Trying to get out of the shambles they’re mired in, the Tories are attempting a typical double-shuffle. They’re going hard on crime, welfare and immigration. But they also claim they’re the true reformers, the only modernisers left in British politics.

It’s an old tactic, of course. Tory victories in 1951, 1970 and 1979 happened because they persuaded too many people Labour was stuck in the past, was in hock to vested interests, and only they, the Conservative party, stood for aspiration and the future.

It’s the position Michael Gove is trying out now. In a recent speech to Politeia , Gove rightly sees the influence of blue Labour behind Ed Miliband’s One Nation conference speech. But he wrongly thinks it proves Ed has embraced ‘the forces of conservatism’.

Instead of Benjamin Disraeli, Gove wants to make Tony Blair the apostle of the modern-day Tory party. It’s an argument designed to make Labour modernisers queasy. Gove thinks the Tories will get back to power by following New Labour’s embrace of limitless globalisation and top-down, market- and manager-led transformation of our public services.

Gove is an intelligent, decent man, the one real talent left at the top of the Tory party. His trouble, though, is that he doesn’t listen. As a result he’s missed something big. We’re not living in the 1990s. After the economic crisis, and wave after wave of scandal has engulfed the people in charge of out of touch public and private institutions, the politics of the 2010s needs to be different. Our perpetual political crisis has one cause – people, ordinary people, have been shut out of the institutions that rule their lives.

That’s true for the banks and energy companies, where mega-profits are made because consumers and ordinary workers have no power. But it’s also true for our public institutions too. Recent Fabian Society polling shows that even after the New Labour decade of reform, people’s experience of public services leaves them frustrated, powerless and ignored.

Most teachers and nurses, doctors and employment advisers and social workers are driven by a sense of duty and passion to care. But too often they’re scared of managers and meddling ministers, frightened about breaking the guidelines or not meeting targets they cannot control. A culture of fear has stopped them from being really creative.

Let’s be honest: a lot of ‘good’ teaching is about following the formula that gets children to pass exams, not nurturing the sense of real purpose, vocation and creativity that Britain’s children need. Because all that matters is exam results, advice about even the transition to university is catastrophically bad in our ‘best’ state schools. Children are prepared poorly for life and work after school. The obsession with 5 A*-C at GCSEs as the only way of measuring improvement; Gove’s imposition of a rigid way of teaching primary children to read; these are examples of well-intentioned directives that stifle the thought and vision which a really good education relies on. The problem, throughout, is that politicians don’t trust people with direct experience of how public institutions work to be the pressure for change.

Taking inspiration from Blue Labour, Ed One Nation politics marks a break with all that. The blue Labour position is simple. It’s based on belief in people’s capacity to get together and work for the common good. It recognises the importance of aspiration, but notices that aspiration starts with our relationships with people we care about: family and neighbourhood, our town or city, community and country as well as our selves.

People want things to improve. We want our children to do better than us. But none of us like change imposed from above, which we have no power over. We all have different aspirations and interests. There is always tension. But if we’re involved in the conversation, if workers negotiate with managers, if parents challenge teachers, we do far greater things together than we can on our own.

Too often, for Blairites as well as Gove, public sector reform just meant letting a new bunch of people with bright ideas tell everyone else what to do. In the name of challenging one set of vested interests we passed power to another. Since the 1980s, education policy has (rightly) taken authority from teaching unions and council bureaucracies. But it’s just given it to civil servants, quangos and headteachers instead.

Labour’s academy programme, accelerated by the Tories, was a good start in giving local schools more autonomy. The best academies are at the centre of their communities. We need to celebrate the difference they’ve achieved. But by imagining the super-head or the academy sponsor can drive change on their own, they concentrate power in too few hands. As a result, they forget that long-term improvement needs parents and teachers are involved.

The answer isn’t to give people power over every detail of the way an organization is run. Parents and patients don’t want to be managers. One Nation politics needs leaders to have authority. Whitehall should let go and let the people who run public institutions get on with their job. But the key idea is the balance of interests, and the sense that we only thrive when we recognise the reciprocal obligations we have to one another.

Authority comes not from the right to command, but the capacity to broker a conversation that brings different interests together for the common good. In my Fabian pamphlet Letting Go, I’ve outlined some practical ways Labour can make sure people can hold our public institutions to account. We could be really radical, and give workers, service users and citizens the power to elect the managers of local public institutions annually so their leaders have a confident democratic mandate.

One Nation Labour offers a clear challenge to the Conservative claim to be the true modernisers. With an idea of public sector reform caught up in the debates of the 1990s, it’s the Tories who are stuck in the past. The sentiment they’ve ignored is frustration with the concentration of power. The word they’ve forgotten is democracy. Labour needs to lead the reform of our public services by making the power of people the force for change.

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Jon Wilson is a historian at King’s College London and author of the Fabian Society pamphlet Letting Go. How Labour Can Stop Learn to Stop Worrying and Trust the People. The pamphlet is launched today at a Labour party policy review event entitled ‘How should One Nation Labour govern in 2015?’ featured Lord Wood, Hilary Benn MP, Alison McGovern MP, Nick Pearce and Jon Wilson.