Who knows exactly what course British politics will take over the next ten years? Most people, if asked, will say that the Labour Party is likely to remain in office because the Conservatives seem less hungry and less prepared for power than ever. They are still failing to come to terms with today’s political agenda, never mind thinking ahead to tomorrow’s. But to stay ahead, our government’s performance must be raised higher, its ambitions enlarged, and the public’s confidence earned as a result.

Renewal is the key. Social democratic values, policy strengths and political trustworthiness are the foundations of New Labour. They provide the contours for where New Labour goes next and the principles from which we can think through new emerging issues.

What New Labour stands for is the long-term transformation of Britain into a modern, self-confident, social democratic European country with equal opportunities for all; high quality public services; the abolition of poverty – except for those who refuse available work; and greater personal freedom, combined with responsibility to the community. This objective won’t change, though the context inevitably will.

New Labour is not about opportunistically splitting the difference between left and right so as to collect support from both sides. Its distinctiveness rests on constantly searching for different ways on the left, including different models and structures of delivering public goods, to embed social democratic values in British society.

As globalisation and the knowledge economy radically alter the structure of our economy and as individualism and interdependence become more prominent hallmarks of society, I do not foresee the emergence of a new left fundamentalism to challenge New Labour thinking in Britain or anywhere on the continent.

Indeed, now that we are no longer trapped in the memories of the party’s past electoral failure, New Labour should trace its roots more openly and directly to Labour’s social democratic tradition and draw strength from it to face the emerging challenges of the future.

This tradition holds that the left should concentrate on ends and be flexible about means; on the importance of sustainable economic growth; promotion of equality through the increased public spending that growth permits; a broad concept of equality as a process rather than a one-off act and which stresses extending personal fulfilment through education; a wider spread of personal consumption and a greater range of cultural and sporting opportunities available to all. This thinking remains as valid in this century as it was in the last.

Where New Labour has already moved on, but its thinking needs to deepen, is in recognising the promotion of enterprise as the key to growth and advocating a stronger concept of rights and responsibilities, and community obligations.

More fundamentally, New Labour needs to develop its analysis of the shortcomings of the British state. Previous revisionist social democrat thinkers like Anthony Crosland were great advocates of state action to right inequalities. They did not come to terms, however, with the incapacities of Britain’s over-centralised system of government, and the limitations of the top down, monolithic, centralised organisation of the public sector that became synonymous with my grandfather, Herbert Morrison, in the postwar period.

New Labour should focus its crusading zeal on what will help people get on in life and make the most of themselves, instead of being held back by the absence of privileges of birth, wealth and family connections.

So far we have talked a good game, one that includes obligatory denunciations of snobbery, racial prejudice, the closed shops of the professions and restricted access to universities and the civil service. But we have yet to take these citadels by storm and make a profound difference to young people like those who live in my constituency and who feel shut out because so many paths are barred to them.

Partly this is an effect of poverty, which squeezes the ambition out of people. But it also stems from the fact that we are still far from being a genuinely meritocratic society in which people can advance on the basis of their skills, aptitude and qualifications. Our task in the coming decade is, above all, to reverse that.

We have also failed to inculcate in people for whom prosperity has been a locked door the values of enterprise and risk-taking that could provide a key to a better life. The rate of small and medium-sized business growth in the fifth most deprived neighbourhoods in Britain remains shockingly low.

Greater social mobility for the masses depends on transforming education from a system that has brilliantly served the needs of a narrow elite to a system that offers genuine opportunity for all. That means a spread of good schools across all social neighbourhoods; high-class vocational education; expansion of higher education; and a proper system of lifelong learning. Education must become so embedded throughout our society that everybody has not just a one-shot opportunity to break free of their social background but a lifetime of opportunities for self-improvement and advancement.

This is part of a wider, more radical direction – promoting greater diversity in the school system, combining excellence and access in our universities, decentralising and localising the running of the NHS and shaking up the police and the administration of criminal justice.

There needs to be more ‘letting go’ from the centre, ending the command and control approach to managing the public sector. In 1997, we asked the people to trust us. Now we must begin to trust the people; for example, we must trust public servants to take over the running of local services, local communities to implement their own programmes of change and regeneration, local people to help manage hospitals and the health service in ways that have been unimaginable previously.

It will not be easy. Within bureaucracies, there will be resistance. Within our own ranks, there will be suspicion that letting go of central controls means passing power to the market. This argument needs to be refuted convincingly if our next phase of social democratic reform is to be successful.

Too much talent is wasted in this country as thousands of young people who sense no prospect of employment drop out of education and training early in life. I speak from a political tradition that views poverty and mass unemployment as a moral wrong. Intractable social deprivation breeds its own problems. We must counter the trend towards a growing underclass in Britain losing touch with mainstream values, prone to criminality and anti-social behaviour and disorder, teenage pregnancy, drugs, violence and joblessness. This ‘underclass’ brings its own reaction in the rest of the population – a mixture of fear, condemnation and a desire, almost, for revenge against those who, they believe, are enjoying rights and benefits without having to exercise responsibility in society.

The link to immigration and asylum has proved emotive. The political impact of this has already been seen elsewhere with the rise of the far right in Europe. I fear the risks of far right resurgence will not go away. The social democratic response must be twofold: firstly, robust in refusing to compromise either in policy or positioning with those who seek to exploit ethnic, religious and racial tensions. At the same time, we have to be genuinely responsive to the real strains imposed on those communities that are bearing the brunt of adjustment to a more ethnically diverse society, for example through much more support for English language teaching in schools with large numbers of children from overseas.

We are presently at the beginning of New Labour’s next phase, not the endgame. Abandoning, once and for all, outdated ‘class’ politics was the first New Labour means of cracking open the mould and bringing greater pluralism to the political process. Better than any other current political party in Britain and Europe, we have understood that, as deferential attitudes to authority have waned, as social class has ceased to function as the central determinant of political attitudes, and the homogenising influence of the mass media has grown, a whole new way of looking at politics has emerged. It has been embraced more successfully by the left in Britain than anywhere else.

This recognition makes New Labour permanent revisionists. In each era or decade, New Labour has to be willing to think through the best measures to achieve its social democratic values: the next general election will, in political terms, be light years away from the elections of 1983, 1987 and 1992, which conditioned the initial creation of New Labour. That is the dynamic we need to nurture – and why renewal must always be our watchword.