I wanted to use my column this week to encourage anyone who hasn’t already done so to read Ed Miliband’s important speech last week to the Social Market Foundation.

Ed’s speech built on the key theme of his conference speech, his call for a new, more responsible model of capitalism.

With the economic crisis in the eurozone, growing evidence that the government’s policies here are causing economic stagnation, the Occupy movement getting the debate about the nature of modern capitalism into the media, and revelations about top pay and energy company profits, Ed’s speech was extremely timely.

ICM’s polling this week showed that public opinion is still split on the blame for the economic mess the UK is in: 30 per cent say the cause is the previous Labour government’s debts, 24 per cent the current government’s cuts, 19 per cent the banks refusal to lend and 18 per cent the eurozone.

With these figures, Ed needs to keep hammering away with our narrative, explaining that the nature of the financial system caused the first dip and the excessively deep and fast cuts being implemented by the coalition are risking a second one.

Ed tackled the immediate crisis and called for a change of direction at the start of his speech but devoted the bulk of it to an explanation of the underlying flaws in modern British capitalism that caused the 2008 crisis.

He moved on from the moral arguments he articulated in his conference speech to a practical message about the economic case for reforming capitalism which I hope will resonate with Progress readers and with ‘squeezed middle’ (a term derided when Ed first used it a few months ago but now used across the spectrum) swing voters concerned about their standards of living, stating ‘our argument for a new, more responsible, productive capitalism is hard-headed – not soft-hearted.’

Ed identified the problems with the system as:

1.       ‘inadequately regulated financial activity’
2.       ‘A deficit which went up sharply after the 2008 crisis, in part because of Britain’s dependence on one sector in particular: financial services.’
3.       ‘long before the credit crunch, a crisis of squeezed living standards of those in the middle.’

He said that these three factors were interconnected by ‘rules which encouraged wealth creation focused on short-term returns not the productive creation of long-term value’ and ‘led to a distribution of rewards increasingly skewed between those at the top and the rest.’

He explained that given the need to continue to pay down the deficit, a future Labour government won’t be able to attack social injustice through higher spending; it will have to do it through economic reform to create healthy markets.

He called for:

‘An economy that creates long-term value based on investment and commitment. Better-quality jobs that reverse the decline of middle-class incomes, and set firms up to compete on the basis of skills and quality. And a sustainable economy, diverse enough to protect Britain against external and fiscal shocks, with environmental sustainability built in rather than bolted on.’

The core of his speech looked at five key policies:

•         A finance system that invests in ‘companies taking a long-term approach to wealth creation’.
•         Ways of measuring company value in the long term rather than the short term.
•         ‘A new something-for-something deal between government, business and employees’ on vocational skills and training.
•         ‘A new commitment to responsibility at the top as well as the bottom of society.’
•         Breaking up vested interests and concentrations of power, using regulation and sometimes stronger markets.

There’s a lot of detail in the speech, it is well worth a read. Further speeches on the same theme are promised.

Ed summarised his vision as ‘a different way of living together. With values of responsibility, fairness, concern for each other at the heart of it. Where we reward contribution and respect talent, not privilege.’

That’s quite idealistic, but I think we are in a period where people are looking for an idealistic vision to contrast with the economic and social despair they see around them. And it’s underpinned by hard-headed, practical economic policies which would bring real economic benefits to the UK.

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Luke Akehurst is a constituency representative on Labour’s NEC, a councillor in Hackney, writes regularly for Progress here, and blogs here

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Photo: Department of Energy and Climate Change