‘Fingers crossed’ is no strategy. Labour needs the chutzpah to occupy the centre-ground, writes Anthony Painter

In a situation of traumatic change, it is completely understandable that people reach for either a radical break or cling to safety. But neither is right for Labour. The question, as ever, is how Labour values can be applied in a new setting. The safety-first approach fails to take this change into account. Consequently, in the Labour leadership election the Andy Burnham and Yvette Cooper campaigns have had little to say but the old tunes from the last few years of Labour in office. The radical approach is galvanising but ends up in a deepening of emotional attachment to Labour rather than widening as well as deepening the conversation it is engaged in with the country.

Liz Kendall is the only candidate who has sought to observe the changes to the country and apply Labour values to those changes. The mistake would have been for her just to cleave to the centre-ground as a pragmatic adjustment. Instead, sometimes unnoticed, she has sought to build an argument around Labour values amid social change. The centre-ground is not enough. Labour needs to be able to tell a credible story about the future and apply its core mission – the pursuit of greater social justice – to that story.

Post-austerity politics will eventually arrive and may help, as that takes one of the points of diametric opposition within the party out of the debate (though even Jeremy Corbyn advocates a current account surplus at some point in the next few years). But hopefully, before then, Labour can start a real dialogue across the party. There are good ideas, passion and commitment to be found across Labour. That is the best means of adapting to real social change – and keeping Labour’s values intact.

What is the change? We are becoming a different society – just as we were in the 1980s. We have been living in a world of, in many ways, distinct owners, producers and consumers. These categories are breaking down. They were never neatly divided but now the differences are becoming even more blurred. People can own a small business, look for conventional employment, and insist on leverage as consumers of public and private services simultaneously. A teacher can be an Etsy entrepreneur, an investor in a crowd-funded energy company, a public sector worker, and an activist public service user all at once. Which is their primary political identity? Will they want a low-tax, high-flexibility state or a traditional producer-focused public sector? There is no way of telling. Norms are few. Political identities will be forever on the move. This causes the whole current approach to political strategy across the entire party to collapse. How best to navigate such a fragmented reality?

These social changes are spurred by shifts in technology and values. The latter ease the path to people trying new things – set up businesses, establish social enterprises, get involved with issue campaigns, put some cash into a crowd-funded enterprise. The former facilitates this new collective and individualist activity and it is both. By the time of the 2020 election there will be many more small traders than public sector workers. The large-scale workplace starting disappearing a quarter of a century ago. Now the nature of work itself is changing as coordination costs between separate entities fall. The challenge is how to help people attain a decent standard of living amid this structural change.

And the state is being transformed around the twin drivers of austerity and these new forms of person-to-person power – people are connecting in new ways to change their local community, support each other and develop their capability and opportunity. Millions are taking to the internet to learn new skills – it is what was termed the ‘spontaneous learning economy’ in a recent RSA report that I co-authored.

The state in 2020 will be smaller, more local, and more experimental. It will also be more weighted towards welfare and core expenditure on universal services. Just prior to the 2020 election George Osborne, who on the current trajectory will lead the Conservatives into the next election, will take a huge stride towards implementing a flat tax. He is also likely to cap state expenditure as a proportion of GDP in the way he has capped welfare spending.

The left of the Labour party wants to return to the old verities of the state backing producers over owners and consumers. It wants to become the owner (it calls it common ownership but it is really state-ownership). For the consumers, it will have little to say. It has a hierarchical view of power which has been superseded. Corbyn even suggested a National Education Service on the model of the NHS. Can you think of just how intrusive, anti-creative, bureaucratic and slow such an entity would be? Of course, Burnham’s dream is to nationalise social care. But the world is going towards personalisation and innovation. Much of the Labour party is trying to replicate and extend the mid-20^th century state.

If Labour is to contest the centre-ground that Osborne now claims to occupy, it needs to acquire a bit more verve and chutzpah. It could just tactically adjust on welfare, immigration, business and fiscal policy and hope that splits over Europe or economic turbulence unpick the Conservative stranglehold. ‘Fingers crossed’ is no real strategy at all. Instead, a Labour party that is confident in its values, clear-minded about the future, and confident that the centre-ground is there to be redefined, not just accommodated, will be a contender in 2020. Anything short will spell further decline.

Labour has to develop a new understanding of what people – increasingly simultaneously owners, producers and consumers – need from politics and from the state. The left-right battle both within the party and outside of it is an old game. Instead, how in an era of a smaller state, a technological revolution, a change in the character of work, and a society of free-flowing roles and identities can the centre-left support people to live their lives? Both left and right have insights to contribute as long as there is a means of opening out the conversation.

The answers, which will involve reimagining core institutions of the market, public services, welfare and politics, are not yet in clear view. The answers do need to draw on passion, intelligence and insights from across the party – and beyond.

Why not think about common ownership but make it ownership that is held by people not the state? This is the sort of counterintuitive politics that creative parties grasp (and,indeed, this is an idea suggested by Stella Creasy). Should tax avoidance not be more ruthlessly confronted and new collective assets such as co-operative housing not be created with the proceeds? Do workers, from the Uber ‘gig’ worker to the fast-food server to the care home worker, not need to be represented and supported not by the ossifying trade unions of today but by new networked and even co-operative entities as we are seeing emerge in the United States? Yes, we need a stronger welfare state to support people in their various roles but why not ditch the complex and brutal tax credits system which locks people between low-paid work and the sanction state? How can we move towards a basic income as a platform for work, learning and caring? How can the state better channel investment not into the industries of the past but to firms and skills at the creative edge of the economy in science, software, and service innovation? How can the NHS not only care for people but be the most innovative enterprise anywhere in the world? And how can it help people better support one another? Might personal budgets actually generate solidarity if implemented in the right way?

So the answer really is not right or left. Unfortunately Osborne is likely to win that game – unless Labour gets very lucky, or serious, indeed. Labour has to be in the political mainstream but that is a necessary but not sufficient condition. The next leader also has to start to redefine the political mainstream. It is now about thinking through the right mix of state, market and civic action to help people as shifting owners, consumers and producers. And we need creative energy and insight wherever it is to be found across the party. Forward, not sideways or back, comrades.

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Anthony Painter is a contributing editor to Progress