Peter Mandelson’s speech today marks a return to voice for the peer after a quiet December. It signals too a resounding defence of government policy and calls on Labour to find a fresh balance between new forms of growth and production and continuing fairness and redistribution.

The commentariat have tried to portray this as being a change in tack or rebuke of previous government policy. It is anything but. Instead it is the next step in an ongoing rethink of the government-economy relationship in new economic times.

That this isn’t a shift is shown by the fact that Mandelson has already admitted that New Labour perhaps had ‘too much of a mindset that markets are best left to operate freely’ in an interview with Progress Magazine in September. He added that government ‘has an essential role to play’ in making sure there are ‘other sources of growth in the economy’ and fostering ‘new technologies, the growing markets and… entrepreneurialism.’ This fits neatly with his speech today where he states: ‘None of this is going to happen with government simply standing on the sidelines. Other governments are actively investing in their industrial strength. We have to do the same.’

However, this should not be mistaken as signalling a retreat to the left. If anything he has signalled that in order to continue economic growth there has to be an upper limit to the burden placed on top earners.

But most of all Mandelson’s speech reconfirms the PBR’s tough measures to reduce the deficit by £80 billion. He is trying to emphasise that the future will not be painless in public services, but that Labour’s strategy will be balanced by focusing on growth to get the debt down as well as spending reductions. While the Tories only have one feather to their bow, cuts to spending, Labour has three: increasing tax for those who can afford it the most; reducing public spending; and investing in economic growth. This is not the third way, but the three ways.