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Prince William and Catherine, Duchess of Cambridge's newborn baby boy is introduced to the world's media outside the Lindo Wing of St Mary's Hospital in London on July 23, 2013. Image Credit: AFP

At not quite two days old, the new Prince is already a national debt-buster. Though hardly Keynes in nappies, the future king is doing his bit for the economy. Bells and cash registers ring in his honour as a jubilant (if hard-up) populace prepares to sink £243 million (Dh1.37 billion) into buggies, booties and beverages over the next fortnight.

This monarch-in-waiting, ushered into the world by a proclamation on a golden easel and a tide of tweets, was born on a cusp of history and modernity. His arrival heralded the legal change, allowing a first-born daughter to be Queen. He will, assuming Commonwealth leaders concur, be free to marry someone of any faith or none.

The country he will inherit will be a land of blazing summers and technological marvels, in which white Britons may be a minority. Not long ago, republicans dreamed of another tweak.

They imagined that by 2070, when this prince may expect to reign, Britain will have abolished an institution long stained by scandal. In 1817, the Morning Chronicle called upon royal bachelors to marry for the sake of the succession, imperilled because not one of the 56 grandchildren of George III was legitimate. In 1936, a king abdicated for love. In 1997, a prime minister bailed out the monarchy from what, under the modern media strobe light, seemed its gravest crisis.

Tony Blair, who announced in his first manifesto that “Labour has no plans to replace the monarchy”, helped rescue a Queen estranged from her people after Diana’s death.

The Windsors never pardoned him for that PR feat and other perceived impertinences, leaving him — and Gordon Brown for good measure — off the guest list for Prince William’s wedding.

The nadir of royal fortunes, when only 48 per cent of Britons thought the nation would be worse off without the monarchy, gave way to a spike of popularity after the Queen’s Jubilee.

The current carnival atmosphere, coupled with reverential BBC coverage of a future king’s birth, suggests that many voters, given a choice, may choose to hang on to their Royal family, but dump their politicians.

While no monarchy dare rely on the vagaries of public opinion, the British model, dating back to King Egbert in the 9th Century, has survived partly because it realises that republics take over only when monarchies have become unsustainable. Thus, the Royal family has changed, albeit in an incremental (some would say sclerotic) manner.

The “magical monarchy” may, in the view of the constitutional historian, Vernon Bogdanor, end up as a “practical monarchy”. That may not mean bicycles and bus passes, but it would rightly involve more scrutiny.

By the time Baby Cambridge takes over, funding may be tighter and more transparent. It is hard to see how the king could continue to be head of an established church to which most of his countrymen do not subscribe.

Though flying cars and glass coaches may co-exist, and though birthright may still bedevil a fairer society, any shrewd monarch knows that survival depends on renewing one’s lifeline to the people. Political leaders have yet to absorb that lesson.

In piecemeal ways, such as bringing in gay marriage, David Cameron has altered Britain, but he has not changed a Tory party whose future is contested by an immutable old guard and a hard-edged group of newcomers who see the Eighties as a golden age that must be recreated if Britain is again to prosper.

For Labour, the Thatcher years led to what Stewart Wood, Ed Miliband’s senior strategist, calls “the exhaustion of the old settlement”. Last Monday, shortly after the royal baby was born, Miliband headed to a sweltering meeting room to explain how he planned to propel Labour into the 21st Century.

Ending the automatic affiliation of three million trade unionists and persuading them to opt in to party membership looks either bold or suicidal, since only one in eight Unite members polled by Lord Ashcroft plans to join Labour. Miliband, sleeves rolled up in shop-floor style, berated Lynton Crosby, the prime minister’s strategist, and “a politics that stinks”.

While some trade unionists and activists applauded his changes, others in the audience warned of financial meltdown. Yet, others reported apathy from voters who thought all political parties seemed the same.

Those voices are the ones Miliband should heed. Labour’s plan for primaries and community-based resurgence will be popular only if the wide swathe of voters he seeks to court think change has something to offer them. This has been a grim few weeks for Labour.

The senior figures heading off for holiday speaking reassuringly of a “brief Tory resurgence” and the “nasty politics” underpinning that recovery should be fearful. Labour’s lack of clear direction and Miliband’s inability to define himself in the public’s mind have allowed Crosby too often to use him as a blank screen on to which the prime minister can project the (unfair) picture of a weak and struggling leader. However reckless Miliband’s big idea may be, his sentiment is flawless. As he told his audience last Monday: “We want to let the people back in.”

Inclusivity, or the semblance of it, has allowed the monarchy to reinvent itself down the ages, while the mausoleums of centralised politics have shut out an electorate that has learnt to glory in estrangement. Whether Miliband can really throw open Fortress Labour depends on whether the people want to “come back in” or throw rocks from the perimeter fence.

Success or failure rests much less on his planned spring showdown over union reform than on whether he can now offer a life-changing deal to voters who, by and large, are more interested in Liam Gallagher and Nicole Appleton than the battered marriage of Miliband and Len McCluskey.

As the party leaders head off on holiday, with suitcases full of solemn beach reads and half-drafted conference speeches with gaps for the “policy nuggets” being gestated (they hope) in supportive think tanks, they should keep in their minds the image of a Britain whose emotions they rarely, if ever, witness at first hand.

This Britain is a nation of tolerant optimists, who cheer on Ashes victors even if they do not like cricket, who laud a Tour de France winner even if they last cycled when three-speed Sturmey-Archer gear sets were cutting edge, and who smile on a royal birth even if they would have been content for the monarchy to expire with Ethelred the Redeless.

Some of those celebrating the arrival of the royal baby have the Union flag tattooed on their souls. For others, cupcakes, bunting and an event with which all citizens can identify help fill the chasm left by politicians who are struggling, and so far failing, to inspire hope for the future while touching human lives.

The monarchy is not simply the celebrity wing of the constitution, there to sell bibs and Babygros and appeal to the maudlin nature of sentimental crowds. As an emblem of stability and renewal in hard times, it is also proof that institutions that fail to modernise will surely die. For all its flaws, Britain’s monarchy has much to teach its politicians.

The Telegraph Group Ltd, London, 2013