Liz Kendall interview: ‘We have got to face up to the catastrophe’ Read more

Labour should support an in/out referendum on Europe, embrace business and stop advocating high taxation “just to make a point” according to the leadership candidate propelled into frontrunner status among modernisers following Chuka Umunna’s sudden withdrawal.

In an interview with the Guardian, Liz Kendall urged Labour to confront the scale of the “catastrophe” at the election, and also warned that the party faces the risk of extinction in Scotland. “One more parliament like the last means we might be unable to form a majority government ever again,” she said.



Kendall argued that the party should not support a top rate of tax of 50p on a permanent basis. She said Labour should instead target running a surplus in the public finances. “The party should have reined in spending before the crash,” she said, “even though the crash itself was not caused by overspending by the Labour government.”



The MP said she was a passionate pro-European, but added: “We should have that referendum, make the case and take on the argument, early, strongly and passionately.” Labour had been opposed to a vote on EU membership before the election; following David Cameron’s surprise victory a poll is expected in 2016.



Kendall was speaking after Umunna, the shadow business secretary, shocked the party by abruptly announcing he was departing from the contest, saying he had not foreseen the level of scrutiny and attention a leadership contest would bring.

We should have that referendum, make the case and take on the argument, early, strongly and passionately Liz Kendall

Umunna’s aides said there was no specific damaging personal story that was due to run, but he had been distressed by newspapers pursuing relatives of his girlfriend, including her 102-year-old grandmother.

Umunna, the son of a Nigerian-born businessman, had only formally entered the race on Tuesday and said: “One can imagine what running for leader can be like, understand its demands and the attention, but nothing compares to actually doing it and the impact on the rest of one’s life. Consequently, after further reflection I am withdrawing my candidacy.”

He has never disguised his love of clubbing, music and smart suits leading his critics to claim he was too urbane to appeal to an alienated working class.

One of Umunna’s supporters, Ben Bradshaw, the former Labour culture secretary, said: “We are the only democracy where politicians that wish to serve their country face such scrutiny of their extended family and friends. If we have lost this huge talent, that is really tragic.”

Umunna had been certain to pass the threshold of nominations from 35 MPs required to stand. The departure of the man once dubbed “the British Obama” increases the chances of the two other modernisers seeking to get on the ballot paper – the shadow education secretary, Tristam Hunt, and the shadow international development secretary, Mary Creagh.

Chuka Umunna withdraws from Labour leadership contest Read more

Many MPs are undecided, although Andy Burnham, the shadow health secretary, and Yvette Cooper, the shadow home secretary, will find it easiest to gain nominations. Their biggest millstone may not be their ability, but whether their association with a previous Labour government leads the party to look to a new, less experienced generation.

Kendall, clearly deciding to present herself as the candidate of change, insisted the 2015 election was a catastrophe. “We should have won a majority. We had fewer seats to win back than any opposition in a generation yet we ended up with the worst result since 1987.

“We have got 100 seats to win back, and only 24 of these have a majority of less than 3,000. It is going to get tougher. Where Ukip has come second , it has got a base that it can build from. The Liberal Democrats can only go up. Our vote is ageing.

“People are much less aligned to political parties than before and we are going to have a biased review of constituency boundaries that that will make the task even harder. This is not a minor issue of cobbling together a new coalition of voters, it is about profound change in our party if we are to change our country.”

Justifying her uncompromising language, Kendall said: “I will tell it like it is.” She added: “I reject turning party unity into an article of faith – real unity cannot be achieved by trying to fudge the issues or dodge the difficult questions about the causes of our defeat.”

The leadership candidate said it was time for the party to break with the past. “The reason we did not win the argument on the economy was because we came to the issue of fiscal probity far too late. Effective stewardship of the public finances has to be at the heart of everything we do.”



Labour risks talking itself into a catastrophe | @guardianletters Read more

Kendall said that she supported a welfare cap on the total amount of benefits received, arguing that “voters in my constituency do not feel people who are not working should get more than those in work”. Arguing that the public do not trust Labour on welfare, she called for a fundamental rethink, saying that “too often people are being left without the tools they need to get themselves back into work”.

She also admitted that the lack of support from business was very damaging, saying: “Businessmen could not share our agenda because too much of the time they heard us attacking business and giving the impression that profit is wrong. We have to be as passionate about wealth creation, skills, life chances and world class education as we are about wealth distribution.”