The BBC's exit poll was revealing. 72% of voters supported raising income tax by 1p to pay for better education. 58% said the new Government should redistribute wealth (only 15% shared the opposition of New Labour and Tory to this idea). 74% wanted no further privatisations. An ICM poll asked Labour voters what the most important factors in their decision were; 71% named health, education or welfare state issues. A Gallup post-election survey showed that most voters believed taxes would go up under all three major parties; 86% thought taxes would go up under Labour - which did not deter them from voting Labour anyway. Anthony King, one-time midwife to the SDP, admitted: "The conventional wisdom of a whole political generation - that voters would never vote for tax raising parties - has turned out to be wrong" (Gallup reported that 72% of voters wanted public services extended "even if it means some increase in taxes"). It therefore seems fair to argue that on May Day, people were voting not for "New Labour" but for improved public services paid for through progressive taxation. They want a concrete change towards a more just and equal society, not mere rhetoric or a "change in tone".

Labour's campaign appears to have made no difference to the result, but it did succeed in setting a dangerous precedent. The narrowing of policy differences between the parties reduced the contest to an exchange of insults and a presidential-style focus on "strong leadership". If that trend continues, public cynicism will mount, along with voter abstention. Without a healthy democracy in which voters are offered honest and distinct choices, socialists cannot achieve any of their goals. However, the scale of the victory has undermined Blair's struggle to dampen down expectations. Roy Hattersley observed: "to succeed, Tony Blair has to fulfil hopes that he did very little to excite and to keep promises that he did not make." The right wing economist Samuel Britain mischievously but correctly pointed out that under New Labour "UK capitalism will be far more unconstrained than the electorate really desires". Here emerges the principal contradiction facing the new Government: between the aspirations and confidence generated by its victory, and the neo-Thatcherite direction to which its inner core is committed. Two days before the election, Blair let it be known that there would be no increase in the value of benefits for the unemployed, the disabled, or the elderly. If such a proposition were put to Party members in a ballot, it would be overwhelmingly rejected.

Previous Labour victories have been immediately followed by an average 2.6% fall in equity markets. This time, the Financial Times Stock Exchange index rose by more than ten points to a new high. Richard Branson assured business colleagues that New Labour "will be more pro-competitive than the Tories". In his victory speech Blair promised to "govern as New Labour" and to work closely with business - no mention of the trade unions, workplace rights, minimum wage or an attack on poverty.

Of course, the change of government does make a difference and already steps have been taken which we would never have seen under a Tory Government. We warmly welcome the moves toward an independent food safety agency, abolition of the assisted places scheme, the moratorium on hospital closures, the reduction of VAT on fuel, restoration of union rights at GCHQ, the foregoing of ministerial salary rises, the proposed windfall tax, the pledge of an "ethical foreign policy", the promise of a London elected authority, and above all the speedy moves to establish a Scottish Parliament and a Welsh Assembly.

However, these positive developments are outweighed by a number of disturbing and in some cases disastrous initiatives - the shelving of the Freedom of Information Act and House of Lords reform, the punitive and repressive approach of Jack Straw's Crime and Disorder Bill, the appointment of the pro-EMU chairman of BP (a company deeply implicated in human rights abuses overseas) to supervise Labour's European policy, the downgrading of the Minister for Women, the refusal to return the Elgin marbles, the packing of the new Defence team with Cold Warriors whose first loyalties are to Washington and the arms industry, and Peter Mandelson's designation as minister for meddling in everything. The Government's most significant move is giving responsibility for setting interest rates to the Bank of England, a move which signalled Gordon Brown's commitment to neo-liberal orthodoxy. People did not elect a Labour Government to concede immediately one of its major economic levers to an unaccountable and undemocratic institution. Is low inflation to be the altar at which this Government, like its Tory predecessor, worships, regardless of the consequences for employment and economic growth?

Frank Field's appointment to the social security brief is ominous in the extreme. "Welfare reform", touted by Blair as a major theme of the new Government, means cuts in the value of benefits and in entitlement to them. Field's technique is to blind people with pseudo-science; his philosophy, however, is crude and clear: more stick and less carrot to winnow out the undeserving poor. Harriet Harman spelled out the threat saying that the welfare state wasn't "for people who just don't want to work." She attacked Peter Lilley for letting claimants "rip-off the system"!

Gordon Brown's budget - promised within weeks - represents the first major test of both the new Government and the labour movement. According to a report by the Institute for Fiscal Studies, taxes must rise to maintain current spending commitments. To achieve the Tory budgetary targets, Labour will either have to increase taxes on corporate wealth or make cuts in public spending more savage than anything ever attempted by Margaret Thatcher. Given the economic philosophy outlined by New Labour during the election campaign, we should brace ourselves for the worst - and prepare to oppose it at every step.

It is important that the abolition of the internal market in the NHS is genuine, that the release of capital assets is on a sufficient scale to allow local authorities to begin tackling the housing crisis, that local government grants are reallocated on a fair basis, that benefits for asylum seekers are restored, that the primary purpose immigration regulation is abolished, that a new bill is introduced to establish workplace rights and re-establish some union rights, and, above all, that a minimum wage set at a meaningful level is speedily and effectively implemented.

While urging the Government to implement the few positive promises in its manifesto, we have to work patiently to coax the Party to break out of the constraints imposed by the manifesto - constraints which will prevent the Government from doing the things voters elected it to do. Reinstatement of the Liverpool dockers (the Government is a major shareholder in the MDHC) is a pertinent and essential demand. The coalition mobilised behind the dockers will continue to grow, though it is hard to predict what form it will take. Taking up the dockers' case - and their broader platform for social justice - inside the labour movement could provide a rallying point for the alternative to New Labour. Within the Labour Party and the broader labour movement, we have to demand, as a top priority, the restitution of free and frank debate. There must be no more pariahs. Unless the movement rediscovers the habit of independent and critical thought - and the courage to articulate it - the new Government will be forced to navigate without guidance from the essential compass of its rank and file base. We cannot allow the tired old cry of "oppositionist" to deter us from speaking what we know to be the truth. It is vital that left MPs promote alternative programmes and possibilities for the new Government.

If working people are not to be demoralised and sink into inertia, there must be voices insisting loudly and clearly that there is an alternative, and backing that assertion up with facts and arguments. History has placed a heavy burden on our comrades in the PLP. The pressure on them to conform will be enormous. But the long-term price of conformity - the elimination of the progressive option from British politics - is simply too high. For the Socialist Campaign Group, the coming months will be a challenge. It is also clear that there is a need for a much wider and looser grouping of the Parliamentary left.

All those who believe in redistribution, who wish to defend and extend the welfare state, who want to strengthen trade unions and restore Party democracy need to be talking and working together. Equally important, they need to co-ordinate their efforts in Parliament with like minded trades unionists and Party members. Rather than hope for the best from a Labour leadership that has written them out of the script, unions need to renew independent political action. Blair says trade unions will be treated just like any other pressure group in society. Trade unions should respond by taking him at his word and exercising their right to apply pressure in accordance with their organisational weight in society which remains enormous.

At its Easter Conference, the NUT voted to organise a national demonstration "to secure additional funding for education" before the Chancellor's autumn statement. UNISON and others unions should join in, adding demands for fresh resources for the NHS, local government and other public services. With the setting up of the Low Pay Commission, there is an urgent need to restart the national campaign for a minimum wage that will put an end to poverty pay, not merely re-enforce it. UNISON, the TGWU and the GMB have strong and long-standing commitments on this issue. It is time to rally their members and demonstrate in the most forceful, public manner what they expect from the Low Pay Commission.