‘I’m optimistic about Britain,’ declares Gordon Brown. Indeed, the chancellor exudes confidence – about the country and its people – as he surveys the political landscape shortly after delivering his annual pre-budget report. It’s not that Brown appears complacent about the day-to-day challenges of government or the impending general election, more a sense that he believes that Labour can, perhaps, raise its aspirations and have faith that the values of the British people will allow it to succeed.

As the party stands on the brink of an historic third term, Brown believes that Labour should be seeking to build what he describes as a ‘progressive consensus’: ‘What we are looking for in this country is a sense that the changes we are making will endure, because they are soundly based, are credible and radical, and because they will give a very strong sense of direction to the country that can be shared by the whole people.’

The progressive consensus, the chancellor argues, will, in turn, create a new ‘common sense of the age’ whereby the changes Labour makes are so embedded that ‘it is difficult for any party, no matter how extreme, to try to rid themselves of that change’. Unsurprisingly, Brown cites the apogee of the postwar consensus, the National Health Service. ‘When it was created in the 1940s, the Conservatives were originally against it. However, it became so popular with the British people and so much part of the fabric of British life that no government, no matter how reactionary over the last 50 or 60 years, has been able to undo it.’

Brown is, of course, keenly aware of the charge against Bill Clinton – that he may have occupied the centre ground of US politics but that, having failed to shift it, he has seen much of his legacy undone. ‘I think President Clinton himself has said that he is disappointed that, after eight years of Democratic government, with one change of administration many of the policies he implemented were swept aside.’

The chancellor is, though, more optimistic about the British experience. Margaret Thatcher, he argues, clearly wanted to make changes that would outlast her time in government: ‘I think her problem, and the Conservatives’ problem, was that whenever they tried to build something new, such as the poll tax, they were actually measures that were not only insufficiently thought-out, they didn’t respect people’s sense of fairness. In the case of the poll tax, it didn’t even outlast the government of which she was a member.’

Brown’s premise about the ultimate failure of Thatcherism in Britain and his confidence about the potential for lasting progressive change is, therefore, built on a faith in what the chancellor terms ‘British values’: ‘The values of your country – what your purpose is, your sense of destiny, what you are standing for – is far more important than people realise,’ he argues.

The chancellor continues: ‘I do think that embedded in our history is a very strong set of values that respect fairness and liberty and civic duty and that are internationalist.’ The challenge for Labour is to nurture a consensus that both builds upon and takes advantage of these values: ‘I think these are values that the Labour party can embrace and that are very much part of our history. Equally, they are values that are very much central to Britain.’

The language of values has long animated Brown’s public statements and his constant evocation of ‘British values’ suggests a steely determination that, in Britain at least, the left will not cede this terrain to those who would use it to promote the kind of social conservatism that helped George Bush back into the White House last month.

Unsurprisingly, Brown is confident that the British people will embrace two of the central features of both his pre-budget report and Progress’ progressive deficit survey: investment in skills and early years education. There seems little doubt in his mind, furthermore, that these can both become essential elements of the progressive consensus and the new ‘common sense of the age’.

For the chancellor, allowing people the opportunities to gain and improve their skills has not simply an economic dimension, but also a moral one: ‘You are talking about realising the potential of every citizen, whether it’s a young child or whether it’s an adult. We’re talking about something quite fundamental to the Labour view of the world and therefore for me, it’s exciting that people can bridge the gap between what they are and what they have it within themselves to become, so that they can realise and fulfil their dreams and aspirations.’

As such, Brown believes the new national training scheme – which will give everyone, whether in work or not, the chance to acquire basic skills – has the makings of a ‘new deal, where the employer accepts his responsibilities, the employee seizes opportunities they never had before and the government makes a contribution’.

The chancellor is unperturbed by the notion that investment in skills may lack the kind of emotional edge which allowed, for instance, the National Health Service to gain an enduring place in the hearts of the British people. We have to make ‘permanent education’, he believes, ‘as exciting for people as, perhaps, the 1940s right to healthcare or school education was, or even as exciting as the Tories made the right to buy your own home in the 1980s’.

While the chancellor has long been the member of the government most closely associated with the drive to end child poverty, he has a near-evangelical air when he contemplates ‘the idea of lifelong and recurrent opportunity’. Brown’s vision is sweeping: ‘To popularise it requires us get people to understand that whether you go to school or a college, whether you are an employee or employer, or a housewife or unemployed, here is a chance that no government has offered before, that no society has been prepared to invest in before.’

