England is getting more optimistic. Why is Labour still in such a bad mood?

The country is sluggishly lifting out of depression. Austerity slowed the pace of recovery, but unemployment is back below the level when Lehman Brothers collapsed. Things are still tough for many, but there’s less despair than there was. I don’t think many people credit the government for sorting the economy. We know economies have cycles, and things will always improve eventually. But, certainly, the mood is getting lighter.

These should be Labour’s best days. We are the party of optimism. We only do well when people have space to imagine a better future. That’s how we won in 1945 and 1964. It’s how we won in 1997, a moment when peoples’ economic fortunes had lifted after the ’92 crash but Tony Blair’s story of hope contrasted with a depressed and fractious Conservative party tearing itself apart over Europe. Compared to then, the demand now is for greater change. After the depression and with crisis after there’s more anger in 2014, and bigger sense of the need to change the way our institutions work. But these are calls Labour can and should answer with an optimistic story and a clear plan about the future.

The rise of UKIP isn’t simply the unfocused rage of the ‘left behind’. Their support is based as much on possibility as despair. Remember – the 60+ skilled working class men who are provide its core support were the future once. Technicians, mechanics, factory workers, UKIP’s support comes from people asked to build modern Britain in the 1960s and 70s. These are people who voted for Wilson’s white heat, some probably also supported new Labour. They were let down by businesses willing to turn England’s cities into ghost towns if their foreign owners could make more money elsewhere, and by governments which showed no commitment to preserving the social fabric of industrial Britain.

Nigel Farage’s story can’t end happily. As James Meek writes, UKIP’s story about the growing ‘power of remote, faceless authorities’ is right. But it is foreign-owned big multinationals, encouraged by successive British governments as much as the EU which causes such devastation in Farage’s target seat of Thanet, as elsewhere. UKIP has no interest or strategy for making global capital accountable to people in England. Their promises are false. But Farage is a man with an optimistic disposition, who does far more than satiate despair. UKIP’s growing strength comes from their ability to tell a story about national hope, and persuade people that politics can make a difference.

Even the Conservatives are starting to talk about positive change. Even George Osborne understands that winning with a lightening national mood needs more than safety first. Osborne realises that the message of tightening belts to fix Labour’s mess won’t guarantee victory next year. Paradoxically, the recovery is forcing a shift of strategy. The Tories are starting to talk about more than staving off bankruptcy, and instead are taking the idea of tackling the uneven pace of growth. Their solution is to steal Labour’s big idea. Pushed by the leadership of Labour in some of our big cities, Osborne is on the verge of announcing a big package of new powers of Manchester and two or three other authorities to lead job creation and economic growth.

And what about Labour? We have a package of policies which could form the core of an optimistic story about national renewal. The list is a good start: Regional banks to provide investment in local economies; a work programme and network of vocational institutions run by local business that accountable to local opinion, not the tick-box cost-cutting culture of private sector providers; more money for local authorities to build homes; merging health, mental health and social care into a single locally-run service. They should be a lot, lot bolder. But there’s the beginning of a plan about unleashing the energy of people to renew the life in our towns and cities by dispersing power. We could be connecting with peoples’ sense of both frustration and possibility by talking about changing the way our institutions work so people, locally, have more power and voice. It’s not complicated or difficult. I don’t know anyone who doesn’t think it’s right, even now it seems the Chancellor.

Instead, Labour’s leadership seems to have forgotten the policies it has agreed. We veer from one line to another; is it the NHS, or the cost of living, one nation, or housing? After a bad conference, any sense of leadership has evaporated, and the political centre seems to have collapsed. We seem think we can tumble into a death spiral with the Tories, and as long as we fall on top of them in the end, with 34% rather than 33%, we’ve won. Yet the Conservatives are waking up, realising that an emphasis on regional growth and the renewal of urban civic life is a vote-winner. The good bits from the policy review will be picked off, and we’ll be a shrunken, devastated carcase. Unless we shake off this black mood, it won’t just be voters in towns like Ramsgate or Rochester, but the Labour Party that is left far behind.