Jon Cruddas on building the new Jerusalem

Labour pledges to reinvent the British model of social justice.

Poverty in Scotland: How can Labour help the whole country? Photograph: Getty Images

The party conference season is taking place at a critical moment in our country’s history. The excitement and success of the London Olympics and Paralympics are over. Our athletes and the thousands of volunteers have given us the gift of national pride. But the way ahead looks grim. The economy is in recession, a financial storm is threatening from the eurozone and commodity prices are rising. In the months ahead there will be more pressure on families whose living standards have already begun to fall. Millions of working people are under severe financial pressure and at risk of falling into poverty. Our children are being shut out of the opportunities for decent work and a secure home. We cannot carry on like this.

We will have to change and we will all have to contribute to building a better country. But our political system is an obstacle to this kind of popular involvement because it is dominated by the rich and powerful. Most people are shut out of Britain’s institutions. Our banks and our media, Whitehall and our big corporations are run by interests that they don’t think they can challenge. Their ingenuity is too often ignored and their skill and hard work are too often taken for granted. Meanwhile, the government flounders, out of its depth, tinkering with planning rules as the economy has shrunk for the third quarter and public borrowing increased by 26 per cent on last year. In this gloom, Danny Boyle’s Olympics opening ceremony shone a light of hope. He showed us our common life and all that is good about our country and its history, and he roused in us a self-confident and generous patriotism. For Labour to win in 2015 it will need to speak for that country, harness its talent and offer a future forged out of the best of British traditions.

This is not a time for quiet reflection on Labour’s future. A poll lead today, François Hollande across the water and the incompetence of the Tory leadership will not secure a Labour victory in 2015. Our ambition is to build a country in which prosperity is shared and in which citizens can genuinely feel that we are all in this together. We are now building a strategy to achieve it. A strategy is about recognising the obstacles and finding ways to overcome them. The obstacles facing Labour are considerable.

To meet them will require significant changes in the culture and organisation of the party. Confronting us are powerful interests. The scale of the effort required to rebuild Britain is immense, on a par with the scope and ingenuity of Roosevelt’s New Deal.

The Labour Party is coming to recognise the size of the task and the obstacles in the way. But among some there remains the hope that if Labour “waits and sees”, the electorate will turn back to it as the economy fails to revive and people blame the coalition. If we keep quiet we can get over the finishing line and carry on where we left off.

This is a dangerous sentiment. First, people may turn away from an unpopular government, but that doesn’t mean they will inevitably turn to Labour. In the 1931 crisis election during the Depression era, the Conservatives under Stanley Baldwin gained over 50 per cent of the vote. Labour, coming out of power, was humiliated. It risks a similar fate today as it struggles to appeal to the growing numbers of self-employed and to workers in the private sector. The second danger of waiting for votes to drop into our lap is that Labour cannot govern in the way it did from 1997-2010. We have a deficit to reduce and we will not be able to rely on tax receipts from the City to spend our way to a fairer society.

Redistribution from a booming financial sector to the declining areas of the country helped to renew our public services and sustain regions bereft of private-sector jobs. In 2015, however, we will not have the same level of revenue. Increasing tax credits will not be an option open to us. We will face very severe constraints on spending. By 2017 the demands and declining tax base of our ageing society will kick in hard. Redistribution will always be necessary but it is not sufficient.

We will have to take another route to social justice. Instead of relying on redistributing money within the existing system, we must start to reform the system itself. Over the past 30 years markets have been remade to benefit those at the top. We will need to restructure them to spread reward more fairly. Ed Miliband is right to say that our current model of capitalism must change through democratic politics.

We will need to improve and strengthen the institutions and organisations that govern our economic and political life in order to give people more say and to spread wealth and power more fairly. We are not going to manage decline, but rebuild our country. We need to construct an economic system that gives people a part to play, utilises their dynamism and creativity and rewards their effort.

We can start by asking the big questions that concern people about our country: not only the broken economy but the fears about levels of immigration, the anger over the benefits system and the lack of time people have to spend with their friends and family. There is no new economic paradigm on the shelf that we can take down and use in place of the broken neo - liberal model. Nor is there a model of democracy which promises a more relational state and more responsive public services. There is no magic fix to recovering popular trust and involvement. We in Labour have to organise the heavy lifting of revisionism ourselves. We will build a new politics and a vision of Britain for the 21st century. This is the purpose of the party’s policy review.

