Last week, I had a conversation in the street with a self-employed landscape gardener. He asked me where I was from and I said the Labour party. He said that ‘that Tony Blair was in the Labour party and earning big bucks’. He said he did not think much of Gordon Brown either. He went on to say that he thought the Tories were clearing up the mess that we had made. My heart sank – again.

We have all had this conversation. The problem that the Labour party now has, in my view, is that this is a narrative which has taken a broad hold in the minds of the general public. We allowed this narrative to destroy us between 2010 and 2015.

What amazes me is that the Tories have made the general public forget that in 2010 George Osborne planned to eliminate the deficit by 2015. He failed. The level of public borrowing has actually increased this month because tax receipts and spending have gone in the opposite direction to that which the Chancellor wishes and yet, still, we are losing the economic argument. In his own terms, on deficit reduction, George Osborne has failed. Yet the public still believe he is making progress and is clearing up ‘Labour’s mess’.

Why is this?

The answer to this question is in my view at the core of what we need to be saying between now and 2020.

Until we begin to convince people like the landscape gardener that we can speak with credibility on the economy and that we have something convincing and persuasive to say to him, then we have no chance of winning a general election.

What then does the centre-left say to the landscape gardener?

First, we must go back to what happened in 2007-8. There was a world economic crisis that was not caused by the Labour government in the United Kingdom. In fact, Gordon Brown’s response was one of the reasons not one person lost deposits in the banks that were about to go bust. Northern Rock, HBOS, Royal Bank of Scotland relied on the Labour government as the bank of last resort, and the UK taxpayer bailed out the banks. As a result, the UK economy survived and when Labour left office in 2010, the deficit was falling.

And, incidentally, our action then was supported by the Conservative opposition.

Far from being an economic basket case in 2010, the UK economy was progressing. For example, supported by Labour’s scrappage scheme, as part of our active industrial strategy, our car industry was recovering and foundations were laid for the progress made after Labour left office.

But we need to go further and explain why we had a banking crisis in 2007-8. We need to tell people that the reason that we had a banking crisis was because we had a centralised system, which was essentially created by the Conservatives in the 1980s. In 1985, Halifax Building Society was one our biggest mortgage lenders, built on solid foundations of investors contributing to new mortgages for homeowners. Similarly, the Northern Rock Building Society was the prime mortgage lender in the north east of England, doing a good job. They were both important regional institutions with their head offices in the English regions, not the City of London.

I think that the demutualisation of building societies and the massive concentration of wealth in the UK in the City of London in the 1980s and 1990s was a catastrophic error. A catastrophic error made by a Conservative government.

The long shadow of Thatcherism hung over the 1990s and even the years after 1997. The Labour government achieved great things after 1997 but we all know that ‘financial prudence’ and caution was an essential component of our 1997 victory.

It seems to me that, after 1997, we accepted the 1980s financial settlement too readily. It was part of our failure to devolve economic decision making to the nations and regions, our failure to decentralise financial power. Although Labour devolved political power to Wales, Scotland and London, too little action to devolve finance was a taken.

Last month I went to Germany. I met with German members of parliament who are putting together a strategy to try to get elected from a low base. They were talking about economic policies that they would be presenting to voters and they focused on the cost of living, fair incomes and equality. What was interesting that they were not at all focused on political structures or constitutional change. That is because their political and economic structures are, largely, working. Contrast this with the UK where we are having perpetual discussions about devolution in Scotland, Wales, political decentralisation and making our political structures work better. See how even the Conservatives are now talking the language of decentralisation.

It is interesting that Germany is seen, generally, as a successful economic model. It is also a successful political model. We should bear in mind that Germany has succeeded since 1989 even after it absorbed the East German economy. It is been able to do so not just because it has decent political structures. It also has devolved economic structures which promote regions within the country. There are regional economic and political centres in Berlin, Frankfurt, Stuttgart, Munich, Hamburg, Cologne – right across Germany.

We need to learn in the UK that we have to have a devolved economic and political model. We must make the crucial political argument that it was the Conservative government in the 1980s, with its privatisation and demutualisation that created the centralised banking system that collapsed in 2007-8.

Furthermore, George Osborne is taking no steps to decentralise financial and banking structures in the UK. For all the window dressing of the Northern Powerhouse, we still have the same centralised banking system we had in 2007 with no prospect of change.

It was a source of constant frustration to me in my early years in parliament after 2001 that, under a Labour government, we seemed to focus too much on the south east of England and not enough on manufacturing. It was some consolation, but too little, too late, when the financial crash in 2007-8 forced us to move in that direction. If we had done so earlier and with conviction then political history may have been very different.

Even in the years of Ed Miliband’s leadership, in opposition, we were much too cautious in promoting the need to decentralise banking and finance in the UK, to take away the dominance of the south east of England in the economy and politics of the UK.

It takes a decisive and intelligent argument to persuade an electorate to vote for the left when they feel under financial pressure. That argument is that Labour did not cause the world banking crisis, rather we dealt with it in the UK with success.

The argument continues that the centralised UK banking model which failed was, in fact, a Conservative creation and it continues with no prospect of change under a Conservative government. The seeds of it’s own destruction remain, unchecked.

It concludes that we need a diverse, devolved banking sector, such as that which is so successful in Germany, and that only Labour can bring the level of fundamental change needed in our economic and banking system to support business, small and large, in our economy.

That, I think, is an argument that can appeal to the landscape gardener.

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Ian Lucas MP is member of parliament for Wrexham and member of the culture, media and sport select committee

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