Offering advice to the Conservative party is not normally what I do on a Saturday afternoon, and so I hope you will take my comments in the spirit they are offered: unyielding dedication to the destruction of the Tories’ bid to form the next government.

In my experience, there are five tests for an opposition party, Tory or Labour.

These are the tests the voters will apply to David Cameron, just as they applied them to Tony Blair, or to Margaret Thatcher, or to Clem Atlee.

The five tests the voters will apply are:

1. What are David Cameron’s motives, and do I approve of them?

2. Does he share my instincts?

3. What policies does he offer me, my friends and family?

4. Is he capable of showing leadership in a tight corner?

5. Can he ride the wave of the future, in uncertain times?

Motives, instincts, policies, leadership, and understanding the future.

This is the metric that David Cameron is being judged against, as we close in on the next election. Let’s assess them in turn:

First, motives.

It is clear that David Cameron wants to move into Downing Street, to meet the Princes and Presidents, to have his finger on the button.

But for what?

The Cameron/Hilton project of detoxification is built on a tough analysis of why the Conservative party lost its popular support after 1992, and failed to win since.

They recognised they were seen as the ‘nasty party’.

Tory modernisers published research after 2005 which showed that people thought Labour was ahead of the Tories on ‘takes care of everyone’, ‘stands for justice’, ‘stands up for everyone’, ‘has vision’, ‘creates opportunity’, ‘has new ideas’ and ‘represents people like me’.

It showed that most people thought the Conservatives stood mainly for the rich and business, were old-fashioned, extreme, having no new ideas, and not representing the majority.

The Tories’ money man Michael Ashcroft commissioned private polling, published as Smell the Coffee, which further detailed the toxicity of the Tories.

This process of self-flagellation both led to, and was accelerated by, David Cameron’s election as leader. So we began the detoxification: matching Labour’s spending plans, support for the NHS, husky rides, hug-a-hoodie, no more rows about Europe, and no place for John Redwood in the shadow cabinet.

But there’s a problem of authenticity here, isn’t there? How genuine is it for the man who wrote the 2005 general election manifesto to be so enthusiastic in throwing it on the fire?

How real does it seem for the man who stood by a Tory chancellor’s side to reject the record of his party in government?

No one can transform their political outlook so comprehensively and swiftly without a huge dose of cynicism. If you’re prepared to believe in anything, you end up believing in nothing.

And the greatest paradox about the Tories’ detoxification is this: that the more they try to look and sound different, the clearer it is that they haven’t changed at all: they want power because they think they deserve it, not because they want to use it to help other people.

So on the first test, Cameron has failed.

Second, his instincts.

A politician’s instincts are a product of their upbringing, their influences, their experiences in life. They are inseparable from their innate values, and this cannot be tutored, trained or counterfeited. Tony Blair believed in aspiration and opportunity. Margaret Thatcher believed in hard work and thrift. Clem Attlee believed in social justice and a fair deal.

So what are Cameron’s instincts?

His first instinct is to surround himself with people who share his background. When I point to the multiplicity of Old Etonians on Cameron’s front bench and private office, the knee-jerk is that I am sparking off a new battle in the Class War. It is a fact that 6.6 per cent of Tory MPs went to Eton, compared to 0.04 per cent of the population; and that 59 per cent of Tory MPs went to private schools compared to 7 per cent of the population; people must make their own judgements about that.

My point is this: it is unhealthy for an entire political party, which wants to become the government of this country, to be organisationally and politically dominated by people who went to the same school.

It would be the same if I appointed only special advisers or secretaries who went to Wardley Grammar School.

So Mr Cameron’s instincts are to stay in the comfort zone, to mix with people of the same background, to alienate people like David Davis who come from another side of the tracks.

I can’t really put it any better than this quotation about Cameron.

“He behaves as if he doesn’t believe in anything other than trying to construct what he believes to be the right public image. He’s a PR guy…he was a lobbyist and PR man for Carlton television for seven years, then he went into parliament… and that’s the only experience of life he’s had.’

And when Rupert Murdoch says it, you have to pay attention!

Third, policies.

Something that Cameron seemed to understand early on is that elections are won and lost on the centre ground of politics; it’s a reflection of our electoral map, and of the moderate nature of British politics. So you might expect a policy agenda which mirrors the heartbeat of middle England.

