By instinct and conviction, Rachel Reeves is a traditionally social democratic, centre-left Labour chancellor. When she delivers her budget next week, though, those qualities will be hard to discern. The reason for that is simple but powerful. She has become hemmed in on every side by avoidably tight commitments on taxation, spending and borrowing. Above all, however, she is hemmed in by Labour politics.

It did not have to be this way. Reeves would have had a freer fiscal hand if she and Labour had not ruled out increasing all the three main personal taxes at the 2024 election – a choice the former Conservative minister David Willetts described this week as “catastrophic”. Reeves might also have won herself more elbow room, albeit at some political cost, if the new government had moved very decisively to say that, having studied the figures, the triple-tax pledge was in fact unsustainable.

These, though, are might-have-beens. They were roads not taken. Instead, Reeves got the politics wrong. She waited until this month before belatedly starting to argue, albeit entirely correctly, that the tax pledge had to be broken if Labour was to fulfil its other commitments and to regain direction. Yet in little more than a week she had to abandon the idea in a humiliating retreat.

The chief cause of the U-turn was the politics of the modern Labour party. With Labour already sliding in the polls, MPs revolted against breaking a manifesto pledge. They even started plotting a new leadership. Party whips reported that an income tax rise would not pass the Commons, an event that could have brought the whole government down. As a result, Reeves caved.

Where that now leaves the credibility of Reeves, her exceptionally difficult budget, Keir Starmer’s government and the Labour backbenches will all become a bit clearer, limited measure by limited measure, next week. But the damage to all of them is serious – and the larger political lesson hard to miss. Starmer’s modern Labour party cannot agree about doing anything big, radical or different in domestic policy. Since it cannot agree, it is unable to govern well. It is not up to the job.

The mishandling of the taxation issue is far from the only example. Equally pivotal was June’s backbench revolt against welfare reform, which came in the wake of Reeves’s similarly unpopular cuts to winter fuel payments. In both cases backbenchers showed their power on behalf of claimants, forcing two about-turns on government welfare spending plans. Even so, 47 Labour MPs voted against the much-diluted welfare bill in July. Whether the plans were wise or not isn’t the main point here. The revolt itself mattered more. It sent the important message that this government could not deliver on welfare reform.

This week there was a frisson on a wholly different policy issue. The home secretary wants to tighten refugee policy into a stronger deterrent to Channel migrants. In her marathon defence in the Commons on Monday, Shabana Mahmood faced more doubters on the Labour benches than she did on the Tory or Liberal Democrat ones. The whips think the revolt is not big enough to upend the plans. But these are early days.

The upshot is a Labour party that does not want to cut spending, but at the same time does not want to raise taxes either, and may yet have to be dragged unwillingly towards the voting lobbies when Mahmood’s measures come under the microscope. In other words, Labour is now an alliance of positions, interests and instincts rather than a party with a unifying direction or a leader who clearly articulates an overarching plan for government. As a result, Labour has become several small parties in one.

Some of this is down to poor leadership. But not all of it. There has always been tension, even in Labour’s earliest years, between its working-class base and its white-collar and more ideologically driven supporters. More crucially, though, the old core Labour vote of the 20th century has simply disappeared, as has the industrial Britain that generated it. That old Britain will never be reassembled. Nor will that form of Labour vote.

Until the mid 1980s, as the pollster Peter Kellner and others have long pointed out, about 80% of Labour’s support came from manual workers and their families, compared with 20% from middle-class workers and their families. By 1997, when Tony Blair swept to power, the working-class share of Labour’s vote was down to 59%, while the middle-class share rose to 41%. In 2010, for the first time, white-collar Labour voters exceeded blue-collar ones.

That new imbalance continues today. The essential fact is that Britain is significantly more middle class, better educated, more outward-looking and more liberal. Yet Labour still struggles to adapt to, never mind to lead, this intricate, nuanced and continuing change.

“Why is the Labour party in a mess?” asked the social historian Gareth Stedman Jones in a 1984 essay. Among his answers, he said that the party was too comfortable looking back to the postwar Attlee years, it was too easily tempted by old forms of working-class politics, and it was neglecting the concerns and priorities of the emerging middle-class Labour electorate.

More than four decades later, every single bit of that critique is still true. Only more so. Today, Labour expends a lot of effort trying to capture working-class Reform supporters. Yet it spends far less trying to retain the support of its middle-class progressive electorate – and indeed seems to enjoy berating them. When a party like this faces in too many directions at the same time, it seems sensible to ask: what, today, is the point of Labour?