At a time when politics is shifting, now is the moment for us to show how Labour’s values are the centre ground of British life and can offer a way forward. That’s what we discussed last Thursday in Sunderland at the first of a series of Progress events that will be taking place around the country.

The first thing we have to be is confident about our economic record. The thing we got wrong was the regulation of the banks, but then so did the French, the Germans, the Americans and George Osborne; remember when he criticised us for being too tough on them? Prior to the economic meltdown, we had reduced the debt we inherited from John Major’s government and the Tories cannot accuse us now of overspending when at the time they had promised to match our spending pound for pound.

The real test of our politics, however, is what we do when times are tough. The reason we took the banks into public ownership, brought in the future jobs fund and helped people with mortgage interest was because we understand what losing your job or your home does to people’s lives and their families.  And that’s why what George Osborne and David Cameron are doing now is so wrong – do we really have to learn the lessons of the 1930s all over again?

The debate about economic policy is not an academic one about whose analysis is right. What government does – or does not do – has an enormous impact on the hopes and aspirations of communities and families not just now, but in the years ahead.

People are worried about their jobs, rising prices and the high cost of housing, and it is clear that the chancellor’s economic plan isn’t working. Confidence is falling, growth has stopped and unemployment is rising. That means less tax income, higher benefit payments, and more borrowing –  £158 billion more than planned. The government won’t now balance the books by 2015. What’s more, nothing like enough private sector jobs are being created to replace those being lost in the public sector.

So we need a new plan to help get growth going – it is after all the best way of paying down the deficit – and that’s why our temporary reduction in VAT and a repeat of our bankers’ bonus tax to help 100,000 young people find work and build 25,000 affordable homes would help.

The big lesson we have all learned from the last four years is what happens when your economy turns out to be unsustainable. The question now is – what does the economy of the future look like? Ed Miliband has led on this with his visionary conference speech last year. What he talked about then is being discussed by everyone now. Why? Because he is really on to something. Add to that the two other great challenges facing our world – how to ensure a sustainable climate and how seven billion people and more will be able to live sustainably on a small and fragile planet – and you have the big tasks to which Labour politics must address itself.

Tony Blair once spoke about the kaleidoscope being shaken, with the pieces all in flux. That is certainly the case now. My constituents want a fairer society, where reward relates better to effort – whether that’s about how people are paid or benefits given. They can see the argument for doing things in a much more sustainable way, not least because we have witnessed what happens when they aren’t. People want to know what their sons and daughters will be doing for a living in the future in an economy that has to have a better balance.

The biggest threat is not the scale of the challenge. We have faced up to, and overcome, big threats to our country before. It is, rather, that people might lose faith in the capacity of politics to do something about all this. Tough times can make for hard political hearts, and yet our history should give us encouragement.

Look at local government. Born in adversity it quickly became an ocean of innovation for 19^th century Britain. People of civic mind and civic virtue led the way. They brought gas and electricity, and hospitals and schools to communities. They created the first public parks. They built homes. And they provided the clean water and the sewers that did more than anything else to beat disease and increase the life expectancy of our forebears. They didn’t wait to be told what to do by the latest government circular. They looked around, saw the problems, and got on with it.  That’s exactly what we need today, but power in England is too centralised.

That’s why we should give communities the ability to do more things for themselves. The backdrop is the debate about the future of Scotland, and the fact that over the last few weeks and months, the government has said it is prepared to devolve powers to the core cities over, for example, transport, housing, skills and broadband. It’s the right thing to do, but why only to our core cities? What about the rest of local government in England?

I think the time has come to be much bolder, and to make a new offer – an English Deal – that would be open to all authorities. A deal in which these powers – on transport, housing, skills, and ways of boosting economic development – are devolved but with local government deciding the basis on which it wishes to receive them. In other words, rather than the government poring over a list of approved councils or a map of new boundaries in deciding whom to entrust with greater powers and where, local government should decide how it wants to organise itself for the purpose of taking greater responsibility.

It could be a city with a mayor, or a city with a leader, or a city region, or a county, or another combination that makes sense locally, including of course working with business. An organic, bottom-up approach that would be truly radical and one that would show that Whitehall is serious about transferring power.

And why do we need to do this? Well, just think of the great challenges of this century. A population that is growing and ageing and will need caring for. The public health epidemic of obesity. Finding a way to live sustainably and recognising that we depend on the climate and the natural environment for our very existence. Building the infrastructure we need for the new economy – high-speed rail and even higher-speed broadband. All of these need local ideas and strong local government in abundance.  And the more we show what Labour can do that is visionary in one place, the less difficult it will seem elsewhere.

We have a great opportunity here to meet the British public on the new centre ground of politics. Let’s use it.

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Hilary Benn MP is the shadow secretary of state for communities and local government