But instead you have three things:

A) Policy deferred, through the mechanism of policy reviews which can mask rows, buy off opponents, and create policy ‘aromas’ without specific pledges.

B) Policy confusion, such as the flip flops over grammar schools, or the monumental flip flop over spending plans.

C) Policies which are out-of-touch with hard-working families such as the scrapping of inheritance tax, which would help the most wealthy 6 per cent of families.

And what the dodges and the flip flops prove is that Cameron is not master of the policy agenda: he still has to deal with the Tory right-wing, and make concessions to keep them quiet.

We’ve heard a lot this week about the ‘do-nothing Tories’, but let’s be clear: the Tories’ do-nothing approach is not because they lack wit or imagination. Do-nothing is not the absence of policy: it is their policy. Faced with this recession, as in the past, they would ‘laissez-faire’: let it alone.

So test three – policy. Has Cameron constructed a policy programme to excite the imagination of the voters, and to escape the ideological handcuffs of his party’s past? No, he has failed this test too.

Fourth, leadership.

Now, this failure to fashion a policy agenda demonstrates a further failure: the failure of leadership. A strong leader stands up to his opponents. Cameron has not stood up to his own right-wing. He has deferred, not confronted internal conflicts on Europe, tax, spending or education selection. These are the death-watch beetles of the Tory Party, gnawing away at the beams and joists, which would inevitably burrow to the surface in government, just as they did for John Major.
But Cameron has not displayed Major’s confidence in tackling the right-wingers. Cameron lacks the political courage to do so, and in politics courage is all.

But most telling is his loyalty to George Osborne. Osborne is plainly a liability: he is out of his depth. And if you eavesdrop the conservations of huddles of Conservative MPs, you can overhear their disquiet with Osborne’s performance. Loyalty is an admirable attribute, but dependence is not. A leader has to be able to take tough decisions, and jettison a member of the team if they are letting the side, and the country, down. Lord knows, we’ve had plenty of experience of that in the Labour party!

Yet Cameron clings to Osborne like Linus to his blanket, and that makes him a flawed leader.

Fifthly and finally, the future.

Elections are not about lists of achievements; they are about the future. The party which can greet the dawn with optimism, which can ooze modernity, which can reflect the ambitions of the young is the party which will win.

I think the Conservatives confused having a youthful leader with having a youthful brand identity. In this recession, with the Democrats in the White House, and European leaders united in the desire to tame markets, regulate finances, and take strong action to protect homes, jobs and businesses, it doesn’t really matter whether you wear a tie or ride a bike.

It’s about whether you understand that in the future successful governments will be active governments: helping businesses to create jobs and wealth, helping communities to thrive, providing a platform for people’s ambitions, safeguarding the climate.

And a Conservative party, which has proved in spades this week that it would be an inactive government, is weighed down by the past. David Cameron reeks of yesterday, and so on the fifth test, Cameron fails.

So, on the five tests for an opposition party, Cameron has failed five out of five.

Can Labour pass these tests, in these most testing of times?

We can, and we will.

This has been quite a week. I won’t pretend it’s not all a bit surprising. A new Labour government signals an increase in the top rate of tax and is thought to hint that nationalisation of the banks remains an option. Peter Mandelson thinks it’s all a good thing. Truly, you never stop learning.

But it has been dismaying to read the accusation that this is the end of New Labour. How peculiar that all these commentators, who never liked New Labour in the first place, are so sad at its apparent death. It’s also odd that, like a cat with nine lives, this isn’t the first time I’ve read of the death of New Labour. I’m sure it won’t be the last either.

The basic insight of New Labour was that we had been held back by our tendency to let once sensible policy positions become unquestionable and unending ideological commitments. The central idea was the same as Crosland’s – that the Labour party had always got means and ends mixed up. The ends were social justice and a fairer society. Too often, the Labour party had made a fetish of state action when the means should have been whatever it took to get the ends achieved.

And, in a time of crisis, it takes a public stake in the banks and a fair sharing of the tax burden. That’s not the death of New Labour. It’s a pragmatic response to a crisis. It’s using the necessary means to ensure we come through the storm.

There is a strange irony here. New Labour allowed us to be released from the tyranny of means. The people who are declaring New Labour dead are themselves defining it by one set of means and saying that, because we have changed them, the whole enterprise is cast to the winds. This is just silly. When the facts change I change the way I act. What do you do?

