Constructing a conceptual framework for our post-recession economy should be a doddle for new Labour.

The public consensus occupies the same ground as Labour values: in support of an economy that benefits the many not the few, in favour of reining in the excesses of the city, and against corporate greed.

Despite this we have not managed to construct a narrative that convinces the public that we are on their side in tackling some of the big totemic economic issues, and so have lost our poll advantage in an area where we have an impressive track record.

We should be gaining ground easily on the Conservatives for whom regulation and redistribution are still alien concepts. The gulf in thinking between David Cameron and even centre right leaders in Europe, let alone President Obama in the US, underlines internationally the Conservative party have isolated themselves on the right.

Gordon Brown and Alistair Darling won the international debate on public sector investment during the recession and shaped a global consensus that left the Conservatives stranded. But we are now behind the curve on dealing with the shape of a post-recession economy.

There are particular flashpoints in the banking world that has been at the eye of the economic storm. One is bankers’ remuneration. The bonus culture of the city epitomised by Fred Goodwin’s pension, aroused the most visceral public loathing. It’s extended now to the profiteering of the Phoenix four at the expense of thousands of carworkers and the taxpaying public. Yet Stephen Hester, Fred’s successor at the now nationalised RBS has a roughly similar pay package, giving the very clear impression that it’s business as usual in the banking world.

Our European partners have been vocal on limiting bankers’ remuneration: our voice has been muted. This is both a totemic and a deeply practical issue. Remuneration in the banking industry was one of the factors that contributed to the 2007 crisis that triggered the recession.

Regulation of hedge funds and other complex financial instruments is another of the dividing lines. Spain’s economy minister, Elena Salgado, fronted the European consensus on regulation when she said governments had to look at the social consequences of their decisions in this area. Our own regulator Adair Turner has this week championed the public interest against the social uselessness of some financial products. In comparison government gives the impression of siding with the markets.

Now that the government is majority shareholder in two of our largest banking groups, RBS and Lloyds, we have an opportunity to help create a different culture. Yet UKFI, which manages the government’s interests, has set out a high level strategy strong on financial targets and weak on any social or ethical criteria for investment decisions, and has not delivered financial help to struggling businesses.

It’s against this background that the government has to win the argument on public sector spending post-recession. The battle lines are drawn. Some of the Tory cuts are derisory: the scrapping of SureStart would destroy a key service for British children for the sake of slicing less than one per cent off the deficit. Lib Dem cuts will be ‘savage’. Last week we belatedly entered the debate. The public sector unions have led the charge against.

But it is all just talk at this stage. Detailed spending plans will only be disclosed after the general election, and it would be months before decisions take effect. What matters now are the conclusions the public draws from the debate: who’s credible and whose side they think we’re on.

Our agenda is rightly about protecting frontline services, increasing taxes on those on the highest incomes, managing efficiency savings and targeting spending at the poorest. Meanwhile growing the economy out of recession will make by far the biggest difference to the size of the deficit. But a party that struggles to regulate excess pay packets in the city will have difficulty in convincing that, given tough choices post recession, it will redistribute wealth to poor families with children.

Traditional values in a modern setting was New Labour’s original slogan – it’s the values that we need to spell out now.