Ed Miliband gave a speech this afternoon in which he sought to explain the way he thinks the party, and then the country, need to change. He also took the opportunity to reach out to Lib Dem voters and make some breaks with New Labour.
Today I want to talk about the next stage of this leadership campaign.
So far in this campaign we’ve talked about where we went wrong as a political party and as a government.
Since last week we have focussed on what is wrong with the Budget the coalition put forward and it is right that we fight it every step of the way.
The Liberal Democrats vote for the Budget has forever forfeited their claim to be a progressive alternative.
They promised fairer taxes, protection for the poorest and a more equal country, yet they supported unfair taxes, cuts for the poorest and a more unequal country as a result.
My message to Liberal Democrat voters is this:
I want Labour to be your home.
I want us to show you that we are the home for all those who believe in a fairer, more equal, more just country where liberty is protected.
But to do that, this campaign needs to be about more than a critique of the past, or a critique of the present.
It needs to be about the new progressive alternative that Labour will present to the electorate.
Building this better society, after the damage about to be inflicted by this government, will be our progressive task.
Of course we must reduce the deficit, but don’t believe for a moment that a lower deficit will on its own lead to the good, more equal society to which we aspire.
To do that requires not simply a moving on from New Labour but setting out what a 21st century social democracy looks like:
– A more equal society where we are not divided as we currently are by gross differences of class, income, wealth and power;
– A country where people can get on doing good jobs at good wages, whatever background they come from;
– And a society which we judge by the quality of the lives people can have outside work: time, community, culture, quality of life, the environment.
This is a vision of a more progressive Britain, that the current Coalition cannot understand.
To achieve our vision of the good society we need to decisively turn the page on New Labour orthodoxy in three key areas of domestic policy:
On our approach to creating and distributing wealth.
On the limits to markets and how we protect and nurture the things we truly value in life.
On the relationship between state and citizen.
Today I want to say more about each of these elements and I will flesh them out in greater detail as the rest of the campaign progresses.
Fundamentally, we need a different approach to both markets and the state from that taken by New Labour.
New Labour was born in response to a world where Labour still had in its constitution a commitment to public ownership of the means of production.
We were right to change clause four and say that a dynamic private sector was central to growth and prosperity.
But at times we forgot the social democratic lesson: that the role of politics is to shape markets in some areas and protect others from their reach.
We were right to say that the state is a crucial guarantor of fairness. But the job of making our state more democratic was incomplete, we were at times too cavalier about civil liberties and there is much left to do to engage people in changing their own lives.
This is not just my analysis of New Labour, I believe it is also what people across progressive politics, who share our values and want us to succeed, are telling us.
The place I want to start is our approach to creating and distributing wealth. What you might call our political economy.
Now clearly there is a task to reduce the deficit. We set out a four year reduction plan for the deficit; it would have involved tough decisions, including significant cuts outside protected departments.
But let us be very clear: the coalition government has put more weight on spending cuts than tax rises, and more importantly, has gone well beyond our plans, to the tune of £30bn a year by the end of the Parliament.
The danger is that we inherit a low growth economy and a more unfair society. Our task will be to address those failures but we will need to learn lessons from our past and do things in a different way.
The New Labour model of minimally regulated markets combined with redistribution of income and wealth achieved significant progressive gains; it created sustained economic growth and millions of jobs; it enabled us to reduce child poverty and reinvest in neglected public services.
I was part of that at the Treasury and I am proud of it.
But I also take responsibility for its limits. It produced an economy too reliant on financial services and many people got stuck in low wage, long hours jobs, with stagnant living standards, with little opportunity to break out of their situation and aspire to something better for themselves and their families.
The paradox is that despite being the most redistributive government since 1945, something we should be proud of, the gap between rich and poor grew.
The hard truth is that our approach reached its limits.
So now we have a choice: we could say that this is an inevitable part of the capitalism that we are stuck with. Life isn’t fair and inequality can’t be tackled.
Or we can take another road.
All of the evidence from around the world is that those countries that are healthier, where people live longer and people are happier are those that are less unequal.
The task of progressive imagination is to understand that we need to build a different kind of economic model if we are ever going to tackle this.
The lesson from Scandinavia is not just about redistribution, it is about whether we create a fairer society in the first place before we get to the tax and benefit system.
We need to move on from the New Labour approach of using the state to correct for gross inequalities and injustices of the market, to one that better avoids them in the first place – through industrial policy, through the right approach to regulation and through responsibility at the top of society.
Reshaping our economy is not a project for one year or one term but is a long-term effort that we have to make.
It begins by deepening – not abandoning as the coalition is doing – the active industrial policy that Peter Mandelson led at the end of our time in government.
It is scandalous that the government have announced the abolition of Regional Development Agencies today, when it is clear that in many regions they have led the way in building the growth economies of the future.
I saw that in my time as climate change secretary working with One North East to bring jobs in offshore wind manufacturing to Tyneside, for example.
Our country should be building on the success of the RDAs and a more active industrial policy with a new approach to finance.
Business as usual says let’s sell our stake in the banks back to the private sector as quickly as possible.
But I would take the opportunity of the rationalisation of these stakes to create a new banking system which works to invest in the industries of the future and the small businesses that can be the centre of our communities.
This means creating a stronger regional dimension to our banking system, potentially keeping a public stake or remutualising part of the sector.
We also need a new approach to labour market regulation.
The truth is that originally, New Labour was not the party of maximum labour market flexibility, it was the party of the minimum wage.
But then we became stuck in an orthodoxy: that maximum flexibility was always a good thing.
But it wasn’t because one person’s flexibility is another’s lower wages and worse terms and conditions.
