Former PM says party has to be ‘for ambition and aspiration as well as compassion and care’

Tony Blair has insisted that Labour can recover from its disastrous general election defeat only if it reoccupies the centre ground of British politics, proudly championing a pro-business agenda and bold new ideas to reform public services.

As the party attempts to come to terms with a devastating result that saw the Conservatives returned to office for five more years with an unexpected Commons majority, the former prime minister and three-times election winner said Labour has to be “for ambition and aspiration as well as compassion and care”.

While generous about Ed Miliband – praising him for showing “courage under savage attack” and campaigning brilliantly – Blair made clear in an article in the Observer that he believes Miliband’s left-of-centre agenda alienated the business community and failed to appeal to those wanting to get on in life. In an unashamed call for the party to return to the approach of New Labour which Miliband abandoned, Blair wrote: “The route to the summit lies through the centre ground.

“The Labour party has to be for ambition as well as compassion and care. Hard-working families don’t just want us celebrating their hard work; they want to know that by hard work and effort they can rise up, achieve. They want to be better off and they need to know we don’t just tolerate that, we support it.”

His intervention sets the stage for weeks of bitter arguments over the direction the party should take as it seeks a new leader who can take the party into a 2020 election and ensure it does not spend three terms out of office.

Labour must be the party of ambition as well as compassion | Tony Blair Read more

Seeking to avoid any impression that he is stoking conflict at a low point in the party’s history, Blair made the striking admission that Miliband was right to champion the cause of inequality and accepted that during his two-and-a-half terms as prime minister he paid the issue insufficient attention.

“Ed was absolutely right to raise the issue of inequality and to say that Labour should focus anew on it. This will stand as his contribution to the party’s development. In so far as this was an implied rebuke to my politics, I accept it. But we still need ways relevant to today and tomorrow, not yesterday, to tackle it.”

He said that Labour could be convincing in advancing the case for greater equality only if it does so within a wider pro-business agenda. “We have to conduct the big argument on the wealth-creating potential of the macro-economy, not only the targeted campaign on the injustices of it. So we were proud in 1997 to put forward the case for Britain’s first minimum wage. But we could never have an election on it unless set within a broader framework. The same is true with zero-hours contracts.”

Facebook Twitter Pinterest Chuka Umunna, shadow business secretary, is calling for radical ideas. Photograph: Christian Sinibaldi/The Guardian

One of the favourites to succeed Miliband, the shadow business secretary Chuka Umunna, has set out his stall as a modernising, centre-ground, pro-business candidate. Umunna is one of half a dozen prominent Labour figures believed to be considering throwing their hats in to the ring to succeed Miliband. Others include Yvette Cooper, Andy Burnham, Tristram Hunt, Liz Kendall and Dan Jarvis.

Umunna, effectively offering an outline manifesto in the Observer, is openly critical of many aspects of Labour under Miliband. He also calls for radical ideas to demonstrate his commitment to a new form of politics, including a suggestion that MPs move out of the current Houses of Parliament to a purpose-built headquarters.

Addressing Labour’s failure to attract middle-class voters, Umunna said: “We allowed the impression to arise that we were not on the side of those who are doing well. We talked a lot – quite rightly – about the need to address ‘irresponsible’ capitalism – for more political will to tackle inequality, poverty and injustice (and we must never give the appearance that we are relaxed about them).

“But we talked too little about those creating wealth and doing the right thing. That’s why I have always argued you cannot be pro-business by beating up on the terms and conditions of their workers and the trade unions that play an important role representing them. But you cannot be pro good jobs without being pro the businesses that create them. In spite of the fact our policy offer was pro-business, the rhetoric often suggested otherwise. And sometimes we made it sound like we saw taxing people as a good in itself, rather than a means to an end.”

Where Labour went wrong – and what we must do to put it right Read more

He says Labour treated large sections of the electorate as “no-go areas” and had a narrow focus on just over a third of voters. “We tried to cobble together a 35% coalition of our core vote, disaffected Liberal Democrats, Greens and Ukip supporters. The terrible results on Thursday were the failure of that approach writ large. We need a different, big-tent approach – one in which no one is too rich or poor to be part of our party. Most of all, we need to start taking large numbers of votes directly from the Conservatives.”

Putting radicalisation and political reform at the heart of his message, he said: “We must be the party of drastic political reform. For example, we should be saying: it is time for parliament to move out of the relic that is the Palace of Westminster and into a new, modern, accessible site fit for purpose, for a serious debate about the electoral system, for an elected Senate in place of the outdated House of Lords.

“We should start by changing our party: cultivating networks of supporters and civic society organisations and making it more of a force for progressive change in people’s communities every day, not just every five years. It’s worth noting: if Labour had as many members as the SNP, relative to population, it would have 1.2 million members.”

Labour MPs meet in parliament on Monday for the first time since the election to discuss the forthcoming elections for leader and deputy, before the national executive convenes on Wednesday.

On Saturday night arguments were breaking out between those calling for the elections to be concluded before the Commons breaks for the summer recess and other who believe the new leader should be announced at the party conference in September. Shadow cabinet member Ivan Lewis insisted the election must not be rushed. “Anyone who suggests we can learn the right lessons from this dreadful election result by putting a new leader in place within six weeks is not acting in the interests of the party,” Lewis said.

“The leadership election should take place in September with the result announced at the beginning of our party conference. In the meantime, while leadership candidates are making their case to the party, it is the responsibility of shadow cabinet members to do their job in holding the government to account and rebutting Tory attacks.”

Labour veteran John Prescott was less generous towards Miliband than Blair had been, launching a blistering attack in an article in the Sunday Mirror on his failed “presidential-type” election campaign.

The former deputy prime minister poured scorn on the Labour leader’s “Hell, yes, I’m tough” boast and said the party had paid the price for failing to defend the economic record of the last Labour government in the last parliament.