Ed Miliband did a really good job of keeping the UK Labour Party united. They still lost, proving there is more to winning elections than having everyone singing the same tune.

Labour was thrashed last week because it was seen as tactical, not principled, and out of touch with the basic needs of voters.

Former Home Secretary John Reed was probably right when he said Labour had been "on the wrong side of all the major arguments - our economic competence, on the question of creating wealth, on the question of immigration, on the question of reform of the public services". In Scotland, Labour was bashed by the Scottish National Party for being Conservatives wearing red, while in England it was thrashed by the Conservatives for being puppets of the SNP. Only by being opportunistic, not principled, can a party manage to get on the wrong side of two diametrically opposed attacks.

The phenomenal result in Scotland looks like similar surges in support we have seen in New Zealand for Maori nationalist parties when they swept the Maori seats, and to a lesser degree for the wider New Zealand nationalist NZ First party. Both occurred when everyday working voters saw Labour as out of touch with their priorities. They sensed that a middle class elite in the party secretly despised their values, and punished it.

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Miliband's Labour prioritised uniting the disaffected rather than attracting Conservative voters to switch. He ended the campaign playing to the vanity of a delusional celebrity luvvie, appearing on the YouTube channel of Russell Brand. It was the poisonous political equivalent of being aligned with Kim Dotcom. His centrepiece campaign stunt was to write his promises in stone, but on close inspection the promises were fuzzy and meaningless. You can't be held accountable for promising "a strong economic foundation".

Labour campaigned against the fiscal austerity of David Cameron's Government, until polls showed majority public support for the cuts. Unable to make a convincing Keynesian pro-growth case, and win an argument that austerity is ultimately self-defeating, Labour went to the election promising broadly the same deficit cutting track as the Conservatives.

It distinguished its fiscal policy with a couple of symbolic new taxes on mansions and the foreign rich. Instead of making Labour look pro-stimulus, these initiatives were easily marginalised as class war.

Likewise Labour spent most of the last five years making personal attacks on David Cameron, hoping that if they could make the Prime Minister unpopular, the scales would fall from the eyes of the working class. It just made Labour look like it was focused on petty politics instead of everyday concerns. Meanwhile, Miliband himself never connected with the British public and only ever got the leadership on a block union vote ahead of the wishes of party members and MPs.

Today some in Labour are asking "what's wrong with the voters?" They don't phrase it like that. Instead they say the voters were "afraid", or tricked into voting Conservative by mendacious newspaper editors. This delusion simply underlines the suspicions of working people who think the party despises them for eating the wrong food and watching reality TV.

A cultural divide has opened between the party and the people Labour was created to represent. They see Labour as every bit as elitist and out of touch as Labour's activists see the elites in Government.

Few people saw the result coming, but the last Labour leader to win an election did. Back in January, in an interview with the Economist, Tony Blair said the election might see a return to the pattern of elections before he became leader, "in which a traditional left wing party competes with a traditional right wing party, with the traditional result". No Labour leader other than Tony Blair has won an election for 40 years. Miliband did little better than Michael Foot in 1983, a disastrous ebb from which it took 14 years to reach government.

I was a young political activist living in England during the Thatcherite years. It became obvious then, as now, that Labour needed to change thoroughly to win.

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It's hard to admit you are wrong, that many of your leading personnel have failed, and that you are out of touch with the public you seek to govern. But only when there is honesty about the need for change can a party begin to prepare itself for government.

The job for any Labour party is not to abandon its traditional principles, because these are popular, but to understand that if your principles are popular and you are not, then you are not trusted to deliver on your principles. Labour needs to be prepared to jettison unpopular positions even when those are entrenched and change is painful. It must be the party for compassion, and ambition.

The defeat of UK Labour demonstrated that a 35 per cent strategy doesn't work. A Labour party of any country is unlikely to form a government by trying to assemble coalitions from within its comfort zone. It needs to reach out and create reasons for the Government's supporters to switch.