So when we look at issues like agency workers or workers posted abroad, we must bear in mind that a strategy to build economic strength through undercutting, neither builds a strong economy or a fair society.
But it’s not just a question of fairness. There is also a critical economic dimension: the price of maximum flexibility can also mean the incentives for people to acquire skills are too weak while employers can comfortably compete on the basis simply of costs rather than quality.
So we need labour market regulation that supports the high skill, high wage economy.
Finally, while Old Labour was seen as anti-business, New Labour made an alliance with big business. The truth is that we need to be the champions most of all of small business.
An economy which cultivates and supports small businesses offers the opportunity for people to become entrepreneurs and provides them with greater control over their work.
We should be their champion, not on the basis of low tax and regulation but by championing the fight that small business and entrepreneurs who will build the businesses of the future have against vested interests that hold them back, from the banks to the energy companies.
So a 21st century social democracy needs a different political economy and in the coming weeks I’ll be setting this out in more detail.
Second, we need to recognise that many of the things we value in life are outside of what we do to earn a living.
As Robert Kennedy said more than forty years ago:
“GNP does not allow for the health of our children, the quality of their education or the joy of their play….it measures everything in life…except that which makes life worthwhile.”
We have been slow to act on this lesson.
We need growth to return to raise people’s living standards and we need to do all we can to fight for employment.
But we also need to acknowledge that time and our lives outside work are precious, as important, if not more so, than what we do at work.
As Labour looks ahead to an election, probably in a few years time, these things will become more not less important.
A thriving culture, strong families, vibrant communities, a sustainable environment and healthy lives depend on these things being protected.
What is the threat? It is, in part, that in area after area, we are letting the market decide what is good and what is acceptable. But there are things that matter to all of us where markets should not be allowed to dictate the decisions that are made.
It is true in the way we work because of our labour market: we still work harder for longer than any other country in Western Europe.
This is not the good society we aspire to.
It should be a central objective to change this.
As a start, to signal the way we want to change the culture, there should be a right to request flexible working available for every worker not just those caring for families.
But it’s not just in our labour markets that market logic intrudes.
It is true in the way we think about childhood: the way our children are the targets of increasingly aggressive marketing. We should be clear that we value childhood: advertising to children is a major cause for concern and we need to be far less tolerant of many companies that parents believe take advantage of their kids.
And there are issues where we face big decisions about whether the market should intrude further.
Most people who work at a University will say that marketisation has had an effect on the way they work.
I won’t revisit this whole issue in today’s speech, but the question is whether we want that logic extended further: deep into the heart of decisions that students make about which university they should go to.
The argument that some people make for higher and variable tuition fees is that universities can compete for students and students must choose between a high quality education and a low quality, cheaper degree.
But this goes to a fundamental point: do we want market logic further dictating the decisions that students make about where to go to college?
Or do we think decisions about which university a kid should go to should be based on what and where they want to study?
I do, which is why I favour a graduate tax which removes the threat of differential fees and makes for a sustainable future for our Universities.
Government can’t create the good life, but it can help create the space for it to flourish. This is about ensuring that the state takes its responsibilities to safeguard what is valuable in society.
Third, we need a different attitude towards the state.
The Con the coalition want to sell is that the economic problems of Britain are of the state’s making: that is wrong.
Their campaign to denigrate and deride the state is wrong.
Their mission to destroy the state is wrong.
But our message mustn’t be that the status quo is OK.
Our state remains too undemocratic, sometimes too overbearing and too unresponsive.
We need to improve the legitimacy of the state, both with a better democracy and with greater respect for individual liberty, and we need to improve its engagement with people and recognise that change comes from within communities.
We have a 19th century state and politics. Obviously that must change: the Alternative Vote to make politics more accountable, a reformed House of Lords elected by a proportional system, Votes at 16 to enfranchise young people, reformed and more powerful local government. And just as the State must be accountable and responsive, so it must not be overbearing.
We have too often as a party underestimated the importance of individual liberty. We were too cavalier about the extension of state power: from ID cards to stop and search. And it undermined the other things we stood for which made sense, like CCTV.
We also need to understand the combination of state action and individual responsibility that we need to improve people’s lives.
With more and better services, we have made great progress in improving educational attainment, health outcomes, reducing crime. The Conservatives offered the so-called Big society: a state that withdraws leaving people abandoned.
This is no answer.
And I fear we will inherit public services weakened after the fearsome ideological attack that is being mounted upon them. The Tory mistake is to fail to understand that the great injustices in our society need a combination of action by government with responsibility from individuals and communities. We need a schools system that recognises that engagement of parents is as central as the curriculum taught in the classroom.
Free schools are the opposite of the thing we need: empowering the already empowered without any obligation to help the disempowered.
We need health services that recognise that helping people live healthy lives is as important as providing services for the sick.
That means a minimum set of targets and developing services which draw on the knowledge and expertise of users as well as professionals.
But this recognition about the role of the state has implications for our party as well. My campaign for a living wage recognises that we need a minimum wage set in law using the levers of state power but that the fairness we need depends on more than law – which is why I want our party, working with the Trade Unions, to campaign for a living wage.
The institutions of civil society are crucial to changing our country.
The state we must stand for is one which changes the way it works to look outwards and engage, and I will be talking more about this in coming weeks.
So in our political economy, in the way we protect the things we value in life and in the kind of state we have, we need to decisively turn the page.
In each, we need to forge a new approach, learning from the strengths of New Labour but also recognising where we fell short.
I am standing at this election because I think our party needs profound and credible change if we are to win back the trust of the British people.
Only change can win.
An economy that works for people.
A more equal society with the space for people to flourish.
A more engaging, more accountable, democratic state.
This is the 21st century social democracy I believe in.