Let’s look at what we did by considering the effect it will have, which is, in the end, the only way that matters: £7 billion to help small businesses, warmly welcomed by the people on the receiving end; a very strong defence of open markets and a rejection of protectionism; strong action from government to recapitalise the banks and correct the fiscal deficit.

The crisis has dramatised a New Labour truth: that sophisticated markets cannot exist without governments, without the application of proper rules. It has also shown that private liabilities often fall on public resources. The very idea of a public company with limited liability exists on a guarantee from the state. The only people who have ever thought there is no role for an active government don’t understand government and they don’t understand markets either.

An active government using the state and the market to best effect, to put the economy back on the road to prosperity.

I am not suggesting it will be easy or painless. But I am saying that we have, at least, acted in the public interest. It is a bold decision. There are political risks. But it is Cameron’s Tories who have really bet the house. They have closed their eyes, averted their gaze, crossed their fingers and hoped that the economy doesn’t get better. That’s a strange wish to have – to hope that the fiscal stimulus doesn’t work. But they cannot win now unless it doesn’t work because they decided that nothing could be done. To hear them you would think that recession was like a force of nature that you cannot mitigate. Oddly, they think recessions are man-made but recoveries are natural.

The real death this week was not of New Labour but of Tory New Labour posturing. This week has showed that they are sceptical, as a matter of faith, that government can do much to support the economy. And so, with the Tories vacating the New Labour space in which they never looked comfortable, economics is contested again.

The path out of recession, the decade that follows, will be defined by the calls that politicians make today.

This is the problem that the Conservatives now have. They sought to throw off Thatcherism but that left a void. It returns them, by default, to the do-nothing stance of Macmillan. To the failure to face up to the way the world is changing. To the small c conservatism that was part of the reason Britain stagnated in the second half of the 20th century.

So they have ended up in a traditional place: opposed to extra spending but with no constructive suggestion about what government should do. They are frightened to say what they think – that they don’t think there is much they can do to help.

They seem mystified as to why things are becoming more difficult for them. Let me help – it’s because you have nothing to say. It’s because your modernisation was a spray job. It’s because you can get away with windy rhetoric in good times but it sounds beside the point in bad. It’s because you have thrown off Thatcherism but replaced it with nothing.

And then you end up, as an opposition, doing politics on a reflex. First you oppose Northern Rock because it looks unpopular. Then you support the government because it looks statesmanlike. Then you renege on that because it looks supine. And when asked what you would do instead, you look out of your depth.

Their response to the recession is like the old joke. We wouldn’t have started from here. In an integrated economy I’m afraid you don’t always choose the problems that are thrust upon you. After blowing in the wind for a while the Tories have got back to their default position: the recession is a necessary adjustment. It has a silver lining.

The moment the penny dropped for me was when I watched David Cameron’s conference speech. What a dreary collection of straw men and stereotypes. What an awful country he seemed to describe – a broken, politically-correct-gone-mad, health-and-safety-insane fantasy. Assuming he’d won hearts on the left, he flirted outrageously with his old flames on the right. What a cynical politics by numbers. It’s what you get when you can’t do politics by ideas.

And it is this, the complete absence of any notion of what the Conservative party is for, not the financial crisis, that offers the opportunity. In fact, we need to be cautious about the current crisis. Gordon Brown and Alistair Darling have rightly been congratulated for helping lead the world’s response to the credit crunch. But if we think that we will be rewarded in the long term for that fact alone, we will be making a mistake.

Elections are fought on the future promise, not the immediate past. Of course we can and will call up our record in support of the idea that we know where we are going next. But the only dividing line that will ever matter is between those political movements that excite people about tomorrow, not those who cannot move on from asking for credit for yesterday.

This is the great opening for us. Think back to the two great political mood swings of our lifetimes (well, most of us). In the late 1970s the Thatcherites had a big defining idea. They thought the British economy was broken, they thought trade union power had become excessive, and they thought they knew how to fix it. In the late 1990s, we argued that a modern economy cannot afford to neglect either its public realm or the ability of a large minority of its population.

What comparable big mood-defining idea do Cameron’s Conservatives have? That Britain is broken. And then, remarkably, in the next breath they say that they it will fix itself if governments do less.

This is wide open ground for us. If we can make people feel hopeful about the future then it will be ours to inherit. People feel discomfited by change, of course they do. They worry about their job security, about their pensions, about the prospects for their children.

