Progressive ideas have shaped British politics over the past decade in part because New Labour jettisoned political baggage and understood modern economic and social forces. If we want progressive ideas to flourish in the future we must first demonstrate a capacity to continue to learn from the past.
Eleven years in office counts for something when it comes to the business of delivery. Experience doesn’t have to be a liability at the next general election; it can be an asset if we show a willingness to reflect and apply those lessons to the new challenges the country faces.
Winning a fourth term won’t be determined by the record of the past eleven years but it can be informed by it. Governing is predicated on being able to communicate an understanding of the future and inspire confidence that we are equal to those challenges.
On a recent trip to Asia, I experienced why the 21st century promises to be a period of change, challenge and opportunity for Britain. At the Foreign Trade University in Hanoi I heard the ambition, expressed in perfect English, of highly educated students determined to learn and succeed in an economically liberal world.
In Hong Kong, I saw how Chinese pragmatism is making a reality of one country, two systems. Where ten years ago there may have been doubts, local business leaders are now enormously optimistic about the future.
In Shenzhen, one of the least well-known of the many Chinese economic success stories, I saw a fishing village that had been home to 30,000 people 25 years ago, transformed into a new metropolis of 12 million people. And the companies we visited in Shenzhen were not low-grade, mass-volume manufacturers. They were high-tech, high-quality, high-value-added businesses. The parts of the value chain we sometimes complacently believe in Europe we have a right to hold onto.
In the UK we can’t shelter from these profound political and economic forces. We have to compete and not retreat from them. How government responds to these forces must draw upon a decade’s experience of its strengths, as well as a candid assessment of its limitations.
There is no doubt that had the Tories won in 1997, 2001 or 2005, Britain would have been a very different country to the one it is today. The once-in-a-generation renaissance of our schools, hospitals or parks would not have taken place.
We have shifted the debate to the point where the Tories try and give the appearance of having bought into a consensus about the size of the state as a proportion of GDP. While the reality of the Tory policy position hasn’t changed, their rhetoric tries to insulate themselves from attacks by saying they would not shrink the state by cutting vital public services.
Despite this, New Labour cannot fight and win the next general election on the issue of tax cuts versus investment alone. Or a big state, little state argument. The next election will be a choice between a Tory version of a weak state and New Labour’s vision for an effective state.
At home, that means a progressive mission to build capacity within individuals, families and communities to be the drivers of opportunity and change in Britain. Abroad, that means a progressive mission to defend Britain’s national interests by influencing, shaping and empowering the multilateral institutions that will determine the future of our planet.
The common condition that connects these two objectives is the realisation that Britain is in the fiercest global competition for finite financial and human capital. Progressives will always be concerned with the fair distribution of wealth, but for this to be meaningful in difficult economic times we must prioritise wealth creation. So our tax regime, planning regime and regulatory regime must all be subject to the discipline of whether changes are improving Britain’s competitiveness and creating a more prosperous economy.
Regulation is critical to our competitiveness so, as we go forward, the state needs to learn to regulate differently. It is about good government and good policy making. We need to see a greater emphasis on self-regulation where possible if we want to stimulate real ownership of a problem. Or market-based solutions like EU Emission Trading Scheme that create the right incentives to tackle climate change.
We should learn from the new models of regulation developed in recent years. The right to request flexible working was a deliberate attempt to strike a balance between the needs of employers and employees. The old politics would have legislated for a right to flexible working, rather than a right to request. It’s a subtle but important difference that has competitiveness at the heart of its design.
Ultimately regulation and its impact upon wealth creation can generate a price paid by businesses and consumers. That is why earlier this year we announced the first ever system of regulatory budgets. We will cap future regulation to create the same discipline for departments about where to focus their regulatory interventions as the spending review process is delivering for the allocation of resources. If we get it right it could be a radical framework to support competitiveness in the future.
If competitiveness is largely a product of a county’s indigenous resource then, as the prime minister has rightly said, the most important resource we have as a nation are the British people. Developing talent, nurturing aspiration and fostering responsibility is a progressive ambition to build capacity within individuals and families.
This means a state that is more flexible, discriminating and sensitive to the needs of individuals and families. One that empowers by actively seeking differentiated response because we are different and start from different places. This means a state that devolves power and responsibility not through abdicating its interest but by building capacity.
We will need to deepen our reforms to empower people not institutions. Financial incentives are critical. Systems and institutions understand and respond to those signals. Payment by results and the introduction of choice in the NHS is delivering huge improvements in the quality of care. These are principles that can be applied elsewhere in the public service landscape.
Within communities, building capacity means strengthening local leadership by empowering local electorates to have a greater say in how they are governed. Locally elected mayors can lead this process. In some areas, building capacity will first mean a more directive role for the state. In welfare the ‘deal’ between the state and citizen constantly needs refreshing to make sure the balance between individual and state responsibility is right.
However, there are few challenges at home that are not powerfully influenced by forces abroad. The interdependency we face from climate change and energy security, economic liberalisation and trade, and terrorism, means we must engage with the world and commit the resources to deliver the right outcomes. The state needs the capacity to defend our essential freedoms and those of others around the world.
Britain’s strong historic relationships with every important part of the new global power landscape, gives us a tremendous platform for influence. To defend our vital national interests we must be prepared to engage and empower multilateral institutions. Pooling sovereignty has been the essence of our relationship with Nato. We must not retreat into the isolationism that still permeates the right wing of British politics.
Competitiveness in the key test in the decades ahead. As progressives we must shape the state in ways that help people prosper in the face of profound change. The old argument between left and right was portrayed as that between a ‘big state versus small state’. That’s the old politics. We should drop our obsession about size. It isn’t everything. What matters most is our effectiveness at building capacity to enable individuals, families and communities to seize the opportunities afforded by this new global era.