This was always Tony's position. Blow the principles and beliefs the party stands for, shift to a position it doesn't really believe in, in order to get votes.
Having both major parties pushing a similar agenda only really works when the public is fed up of the incumbents but want more of the same. Otherwise they stick with the status quo.
What the Labour party needs is to stick with their basic beliefs, they can change the details and shift slightly over time, and await the public becoming aware of the downside of 'everyone for themselves' values.