But, at the same time, this country has a remarkable capacity for adapting to change. In fact, people in my experience do not feel overwhelmed by the world. On the contrary, they would actively welcome more control. I am a believer in active government. But I’m an even bigger believer in active citizens. I don’t principally mean sitting on committees – not that there is anything wrong with that. It’s just that, as Oscar Wilde once said, the reason that socialism will never happen is that there aren’t enough evenings in the week.

I mean real control, over the basic circumstances of their lives. I think people want to be in charge. They don’t want to be told how to live their lives. They want help in living them as they choose. They want help to be able to strike the right balance between supporting their family through work and supporting their family by play. They want to feel they belong to a nation that is prosperous and fair and in which their children, no matter their background, have a shot at their dream.

Hence there is no substitute for keeping the ideas flowing. Policy work is an unglamorous permanent revolution. A few words of congratulation are in order here. Progress has been a courageous organization, getting out in front of the arguments, a position I know can be uncomfortable at times. You need to keep working at it because bold policy is getting more important than ever.

It is getting more important because a big change may be afoot. The most significant domestic political events of my life was the Winter of Discontent. Although I can barely remember it, I know that it discredited a particular kind of social democracy, which had allowed excessive trade union power, borrowed without saying how the money would be repaid and believed the state knew better than the market.

The collapse of that system echoed throughout the 80s and 90s, making it harder to argue for state solutions, for redistribution, for trade union rights, even when they were justified.

The credit crunch may change British politics in a similar way. It discredits the view that markets don’t need a regulatory framework, that markets are wiser than the state, or that a super-rich minority could work in Britain without being responsible to our society.

But it would be a mistake to think that the credit crunch has turned the clock back to 1977. The mistakes of that era are not righted just because a different set of mistakes were made in ours.

Instead, the credit crunch’s biggest political effect may be to rebalance the political spectrum. To underline the argument that we should be ideological about ends, but not about means.

So, the credit crunch poses new problems and makes it easier to reach for the right solution.

Though many features of our society will remain the same, many will change. That, combined with the Democrats’ victory in America, puts a turbo-booster under progressive politics. Some parts of politics which were beyond the pale are suddenly possible again. Those parts of politics which weren’t out of bounds can be reached more quickly. We can go further, faster.

That is the answer to David Cameron. When he talks about a Broken Britain, we shouldn’t question that he is wrong to identify problems. We should say that he has the wrong solution. That the right answer isn’t to turn the clock back. But that the answer is to continue to modernise Britain so it can benefit from change rather than suffer from it.

That the right answer to his diagnosis of a Broken Britain is that oldest of New Labour clichés, that we should build a New Britain.

Yes people worry about anti-social behaviour or knife crime, are unsettled by migration.

But nor would we want to go back to the 1950s, when homosexuality was illegal, when women’s place was in the kitchen, when men’s place was where they were born, when travel meant going to the seaside and communities could be as oppressing as they were reassuring.

I love modern Britain. I love its tolerance. I love its openness. I love the fact that the world meets in London, but that Newcastle, Glasgow, Manchester, Birmingham are all becoming world cities.

That success has had its excesses, whether financial or social. But the solution isn’t to turn back the clock – not to say that we’ve had too much growth, or too much freedom. The solution is to give people the ability to share in our future growth and the responsibility to exercise their freedom without harm to others.

We should be proud of the way Britain has changed in the last ten years. We’ve had the biggest fall in inequality of industrialized country. Gay people can get married and can adopt. We fixed the roofs of our schools and hospitals while the sun was shining.

But now we need to modernize Britain again. The clichés of New Labour still contain their grain of truth, though in each case we need to think again about where they have to change.

We must be progressive. People want their children to do better than themselves. We must give them confidence that our country can continue to get better, and that from that confidence stems the openness that is the precondition of success in the global economy, of the free trade that will make us richer, and of the migration that is inevitable and desirable.

We must be for the many, not the few. It must be possible for people to get on whatever their background. But that will be a hollow promise unless we abolish child poverty.

We must be pro-business. Markets remain the best way of generating wealth and we should celebrate and reward those who create that wealth. But people who have done better should contribute more when times are hard.

Rights need to be matched with responsibility. Welfare reform is even more important when people may find it harder to find that next job. But that responsibility at the bottom of the income scale must be matched by responsibility at the top.

Education, education, education may have been the most meaningless trope of New Labour. But it encapsulated its most important idea – that education was the liberator of people’s talents.

