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Why Ed Miliband welcomed David's intervention

It is right that the Labour Party rigorously debates how to deliver fairness in tough times.

It was little reported but Ed Miliband welcomed David Miliband's elegant, cogently argued and stimulating essay last week on Labour's direction.

We all believe it is right that the Labour Party as a whole talks about how we deliver fairness in tough times. Even if the Westminster bubble wrongly sees this as division we should encourage a genuine debate be heard through the din.

So let's try. The starting point is to understand the seriousness of the party's 2010 defeat, the second worst in our history only masked by a poor Conservative result which confounded David Cameron's cocky expectation of victory.

Although the Tories didn't win, Labour lost five million votes from our 1997 landslide, four million by 2005 while Tony Blair was leader: the rot had set in well before 2010. The party was hollowed out of members, activists and enthusiasm -- and it was saddled with mega debts.

From that abyss, Ed Miliband has done remarkably well to pull Labour back to poll consistently in the promising late 30 per cents from the dismal late 20 per cents. In Wales last year Labour got its best ever Assembly result. Five MP by-elections under Ed have seen not just good victories but, significantly, big swings from Tory to Labour. After they lost in 1997 the Tories couldn't win by-elections for nearly ten years.

He has also set the agenda, on Murdoch, on bankers' bonuses, on government destruction of the NHS, on the squeezed middle and on the plight of young people denied the promise of Britain. He doesn't get much credit for that, but then no Labour leader of the opposition has ever had a favourable media unless the Tories are down and out -- witness the run up to 1997. His poll ratings compare favourably with David Cameron's first period as opposition leader after 2005.

So much for the facts, what about the ideas?

First, no complacency. Labour has a great deal of ground to make up and trust to win back. The goal of one-term opposition is daunting. Yet it is achievable, not least because there was no seismic shift like in 1997. Cameron is no Blair and he leads a creaking coalition, not a post-landslide government. What is more, parties rarely, if ever, gain support in power and Cameron starts from a low base of 36 per cent. It's game on for 2015.

Second, party reform, as David argues, is necessary. That's why our Refounding Labour project, the principles agreed at the September conference, is so important. Actually the task goes well, well beyond examining new ideas like how the French socialists widened the franchise for their Presidential candidate -- because the political party model is bust.

Whereas 4 per cent of voters were members of a party 60 years ago, today under 1 per cent are. People are not joiners anymore. But they can be engaged in their thousands as supporters -- exactly what Ed Miliband achieved at the party's 2010 conference: a new category of registered Labour supporters who pay no fee but can broaden the party's reach rather as the Obama campaign did in 2008.

Third, the role the state. No serious Labour figure today favours a "big state", a "nanny state" or a "centralised state". But where we sharply differ from Tories and their Lib Dem allies is in our absolute commitment to active government.

They favour a hands-off approach to industrial policy -- witness cutting Labour's loan to Sheffield Forgemasters, which is capable of creating a centre of excellence for nuclear centrifuges in Britain rather than abroad. Or the disastrous unwillingness to block to the UK's only remaining train manufacturer, Bombardier, from securing a £1.4bn train order. Or the missile fired at the solar industry by an arbitrary rather than phased reduction in the feed-in tariff.

The list goes on, but it amounts to a calculated and cavalier stance on our industrial base which cannot expand without the kind of active government support enjoyed by German manufacturing, for example.

Then there's the future of Britain, where again Ed has begun setting the agenda. By making the case for a progressive Britain where strong economic regions help the weak, where rich help poor, rather than a dismembered Britain where nations like citizens fend for themselves.

And the defining issue of our era: the economy and the deficit. In keeping with their neo-liberal ideology, the Tory-Lib Dems are determined to cut the state, come what may. They seem unwilling to let the facts get in the way of their dogma. They remain indifferent to the fact that the deficit has actually gone up precisely because their cuts are going too far and too fast. The cuts have forced economic activity down and unemployment up, pushing borrowing up by a staggering £158bn.

All the indices under Labour's active government have gone into reverse. When Labour left office, Alistair Darling had put in place a carefully calibrated programme to recover from the banking crisis and prevent recession sliding into depression. Borrowing was coming down, unemployment down and growth up. Under the slash and burn of Cameron and Clegg the opposite has been happening and is set to continue.
Labour remains committed to a fairer, more equal society. Yet inequality is growing, greed at the top increasingly and angrily resented by the squeezed middle.

On all the big questions, hands-off, passive government and a small state has no answers. The crisis of affordable housing cannot be resolved by leaving it to the market. Climate change cannot be tackled by PR hug-a-huskie stunts soon downgraded to no action at all. Health care will not be improved by importing the worst of America's dreadful, costly system. The ticking time bomb of elderly care cannot be off-loaded to families. Educational opportunity cannot be enhanced by a free-for-all in schools. And crime cannot be reduced by cutting all the police officers (and more) recruited by Labour.

None of that is working. Which is why -- as Ed Miliband and Shadow Cabinet members start rolling out new policy ideas in the coming months -- there is a huge opportunity for Labour, not just to bounce back as we already have, but to gain the trust of Middle Britain and win again.

Shadow Cabinet Member Peter Hain MP is Chair of Labour's National Policy Forum. His memoirs, "Outside In" have just been published by Biteback