If we are to win in 2015, party members, supporters, affiliated societies and the wider labour movement will need to unite in this common purpose. The shadow cabinet has agreed work under three thematic headings: a new economy, a good society and a new politics. Public debates and seminars, networks of academics and policy experts will develop thinking and policy ideas. On Sunday, the eminent philo -
sopher Michael Sandel will address the party conference. Party members will have an online hub where they can engage in the debates and get access to the papers and ideas that the shadow cabinet groups are discussing. We will not be successful if we speak down to our members or just talk to ourselves. We will invite campaigning organisations and the wider public to get involved, organising house meetings
so that people can meet to discuss politics, building relationships and political activity in our neighbourhoods. We have to reach out to where there is energy and new thinking, locally, nationally and internationally, and bring together expertise, organising skill and good practice wherever we find them.

We need a different way of talking about politics. Our language of modernisation and progress in government became lifeless and filled with technocratic jargon about targets and delivery. We lost touch with how people live and speak and feel about the world around them. England’s socialism is both radical and conservative. It is about a love of home, and locality – and it is about people’s power to protect the people and places they care about. We need to talk more about conserving our traditions, valuing the places we live in and sustaining our ways of life.

We want people to be enterprising, resourceful and self-reliant, fully capable of meeting the challenges and opportunities of the technological changes that lie ahead. But in order to flourish people need security and a sense of belonging. We need to protect people against the life course of risks we now face. Labour wins when it speaks authentically for Britain. We are defining the essential character of a Labour England, a Labour Scotland and a Labour Wales. We will establish the identities of our cities: a Labour Manchester, a Labour Bristol, a Labour Birmingham. Muslim, Christian, Hindu, English, Scots, Welsh, we are all British together. Nations are forged out of common ground not multiple differences. They become prosperous by shared effort. We are one country with many roots and Labour is the party that can speak for the whole of its people.

Sir Frank Lowe, who helped coin Tesco’s slogan “Every little helps”, understood the necessary political alchemy to win this common ground when he said that Labour must communicate with the voters “in a way that shows them a vision and a philosophy that they themselves already wish to embrace”. We will engage with the electorate on issues that Labour has shied away from in the past. We will listen deeply to what people are saying and salve the loss and pain as well as embracing enterprise and success. As Ed has said, everyone’s voice needs to be heard. It will involve developing reforms in our political and economic life that are not directed down from on high but which work from the bottom up and over which people can feel some ownership. The task is to strengthen and improve the institutions of our common life to make sure we have an economy, a society and a political system that people feel a part of. This is the aim of the three themes of the policy review.

Political economy

The economy of the UK has severe systemic problems. Our banking system isn’t working for Britain. By 2015 it will still be unreformed. The culture of short-termism is an obstacle to responsible and developmental investment. Parts of the pensions industry are a disgrace. Across the regions of the country the private sector is not creating the jobs we need to sustain people’s livelihoods. The taxpayer is subsidising low wages by billions of pounds in tax credits and housing benefit. Employment trends signal an increasingly polarised job market and a diminishing of semi-skilled work. The numbers of low-paid and unskilled jobs are set to grow. The share of GDP going to wages is in decline.

Labour’s priority is to kick-start growth and get the economy moving again. But this is only the first essential step. We aim to build a productive, wealth-creating economy, in which the gains are distributed more fairly across regions, classes and generations. Economic recovery will be meaningful only when middle- and low-waged workers get their fair reward. Rebuilding the economy will demand government activism to reform the financial system. There must be a clear separation between investment and retail banking. New houses and infrastructure will be built. An active industrial policy is needed to facilitate strategic investment and foster new markets in which successful businesses  are carbon-neutral, productive wealth creators and job generators. Britain is the only country in the G8 which does not have a dedicated institution dealing with financing of small and medium-sized businesses. A British Investment Bank with a public policy mission has a big role to play in economic growth.

We need to reform our institutions of economic governance, too, so that they balance the interests of society, employers and employees. An economic system of shared responsibility will help to re-embed capitalism in society and reassert the practices of democracy and reciprocity. A well-functioning democracy provides an economic system with legitimacy and stability. Markets require reciprocity for efficiency and productivity. Together they establish trust, relationships and a sense of stewardship at the heart of transactions. It is a moral economy that can be expressed through co-operative and mutual forms of ownership, and internalised in the culture of business through employee involvement in the governance of firms. In return for their commitment to the company, employees can have a voice on salary levels, improving productivity and business strategy.

The neoliberal model of capitalism treats social value as an external factor it can ignore. Labour is the party of good business because it believes that building social value increases economic value. Businesses across Britain know that good jobs motivate people to learn, to work hard and to acquire new skills. Good employers have always known that globalisation doesn’t have to mean a race to the bottom. A new economy requires a better balance between work and home, more flexible working, equal pay for women and a living wage. A strong society and secure families improve productivity and add to wealth creation. We will build a welfare system that rewards those who contribute and properly protects people from the risks they cannot control, from illness and disability to redundancy. It will facilitate access to vocational education and skills training. We need to organise a national system of high-quality childcare that will enable more mothers to join the workforce. Not only will it boost the employment rate and lift family living standards, but a good system will also improve the quality of life for large numbers of children.