And investment will continue to need to be matched with reform. We have filled the hole left by under-investment in public services over many years. We must continue to invest in our public services, but reform will need to carry even more of the burden of improving their effectiveness and efficiency.

Those clichés may be stale. But the political territory they delineate and the policy ideas they encapsulate are still essentially right. For the many not the few. Rights and responsibilities. Investment and reform. Education, education, education. The party of business. Far from being abandoned, these ideas need to be renewed by applying them to today’s changed circumstances.

The next election will be won by those who can inspire voters with their vision of how Britain can change. But when, like Cameron and Osborne, you yourself are apathetic about the role of politics to make a difference, then your message inevitably ends up being ‘no we can’t’. You can hardly expect people to march behind you holding blank placards. “What do we want?” “for the downturn to take its natural course!!” “when do we want it?” “over the period of the economic cycle!!!”

In contrast, this week, Gordon Brown has proven that we truly are at our best when at our boldest. Once today’s turbulent times have become yesterday’s interesting times, we need to show that we can be just as bold about the future as we have been in a crisis. That boldness will grow from renewing New Labour, not burying it.

Can I start by paying tribute to Progress for the work that it does, its role as a place for a debate about ideas in the party and its realisation that ideas, organisation and unity are essential components of winning the next election.

Two months ago, we went into our party conference with many noises off and a sense among some of inevitability that we would lose.

I never subscribed to the defeatism, just like I never believed the euphoria of a year earlier, and just like now, I think we need to keep our current recovery in perspective.

The challenge I want to take on today, however, is to answer the question about how we maintain the recovery that we have undoubtedly seen as a party.

My argument is that there are four lessons we need to bear uppermost in mind:

First, there is no mystery about our success of recent months: we have shown a sense of boldness and fairness and told a distinctive New Labour story about how we can solve the economic problems we face.

The first lesson is we need to keep doing this.

Secondly, we need an understand this is a moment of ideological challenge and we need to show we are equal to it and show why our opponents are not.

Thirdly, I want to link the downturn with the upturn and suggest that far from being the party that can win the war but will lose the peace, we can show we are both the best people to get Britain through its economic difficulties and have the right agenda for the recovery.

So the third lesson is that boldness mustn’t end with the downturn.

And fourthly, I want to suggest that the twin motors of Progress’ politics: realism and idealism are more important than ever.

First, the immediate situation.

Far from being the week marking the end of new Labour, this was the week when new Labour showed once again its ability to be bold, to be fair, and to take the right decisions for ordinary families.

We promised fairness through the downturn and that was what the Pre-Budget report was designed to do:

What is fairness through the downturn? It seems to me essential we articulate what this means.

Not standing aside and saying nothing can be done, but as we did in the PBR, putting nearly 1 per cent of GDP into the economy through the VAT cut, £20 a month for the average family.

Protecting key services in the downturn with borrowing rising if necessary, as we are doing by bringing forward £3bn of extra spending from flooding to Warmfront.

And ensuring that those who can most afford to, bear more of the burden of putting the public finances back on track.

And let me just say on the top rate of tax: Asking those with the most to pay the most is the fair thing to do, the New Labour thing to do.

Indeed, the idea that introducing a top rate of tax in current circumstances is against our values or principles ignores the history and actions of New Labour.

We were the party that brought in the tax credits, the windfall tax and the New Deal—fairness has always been at the heart of new Labour.

New Labour was always about a commitment to boldness and fairness. and we have seen it again in recent weeks.

And what is absolutely clear is that people are listening to us again because we are telling a bold story which speaks to their lives.

My first lesson is that we have to continue this.

None of us are under any illusions that we can stop the downturn happening, but what we know on jobs, small businesses, and indeed in my area energy, it is absolutely vital we do all we can to stand with people and help them through the downturn.

Secondly, I want to address the question of what the economic situation tell us more deeply about the political landscape?

The conventional wisdom at this stage of the political cycle is clear and was very clear two months ago: we have been in power for more than 11 years and the pendulum would automatically swing back to the Tories.

I was always very doubtful about this sense of inevitability, but we now have even greater reason to doubt it.

The important thing to understand about the current downturn is that it is a also a moment of ideological challenge.

What do I mean by that? I mean that above all, it makes us look again at the relationship between government and markets and the responsibilities of both.

