Labour needs to find a new way back to a new centre-ground, argues Liam Byrne

In the 1990s, progressives learned an important lesson about how to win elections: we built wide coalitions; we held firm to traditional values; but we freed the political mind for new solutions, new methods, new ways of doing business. We kept our philosophy. But we changed the policy. We forged a new path between old-fashioned leftwing statism and new-fangled rightwing laissez-faire.

That new approach worked for Bill Clinton’s New Democrats, the Australian Labor party, the New Democrat party in Canada, social democrats in Germany, the Netherlands, Norway – and, yes, for New Labour.

And today it feels like a long time ago. The political confidence of the third way has taken a battering. Yet faltering growth, worried financial markets, rising unemployment and social unease all point to one thing: the need for a new progressive politics. Yet outside the United States, Brazil, Norway and Denmark, progressives are not winning by default. We need a new way back to the centre-ground.

Now some, of course, will say: ‘New Labour was the mistake. Let’s go back to the 1980s.’ Others will counter: ‘We were not modernising enough.’ A debate like that will not get us far. In 2015 we face a new world: a new global balance of power between Asia and the west, and a budget £30bn in the red. So Ed Miliband is right: we need hard thought now about what to keep from the third way and what to change for new times.

So first, let’s move on from the 1990s. Why? Because, as the world changed, politics changed – and we did not. Tony Blair once argued: ‘What of policy? Our approach is “permanent revisionism”, a continual search for better means to meet our goals, based on a clear view of the changes taking place in advanced industrialised societies.’

But our politics did not keep pace with the change we helped to author. By 2005, progressives had helped create a vast new global market that linked six billion of the world’s seven billion people. Massive new movements of capital kept interest rates low but fuelled asset bubbles. The market, our society and technology changed fundamentally. New challenges emerged: a new inequality between the middle and the top and young and old; living standards plateaued; old solidarities, old communities felt pressured; asset bubbles burst; and banks crashed.

Back in 1958, Tony Crosland wrote: ‘The intellectual framework within which most prewar socialist discussion was conducted has been rendered obsolete.’ Economic growth and ‘a different configuration of economic power … call for a complete reappraisal of the socialist position.’ The revisionist’s lesson? Change as the world changes.

That is why, after the third way, we need a new way back to a new centre-ground. Let’s keep the insights of the 1990s but build on them for a different era. Let’s keep the best of New Labour, not least the late Philip Gould’s basic insight: ‘What most voters want is over time and without greed to advance and improve their lives. In short, to become better off.’

Let’s keep the insight that elections are won in the centre-ground by building an alliance around the values – aspiration, responsibility and community – that unite traditional supporters with footloose voters who change sides.

What does that centre-ground look like? It is bigger than before. More voters are more likely to switch sides. Look at Scotland. No one can win elections trading on old loyalties. That is true for social democrats everywhere. Attitudes have changed too. Take the latest British Social Attitudes Survey which found that support for tax increases to spend more on public services has halved from nine years ago and only a third now say that government should redistribute wealth.

This is no counsel of despair. Neither opinion polls nor by-elections point to any return to Maggie-mania. As Deborah Mattinson puts it: ‘When things get really hard the instinct to put nearest and dearest first is, understandably, paramount.’

This is why Labour’s leader is placing our party firmly in the centre-ground with new ideas not old attitudes. Globally, social democrats are pinpointing five basic principles that can deliver our values in tough times. But Labour is leading the way.

First, the deficit needs not denial but fiscal realism. That is why Ed Balls is tough on tax and public spending. But his approach marries aggressive short-term action to boost jobs and growth, with medium-term ideas to bring down debt. The crash taught us we cannot immunise the world from financial crashes; we have now had 40 since 1800. If we want to protect our room to act when future trouble breaks, we need to bring debt down. That is the best insurance policy for Keynesians. The Tories will leave us with debt at 80 per cent of GDP. That is too high, which is why we have to plan for budgets that are tight.

Second, new growth needs more than just any old jobs. We cannot compete with new economies like that. We cannot risk drawing so much of our tax from financial services. So we need a new active partnership between business and government to rebalance our economy, play to our national strengths, switch to low-carbon energy, strengthen infrastructure, redouble enterprise, and reform our banking system so that, once again, small business and entrepreneurs have the life-blood of credit to grow. This is the new bargain with business. And in return we expect business to behave in a way that values and does not vaporise trust. People want responsibility – on top pay and ethics – throughout society.

Third, we have to renew our welfare states to drive up the rate of employment. In tough times we need as many hands on the pump as possible. For some that means making sure services like childcare and social care are there to help families juggle the ‘care crunch’ so they are free to work when they like. For others it means firm action to ensure that if you can take a job, you do take a job. It is a renewal of William Beveridge’s belief that good social insurance helps people keep working.

Fourth, we know that to get through the next decade we need to draw not simply on the wealth of nations, but the ‘hidden wealth of nations’. The challenges we face today are too big to all be left to government. Governments and political parties alike need to help make it easier for good people to come together to make a difference through social action and innovation – and it is this kind of civic inventiveness that modern democracies need to renew the ties that bind strong communities together. That is why Refounding Labour is so important.

Fifth, we know that in tough times taxpayers’ money must go as far as possible. Standards in public service have to go up even when budgets are coming down. Only a revolution in innovation can square that circle. And that is very hard to mandate from the centre. So sometimes, the centre has to let go – set high standards, yes, but then free up the frontline and devolve power to speed up new ways of doing business, delivering for citizens better than before.

Finally, we need to advance this cause with confidence. Progressives win by mobilising an appeal to optimism. Conservatives want voters to feel disempowered and cynical. They want to diminish the appeal of politics. Where they are in power, they want a fearful electorate to cling to nurse for fear of something worse. Our task is to offer hope in an age of uncertainty, and optimism in an era of doubt. That is how we seize the centre-ground and build a new progressive majority.

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Liam Byrne MP is shadow secretary of state for work and pensions and chair of Labour’s policy review.

Liam will be speaking on this topic to launch the pamphlet at 6pm on Tuesday 31 January in Westminster. Sign up for your place here.

Visit archive.progressonline.org.uk/events/upcoming to find out about and sign up to all our upcoming regional and Westminster events on the new centre-ground.

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Photo: Carl Smith