The fall has been almost as spectacular as the rise. In the space of 13 years, New Labour triumphantly won and comprehensively lost the respect and trust of business leaders. It is a crucially important development. Tony Blair's early success in re-establishing cordial relations with Britain's boardrooms was crucial. It moderated the party's image and made it electable after the industrial warfare of the 1970s and 1980s. But the causes of the present collapse in confidence are no mystery.

The problem is that Blair was too simplistically pro-business. That trait, combined with his determination to govern free of union dominance, a naïve belief in the powers of expensive management consultants and his personal admiration, even awe, of rich men led to the present calamity.
This breakdown of relations with the business community has potentially grave implications for Gordon Brown's premiership. So how did all this happen?

Ironically, it was Brown, more than Blair, who invented New Labour. He grasped early on that the collapse of communism in 1989 meant no party that promised a socialist utopia through State control would ever again be elected.

The Third Way, an ameliorated Thatcherism combining the economic dynamism of the US with the social protection characteristic of Europe, was born. Brown's genius was to articulate a truth traditionally ignored by the left. Before you can redistribute wealth, you must generate it. Labour had to cosy up to business to make the new dogma work.

Labour began the much-mocked "prawn cocktail'' offensive to convince sceptical City figures that the party would not return to the corporatism, industrial confrontation or economic mismanagement of the past.

The strategy went into overdrive when, in 1994, Blair announced Labour would be "the party of business.'' At the 1997 election, 58 businessmen and women endorsed Labour's manifesto. New Labour started the long reconciliation with the CBI.

But by shunning the unions, Blair quickly found himself short of money. He filled the gap by turning to rich individuals known euphemistically as ''high value donors.'' But as the seven-figure cheques rolled in, the contradiction in Blair's approach was horribly exposed. The regulator was now financially dependent on the regulated.

It emerged that Formula One tycoon Bernie Ecclestone gave the Labour Party £1m. When it turned out the government had subsequently changed the law to allow motor racing to continue to take tobacco advertising, Blair protested that he was a "pretty straight kind of guy" but was shamed into returning the money.

For 10 years this fatal flaw in the New Labour arrangements has festered until it erupted in the "cash for honours" affair. It brought catastrophe in the form of Scotland Yard to the door of Number 10. Wealthy donors have run a mile. As if the sleaze outbreak were not enough, New Labour's philosophy was afflicted by a further weakness. The target-driven, management consultant-led public service reform that Blair bought into in a big way, has failed to deliver.

The NHS is the prime example. In 10 years, the government has tripled annual health spending to £105bn. Yet the service still had to sack 20,000 nurses and close 177 accident and emergency departments last year.

Meanwhile Brown, perhaps conscious the unions had a 30 per cent say in choosing the next leader, has in the past two years moved Labour left with higher state spending, more company taxes and extra red tape on business. Sure, the City has prospered. But, critics say, mainly because foreign financial centres such as New York suffered even worse policies from their own governments. And anyway, the City doesn't do the past, it does the future. With Labour trailing the Tories in 75 of the last 80 polls, the smart money is backing a different horse.

Caledonia Investments chairman Peter Buckley recently announced a £60,000 donation for David Cameron's election coffers saying he preferred "to encourage a credible opposition" to a government characterised by "a lack of integrity and incompetence."

As a result of the donor dearth, Brown is about to enter Number 10 with Labour more than £20m in debt. The party is forced to rely on the unions for £3 out of every £4 it spends. Four powerful leaders—Dave Prentis (Unison), Paul Kenny (GMB), Derek Simpson (Amicus) and Tony Woodley (TGWU)—are now consulted on all important Labour policy plans. And Brown has just bowed to GMB demands to tighten the tax noose around private equity firms.

Despite his own belief in the "enterprise culture, then, a Brown government could potentially be less business-friendly than its predecessor.