more well-heeled villages surrounding Crewe. But after the first week they refocused, realising they were making inroads into solid Labour areas.”

Labour is completely incapable of stemming the rot. A publicity stunt mounted to point up Timpson’s privileged background (he is the multimillionaire son of the Timpson family’s shoe repair and key-cutting business) backfired badly. Conscious that far too many of its own supporters had similar backgrounds (it subsequently transpired that one of those dressed in top-hat and tails had attended a private school), and anxious not to alienate the well-to-do, the ploy was disowned by the government and central office, leaving Labour’s electoral campaign floundering.

Even the party’s attempts to brand the Conservative candidate “Thatcher boy Timpson”—a reference to a speech by Tory leader David Cameron on taxation—fell flat. After all, the Labour Party has claimed Thatcher as one of its own, with both Blair and Brown going out of their way to sing the former Conservative premier’s praise and to proclaim themselves as her true inheritors.

In the end, Labour’s campaign tried to outflank the Conservatives from the right by centring on law and order and anti-immigrant measures.

The pro-New Labour network, Compass, complained that Crewe represented “a new low” in Labour “ill-advisedly demonising its opponents, speaking the crass language of authoritarianism and clumsily trying to close down the issue of immigration.”

The party was resorting to the “hysterical maligning of young people” and “advocating police harassment,” it complained, citing the electoral pitch of Dunwoody: “I want the Police to harass yobs, get in their faces.”

“Perhaps most poisonous of all was the Crewe campaign’s attempt to make political capital out of issues involving Crewe’s large Polish population, via a claim that the Conservatives are opposed to ‘making foreign nationals carry ID cards.’ This smacks of the poison spread by the far right. In addition, it misrepresents the debate. The Tories are opposed to making anyone carry or be issued with an ID card. So, in the face of massive public unease about the project, should be the Labour Party.”

Labour now faces another by-election in Henley, the former seat of newly elected Conservative Mayor of London Boris Johnson.

In the lead-up to the Crewe ballot, Trade Union Congress leader Brendan Barber called on the government to “reconfigure its DNA” and take a stand against “casino capitalism.”

The government must challenge “corporate and personal greed at the top,” he said, in order to “reconnect” with “ordinary working people” who are “angry that they are struggling to pay the bills as a super-rich minority is allowed to float free from the rest of society.”

Entirely beholden to the banks and stock markets, Labour is incapable of making any such change in tack, even to salvage its own political fortunes. With little prospect of any substantial shift in policy, there will be renewed demands for Brown to stand down, in the hope that a shift in personnel will be enough to restore the party’s standing.

There were already demands being made for Brown to go, even before the Crewe result was known. Writing in the Guardian, for example, on the eve of the election, Jenni Russell stated that the lack of an apparent alternate leader should not prevent Brown’s removal. “The party’s unpopularity has hit an all-time low,” she wrote. “It cannot recover under Gordon Brown. He has to go, and go quickly.... The party must find the courage to depose him.”

Such calls, if heeded, would result in nothing more than an orgy of internecine feuding between contending right-wing forces. The desperation they express is amplified by the fact that it is not even a year since Brown was elected overwhelmingly and unopposed by the Labour Party, as the man who could salvage its fortunes in the wake of their collapse under Blair over the Iraq war.

So brief was Labour’s respite, however, that Brown even put off an early general election out of fear the government would lose it.

It was the run on the Northern Rock bank that revealed how exposed Britain is to the global economic crisis sparked by the credit crunch. A Bank of England forecast released just before the Crewe by-election projected that the UK faces its most protracted slowdown since the early 1990s, with its outlook on economic growth falling from 3.3 percent this year to 1.5 percent in 2009.

At the same time, the Home Builders Federation (HBF) warned that sales of newly built houses have “fallen off a cliff,” putting tens of thousands of jobs at risk. Chairman Stewart Baseley said, “The implications for the economy are dire. Tens of thousands of jobs are at risk, possibly even more, as the potentially massive layoffs amongst homebuilders start to filter through.”

The UK’s biggest homebuilder, Taylor Wimpey, is to close 13 offices and cut its workforce by more than 10 percent, having recorded a pre-tax loss of £19.5 million last year, compared with £406 million credit in 2006. Persimmon’s sales of new homes are already down 24 percent this year, causing it to put all new developments on hold while Redrow has laid off 15 percent of its staff.

The Crewe and Nantwich by-election marks a further shift in the ongoing disintegration of Labour. Whatever the various manoeuvres of the next months, the party is in meltdown. Haemorrhaging support and entirely dependent on a layer of self-interested, corrupt careerists—themselves riven with petty factional differences—the party is also in debt to the tune of £18 million.