It came home to me in September when I heard two people on the Today programme who sounded like two Compass activists: one was arguing that the city was under-regulated and the other was saying that bonus systems were out of control.

At the end of the interview, it turned out they were two people from the City

Let’s be honest this is a challenge not just to the politics of our opponents but our own politics too.

We have learnt again that markets can be too powerful, as we learned the state could get too powerful in the 1970s.

We have seen very clear that we need to ensure responsibility goes all the way up society.

And we have learnt that sometimes dramatic state intervention is necessary to stabilise capitalism.

But the good news is that we have responded to these challenges; in contrast to our opponents.

Some people think the Tories have had trouble in the last few months because of George Osborne and the yacht.

But it is because of much deeper ideological reasons.

Their hope was that they could pretend that that progressive solutions could be achieved by Conservative means.

But this would only have worked if they could have pursued a strategy of essentially evading any big issues.

What you might call the politics of Nudge: remember Nudge? Nudge was the great new thing that would win the election for the Tories, not the clunking fist of government, but nudging behaviour change.

After what has happened to the banks, the collapse of Lehman Brothers, the threat of deflation, the need for a new global order in finance, I would say nudge looks pretty inadequate.

The last two months have swept away the fog that can envelope our politics.

And as the fog has cleared, it has become clear the Tories are ideologically beached.

The gravity of the financial crisis has exposed extremely effectively that progressive ends, conservative means is a hollow idea.

And it turns out the Tories are still in a laissez-faire, shrink the state politics

Laissez-faire against fiscal action

Small state insisting spending reductions are the only way to cut the deficit.

So they are in trouble because the tide has gone out on their free market ideology

And they are beached, unable to help people through the downturn and unwilling to say how they would reduce the deficit in a way that is fair.

In fact, what the last few weeks have seen is the strange death of progressive Conservatism.

My second lesson then is that it is absolutely essential that we explain this to people—it’s not a coincidence the Tories can’t offer help, it is part of their politics.

Thirdly then, at some point the storm clouds will pass and the challenge is this: to offer more than fairness through the downturn; come the next election, we need to persuade people we have the right priorities for the the recovery as well: the five years hence.

And there is a crucial point here, why the Churchill/Atlee historical parallel fails.

Churchill won the war in the context of an ideological tide that was shifting away from him and that is why he lost in 1945.

He was a great war leader but people wanted to be sure that never again would we go back to the 1930s of an inadequate welfare state and a government that stood aside.

In other words, he was not in tune with the ideological mood of the post-war time.

We are in a world—and it is our task to persuade people of this—where our beliefs are precisely called forth by the challenges of the upturn.

Think of the challenges our country faces:

Take energy and climate change, my areas of responsibility.

Today’s energy policy was designed in a totally different world to today

It was inherited from a 1980s landscape in a world of abundant UK energy supply, low commodity prices and little concern about carbon emissions.

All three of those assumptions have been discarded: we are now importers of energy, commodity prices have undergone a structural shift given the role of India and China and we have a massive low carbon energy challenge.

How does this relate to the question of who can answer the challenges of the future?

The market can provide—and must do so—but the market on its own can’t guarantee security, affordability and cutting carbon emissions.

That is for government: why, because the market doesn’t put a proper price on security, social justice or carbon emissions.

The same is obviously true of climate change more generally: the market doesn’t on its own put a price on carbon and hence we need to intervene in transport, home energy, building regulations to guarantee both fairness and the environment are protected.

Why are we better placed to meet these challenges: because our beliefs understand that markets work best with rules set by government and because we are the people who understand and will ensure that government plays its role in guaranteeing fairness.

And if it is true in energy and climate change, it is true of so many of the challenges we face today:

Markets on their own can’t solve the problems of social care, social mobility or many of the other big challenges we face.

So my third lesson is that we need to show a sense of boldness on the challenges of the upturn as well as the downturn and that is what the manifesto must do.

Finally, though, politics is about more than priorities or policies or programmes, it is about moral authority and leadership.

What draws people to political parties is not simply the policies they advocate but the spirit they embrace, in particular a spirit of idealism.

Take climate change. Many people have more pressing things on their mind at the moment but you can’t measure our impact on an issue like climate change from simply talking to a focus group or reading a poll which puts it tenth on the priority list.

It says much about your moral authority

That’s why we need to show that despite the economic situation, we are not going to let up on climate change.

And having been bold on policy, we now need to translate this into a movement.

