To answer the question, no, I don' t think Labour has totally wrecked the UK.
I think, unfortunately, they've had to become New Labour in order to get elected, which for me is still far preferable to a Conservative government.
For me, the greater problem is our supposed democracy. It's far too distant, and the attempts to devolve power have not been thought through. Not only do we have the West Lothian question - whereby MPs with Scottish Constituencies can vote on legislation which solely affects England, and therefore they're not held accountable for - but now we have Ruth Kelly talking about further devolution of power to local/parish councils. Without the money to back up these proposals, I suspect this might just be a case of devolution of responsibility, rather than power.
First past the post also encourages apathy, as does the lack of any formal way to show disapproval of all candidates for a constituency.