There are not many things that the average Labour party member shares in common with the characters of Downton Abbey. But for most of us, one such trait may be a slight queasiness about the idea of making money.

While an ageing dowager might roll her eyes at the flashiness of the nouveaux riches, we are more likely to be left uneasy when Peter Mandelson proclaims himself ‘intensely relaxed’ about people getting filthy rich, or when Chuka Umunna says Labour should help entrepreneurs ‘make their first million’.

But if the next Labour government is to achieve Ed Miliband’s goal of creating a more just and equal Britain, there is no easy way round wealth creation.

At its simplest, if we want to improve the incomes and wealth of the less well-off, there are three ways to go about it. We can seek to grow the overall economy, we can redistribute resources within it or we can cross our fingers and hope that a more equitable distribution will somehow happen on its own.

That last idea has not always been as mad as it might sound.

In the decades after the war, the changing global economy saw a rapid growth in demand for professional employment, with more ‘room at the top’ of society even without significant government intervention. Manual labourers could see their children get white-collar jobs, while nobody else had to lose out in return.

It was a golden age of social mobility – and it was good while it lasted – but the market for salaried office workers could only go on increasing for so long.

In recent decades the labour market has changed in a different way. The concept of ‘room at the top’ has been replaced by that of ‘hollowing out’. Technological change and globalisation mean that more and more mid-level jobs are being automated, mechanised or outsourced, leaving well-paid professional and financial jobs at the top and poorly paid service sector jobs at the bottom. A chief executive still likes advice from his broker in person, and a patient’s bed cannot be changed by a computer program or an Indian call centre, but everything in between is insecure.

Crossing our fingers, therefore, is unlikely to help the poorest today. But what of redistribution? Even without an overall increase in wealth, surely it must be possible to share the resources that already exist more fairly?

The last Labour government took significant steps in this area. The introduction of tax credits provided greater support to working people on low incomes. The creation of a new top rate of income tax meant that those with the broadest shoulders took on a greater share of the burden of fiscal consolidation after the crisis. And the maintenance of inheritance tax weakens some of the most gratuitous transmission of privilege from one generation to the next.

But in the face of strong technological trends hollowing out the labour market, we should be realistic that even heroic efforts by governments are unlikely to secure a fundamental change in the distribution of income in our society, especially within the life of a single parliament. And the first rule of targets is not to set one over which you have very limited control.

Beyond a certain level, such policies become politically unacceptable as more and more people find themselves amongst the losers from redistribution, while the amounts raised in revenue are spread too thinly to generate significant voter gratitude among the winners.

At some point such policies will become economically counterproductive too, as international competition and tax avoidance eventually begin to have a material impact.

Growing the economy therefore still has an important part to play. It means there is no need for a zero-sum game in which one person’s gain from a policy is automatically another person’s loss. The scope for damaging social conflicts is reduced as less political capital need be expended in order to improve the wellbeing of the less well-off. It becomes easier for Labour to be a truly ‘One Nation’ party.

The conclusion is clear. In today’s economy, laissez-faire will not achieve Miliband’s goal of improving the incomes of ordinary working people. But redistribution is not the whole answer either. The next Labour government must also grow the economy and create wealth – and that requires us to be the friend and partner of British business.

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Stuart Hudson is a former adviser to Gordon Brown and is now a director at the corporate communications firm Brunswick

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Photo: jepoirrier