And the movement must have the Labour Party at its forefront as we seek a global deal in Copenhagen at the end of 2009.

Politicians alone will not bring about this deal. It needs Progress, the Labour Party and others to be part of a crusade, across the world, to make it happen.

And that is the sort of party we should be : rooted in people’s lives, and arguing for big causes.

And it is incredibly important that not just on climate change, progress combines the realism that comes naturally with idealism.

The idealism that says on climate change, child poverty, public services and inequality we have so much more to do.

After eleven years in government, our danger, as I said a few months ago, is not being too much of a risk, but playing it safe.

So you need to challenge us to be bold and fair because that is what will take people with us—middle and lower income families.

We know the ingredients of electoral success and where progressive politics needs to go:

Getting people through the downturn and showing we have the right priorities for the upturn.

Showing we are not simply better managers than our opponents but that we have a different set of beliefs.

And showing that despite tough times, we are the idealists

Above all, we should remember never to succumb to fatalism.

In 1983 when Labour was written off, Neil Kinnock, Peter and others didn’t succumb to fatalism and started to turn round the Labour Party

In 1992 when many thought we couldn’t win again, John Smith, Tony, Gordon and Peter didn’t succumb to fatalism

And in September 2008 when some said it was all over for us, most of our party knew they shouldn’t succumb to fatalism.

Because we know fatalism never won anything, not a single vote or seat or election.

Today we know our fate is in our hands.

The tide of history is with progressive politics not against it.

But it needs all of us in this room and beyond: your organisation, your ideas, your dynamism.

Lets work together to make the history of this generation a progressive one in the years ahead.

Thank you.

The banking crisis shows that markets make mistakes: huge mistakes and that left to themselves they are unable to resolve and unravel the problems they create. The crisis highlights the need for effective regulation and confirms the crucial role of the state.

Does the crisis mean that capitalism is done for? Hardly – there would be few who would argue against markets generally being the most effective means of managing supply and demand, distributing goods and services and creating innovation. Who wants to go back to BT pre-privatisation waiting three months for a phone connection?

But does the crisis mean that we have seen the high noon of markets as agents of social progress? Should we more wary of using markets to help deliver public services? Is New Labour’s mantra on choice as an essential part of public service reform going the way of New Labour’s pledges on taxation?

Emphatically not. Can we imagine taking direct payments away from those who currently receive them? Is it conceivable that we would withdraw the right of patients to choose a hospital or the opportunity for parents to choose where to spend their entitlement to free nursery education?

My argument is that choice is here to stay for economic, societal, equity and political reasons. But choice needs to be properly structured and regulated and needs to be seen as one part of the armoury in improving outcomes for people – and the most deprived in particular.

Economic reasons. Competition aids efficiency. Public spending will be at a premium. We ought to be the ones arguing for getting maximum value from it. Inefficiency is organised theft from the working class.

Societal reasons. When individuals have so much choice in how they shop, dress, access TV or use the web it is inconceivable that the public sector can hold out against such trends. Public service has to be able to offer choice and personal empowerment.

Equity reasons. For too long Labour public services have treated the public as an undifferentiated mass. If public services are to be, as they should be, the engine of social justice and social mobility then we have to target and design them to meet people’s specific and individual needs. You can only do that if there is a diverse supply of providers.

Political reasons. Tony Blair was much more Fabianesque in his approach to public spending than is generally understood. He believed in the state funding and making collective provision for education, health and welfare. He thought it was an essential element of creating a progressive cohesive society. He was never attracted to the US private insurance model for the NHS, for example. But he saw that if the public were to will the collective means to fund these services then people – middle class, working class, all classes – had to be convinced that these services were capable of meeting their individual aspirations and needs. Choice was for him the precondition of maintaining the role of the state.

We are now in a period where the battle lines on tax and spend are as sharp as they have ever been – when we will be fighting for the idea of active government and an enabling state. If we believe in collective provision and if we care about social justice then now is the time to be bolder in promoting choice in public service reform.

The Progress White Paper published today spells out proposals to introduce a series of personal credits covering childcare, schooling (particularly for pupils in areas of deprivation and failing performance), skills, health and social care and higher education. They move support for the most disadvantaged from being delivered via supply side policies (the state making provision for people) to the demand side (giving the poorest in society access and rights to use services in the way that will benefit them most).