Investment in early years education represents for Brown ‘the new frontier of the welfare state’ and its importance is uncontestable. The chancellor cites a wealth of evidence that suggests that the years from birth to nursery school are the most important in a child’s development. The old welfare state, which helped with maternity and the vaccination of babies and then took a backseat until a child appeared at primary school was neither ‘very family-friendly nor offered children equal opportunities’, he believes.

If Brown’s vision of ‘the opportunity society’ is realised, this will all change. The chancellor reels off a raft of both already realised and proposed government initiatives: extended maternity and paternity leave; flexible working for both fathers and mothers; ‘wrap-around’ childcare that begins before school and continues after lessons end; and ‘extended schools’ that will be ‘an essential element of communities’. Topping it off, Brown holds out the prospect of a massive expansion of the much-praised Sure Start children’s centres: 2,100 by 2008 and 3,500 by the end of the decade – five for every constituency in the country or, as the chancellor prefers to put it, ‘one for every community in the country’.

But, can a progressive consensus really be built around such an ambitious programme? ‘I believe,’ says the chancellor, ‘that we can bring the British people to the idea that we all have responsibilities to children who are, after all, going to be the doctors, nurses, construction workers, policemen and women, home helpers, and carers of the future. If we neglect them when they are young, we will pay a heavy price in the end.’

Brown argues, however, that the new progressive consensus he wants to see emerge in Britain will require a different style of politics. It is one that is once again based on a faith that Labour should have confidence in the country’s response.

He believes that in 1997 voters were opting for ‘a progressive form of politics as well as progressive policies’. Brown concedes, moreover, that, for many people, that hope has not been realised: ‘I think we have to learn from our experience since 1997 that we must listen to people rather than simply governing as if you can just take the manifesto and implement it without a continuous dialogue with the people. We need to recognise that there are lots of different views, that people can have different interpretations of the same problem.’

As an example of the new progressive politics he wants to see, the chancellor cites his idea for new children’s forums to be established in constituencies up and down the country. They are designed to ensure that parents and communities have the opportunity to shape the government’s agenda for expanding childcare at a local level. ‘Instead of running the meeting as a question-and-answer session, we say: “Here is the challenge: we have not done enough for under-5s in this country. Here are our ideas. What do you think of them, how could they be applied in your community, have we got the balance right in your community or should it be different?”’

Brown is keen to see this progressive politics – ‘not centralist, not elitist, not lecturing people’ – take root throughout the public services. On health, for instance, he argues, ‘the challenge is to run a health service that is predominantly in the public sector without the centralism of the past and that gives people far greater local democracy and choice. People do want, rightly, to keep the NHS, but it does have to be more responsive at the local level, to what people want and what people need.’

The chancellor’s faith in the potential of progressive politics appears very much marked by his experience of working on international debt relief and development. Indeed, he argues that this provides a model of how to change the political landscape and build a progressive consensus behind new priorities. ‘This did not happen simply because of policies pursued by governments here or elsewhere, but because of a demand by people here and elsewhere – from churches, NGOs, pressure groups, members of the public – that forced the attention and then the action of governments around the world.’ This movement, moreover, broadened out from the single issue of debt relief into a wider demand for the millennium development goals and their ambitious target of halving world poverty. ‘To cancel debt in 1997 seemed unimaginable, but what was ridiculed in the last decade is becoming the settled view of this decade,’ suggests Brown.

Brown’s language and hopes appear a far cry from the ‘politics of fear’ which Labour has been accused of stoking in the run-up to the election and it seems to move on from the idea that the left needs to neutralise certain issues where the attitudes of the voters are said to be out of sympathy with social democratic values.

Take immigration, for instance. ‘If you look, for example, at opinion polls and you ask people what they think the best qualities that define Britain are, people usually answer “tolerance”. When you say what the things that make them ashamed of Britain are, they say “intolerance”. And so, you know, we are not building on the idea of an intolerant Britain, we are building, I think, on the idea of a nation that is tolerant.’ Explain to the people, the chancellor urges, ‘some of the difficulties the country faces and explain why it is right, for instance, to have work permits so people can come into the country and make a contribution to our economy as well as to our culture and society. That’s very different, of course, from illegal immigration, which you do not want.’

Choose hope over fear, Bill Clinton urged American voters in both his successful run for the presidency a decade ago and this year’s US election. Several thousand miles away, sat in the Treasury, the chancellor has made his choice.