The first thing all of us from the left of politics should say is, "Thank you". Thank you to Gordon Brown for his 10 years as chancellor, when we had the most benign and stable economic environment of any similar period in our history. Thank you for taking a world lead in helping to avoid the economic meltdown becoming an unstoppable depression. It is an act of considerable dignity and statesmanship to have stepped aside in recognition of the need – whether with or without the Liberal Democrats – to forge a new future for the left of British politics.

My belief is that it is untenable to create a rainbow alliance, dependent not just on the vagaries of a Liberal Democrat party prepared to get into bed with whoever is offering the most, but also the Nationalists or Ulster representatives – who could pull the plug on a coalition of the defeated at any time. This would result, almost inevitably, in a massive defeat for Labour at the hands of an electorate who would blame us for flouting the will of the substantial minority.

Of course, the deficit reduction strategy has meant that the party leadership has felt the obligation to take any and every opportunity to stop the Conservatives undermining the legacy of the last 13 years. The devastation they are bent on causing to the most disadvantaged communities in Britain must be avoided. But we can do this by building a sustained campaign outside as well as inside the palace of Westminster.

Let's face it. As far as the public are concerned, we have become the establishment. Time now, therefore, to renew, to re-engage with our radical roots, to reach out and engage those of goodwill in offering a genuinely progressive agenda, laying aside the artificial division of old Labour and Blairism.

It is still entirely possible that, despite their flirtation with us, the Lib Dems will join in some form of partnership with the Tories. This would change the landscape of British politics for the foreseeable future. It is our job to grasp this as an opportunity and not see it as an unmitigated disaster.

Protecting the people we serve would have to be uppermost in our minds. That means exposing every duplicity, every supposed "saving" that turns out to be a cut in services. It means mobilising progressive forces at community level to resist the damage which would otherwise be done to the fabric of our society.

It also means a reassessment of what, at a very basic level, the Labour party is for, on whose behalf it speaks, whose voice it articulates in our globalised, consumer democracy. This is a more profound question about the role of government – and the argument that Labour needs to articulate in the period ahead.

The focus may continue to be on the arithmetic in parliament. But politics is about the participation and engagement of the wider citizenry – to miss that point would doom us to irrelevance.

It used to be the case that government's role was the defence of the nation, foreign relations and basic law and order at home. In the 20th century, this changed to encompass the welfare state, the economy and, with the exception of the 1980s, unemployment and social regeneration.

To fail to understand that we are moving into a new phase would be to fiddle while Rome burns. We need a government which, yes, guarantees basic standards in public services, but which also steps in to protect people's wellbeing as they take part in our consumer democracy – particularly online. A government which does not pretend it can cure all of our ills, but which enables people to equip themselves for a thriving, rapidly changing society.

This is not David Cameron's "small government". It is very different – a government that is on the side of the citizen, and citizens themselves who understand that, just as government does not seek to influence every aspect of their lives, so it is not responsible for everything that might be wrong in their community. It is about giving people the wherewithal to make decisions for themselves – and people being ready to shoulder that responsibility.

The Labour party's survival will be by dint of becoming a party of the future, not a rump harking back to the past. If we do not change, we will suffer greater reversals in the years to come. I don't believe that this will be our fate – we have too many forward-thinking people within our ranks who know that Labour must never abandon the aspirant or desert the most vulnerable. Now is the time for them to step forward and show that they understand the scale of the task that lies before us in reconnecting with the British people and articulating the voices of those whom our party was founded to represent.