But if this looks like a case of hard core neo-Blairism gone mad we also stress:

• The need for effective regulation. Unlike the Tories chaotic free-for-all scheme for school places we propose a regulator to get the proper balance between supply and demand so that parental demand can be met while also addressing the problem of failing and surplus places. And we are clear that personal credits should only be used via approved providers.

• A bias towards disadvantage. People worry that choice means that the middle class manipulate supply for their own ends. Under our proposals it is the disadvantaged and deprived that enjoy the top-ups – a pupil premium, extra childcare, an increased training allowance and so on. We use choice to level the playing field and ensure that the poorest receive most support.

In addition we see choice as part of a broader menu of public service reform:

• Shaking up and improving direct democratic accountability and increasing the powers of the local state.
• Empowering and involving employees, local communities and the third sector.
• Fostering collaboration and partnership. It is a myth to believe that competition and collaboration are somehow enemies. There are tensions but it is a question of both/and not either/or. Just as we need banks that are in competition with each other to co-operate on inter-bank lending so we need high performing schools supporting weaker schools – because that helps drive system wide school improvement. So we need to structure our accountability and incentive systems to reward partnership and foster collective as individual effort by providers and institutions.

Markets are fallible. Choice is a not a panacea. That’s why the design of how we use choice and markets is so important. But we cannot let the shortcomings and problems push us off this territory. We have to seize this agenda and define it in our terms rather than the Tories’, because choice is the means of achieving the personal aspirations we all have and the means to empower the most vulnerable and deprived in our society.

Thanks Steve [Richards] and thanks for your incisive columns in The Independent – always a good read.

Especially the one from September last year, which said: “Ministers like to berate the unions and yet, at the same time, they cannot get enough of them. In advance of the annual TUC conference, they let it be known that their message will be tough.

“Yet they queue up to attend the seaside gathering like children waiting to see the latest Harry Potter film at the cinema”.

Though I have to say not an image that sprung to mind when Charles last
addressed Congress . . .

Conference – we have reached a defining moment.

This autumn, the world has changed.

We’ve seen a global financial crisis unprecedented in our lifetimes.

America electing its first black President on a platform of radical change.

And an event so shocking, so unpredicted, it caught us all by surprise.

Yes, Peter Mandelson brought back into the Cabinet by Gordon Brown.

But the salient point is this.

All the old certainties have been blown away.

What we have seen in the past few months is the collapse of the dominant neoliberal consensus of the past three decades.

And all over the world, the Right is on the intellectual back foot. Its most
cherished nostrums – a minimal state, deregulation, privatisation, liberalisation – brought into disrepute.

It’s up to us on the progressive left to articulate a compelling alternative.

The TUC welcomes much of what Labour has done since September – a genuinely radical, imaginative response to the downturn.

In particular we applaud the hugely symbolic pledge announced in Monday’s Pre-Budget Report to introduce a new 45 per cent tax for the richest one per cent of our society.

Evidence of how far the terms of the political debate have shifted in the past year.

Indeed we’ve nothing to fear from being bold: thinking what was once the unthinkable.

This autumn has reminded us that where the market has failed, the state can be a powerful force for good.

Something that has profound implications across the policy spectrum: from the way we deliver public services to the way we respond to the housing challenge.

And the election of Barack Obama suggests there is a huge clamour for change among ordinary people.

A burning desire for fairness:

For fair tax – where everyone pays their fair share.

For fair rewards – where hard work takes precedence over speculation.

And for fair chances – where everybody is given the opportunity the fulfil their potential.

At the heart of all of this: what kind of economic settlement we build out of the wreckage of our broken financial system.

Indeed I believe the single most pressing challenge for progressives is to set out an alternative vision of the global economy.

Avoiding the false security of protectionism, and instead showing how
globalisation can deliver for the many not the few – addressing the real insecurities felt by ordinary people in their workplaces and their communities.

And the centre-left should be confident about taking the lead on this: this is natural territory for us.

Freed from having to make an uncomfortable accommodation with neoliberalism, the new ideological terrain is ours to forge.

So let’s find the ideas to capture people’s imagination; and let’s find the language to get our vision across.

Because if there’s one outstanding lesson from the American election, then it’s surely this: people can be inspired by change.

It’s time to ditch the New Labour discourse – of stakeholder partnerships, joined up government, outcome-driven policy and all the rest of it – and get our message across by using altogether more inspiring language.

The language of equality, fairness and social justice.

Thanks for listening.