A good society

A resilient, connected society needs policies that can strengthen people’s relationships in both social and family life and so help to create social renewal and self-reliant citizens. For 30 years British politics has been dominated by the market and the state. People do not live by the managerialism of the state nor by the transactions of the market. They live in relationships and networks of friendships in local places and these make up society, which is where people experience all that is good and bad in their lives. The political class has become disconnected from the everyday life of our cities, towns and villages. New social evils such as chronic ill health, loneliness and mental illness are devastating but they appear as peripheral to party politics or are simply ignored.

David Cameron recognised this in his attempt to define a pro-social politics that was concerned about people’s well-being, mental health and resilience. His idea of a “big society” was a recognition of the way our social relationships have become more impoverished. But his compassionate brand of Conservatism was made for affluent times. He believed that Margaret Thatcher had solved the long-term economic problems of the country. His strategy of “detoxification” and his hope of electoral victory in 2010 were derailed when Lehman Brothers filed for Chapter 11 bankruptcy protection in 2008. The Conservative leadership retreated into economic dogma and the big society withered beneath the onslaught of its liberal market orthodoxies.

We in Labour made a mistake by dismissing Cameron’s pro-social politics. We now have the opportunity to develop our traditions of reciprocity, mutualism and co-operation. The party grew out of collective self-help and popular movements of self-improvement. Labour’s social alternative must be about rebuilding Britain from the ground up. It will mean a more relational state, preventing problems rather than coping with their consequences, and unlocking the resources of people and communities to nurture transformational local change. Alongside this self-renovation of neighbourhoods will be zero tolerance of antisocial behaviour, bad neighbours, criminal gangs and the selling of drugs.

We will strengthen and improve the local and national institutions of our common life – the NHS, our schools and universities, the BBC, local government, our national network of children’s centres, our parliamentary democracy. We will need new institutions of social care to address the huge challenge of our ageing society, and we need to allow inventive local changes to our public services that put people at their heart. Institutions and faith communities that facilitate intercultural dialogue can engage with neighbourhoods where ethnic differences are a source of conflict. Local and city councils can link to innovate approaches to public service, and provide partnerships in collective selfhelp and community-building. Local and regional economies can benefit from investment in enterprise, public cultural events, collective energy purchasing, community land trusts and credit unions.

Public services still feel unresponsive. Users are too powerless despite attempts in recent years to “personalise” services. Central targets can help raise basic standards but they do not put people in control. Choice is valuable in giving people some power, and competition can help raise standards, but they are limited in their impact. People don’t choose and change schools as they do supermarkets. Users should have a strong voice inside institutions, not just a choice between them. We need to think about different models of change. For example, institutions delivering public services – whether they are state, third-sector or private-sector companies – could have user and professional representatives on their boards.

A new politics

We need a national debate about the kind of country we want to become in the 21st century. To engage in this dialogue effectively, Labour is recovering a moral depth to its politics. We need our lodestar to guide us and to invest meaning and purpose in the inevitable compromises of politics.

What does Labour stand for? Reciprocity, freedom and the common good are three moral practices that are part of our tradition. They will inform our modern approach to citizenship. Reciprocity means that our right to receive help carries an obligation to help others in return. It is a give and take which establishes a sense of justice. The unjust person is “the one who takes too much in terms of advantages or not enough in terms of burdens”. The practice of reciprocity creates social liberty. We are not free to do whatever we want. Our freedom is conditional on the constraints of our obligations to others. Freedom is rooted in the moral practices of democracy and relationships rather than allocated by the market and its commercial transactions or by the administrative state.

Social liberty is about equality but it doesn’t assume that we are all the same, nor does it imply the technocratic fixing of the state. Equality means recognising that each one of us is a distinctive individual. It is not about forcing everyone to be the same.

A democratic politics of the common good does not deny individual and cultural difference nor impose a standard identity and set of values on everyone. It seeks to establish the goods we hold in common through democratic negotiation, which is only possible with strong relationships. Too often our politics has created anger and resentment by trying to impose a false consensus. The common good is always incomplete and contested and so always argued over. It is the politics of practices not of ends, and in creating relational goods, common cultures and hybrid identities out of people’s differences it helps to create an active sense of national and local belonging.

In seeking to distribute power away from our highly centralised state, we can follow up the example of Manchester City Council and others and build city cultures and economies that power regional economic development.

We should be not just a national administration-in-waiting, but a movement that organizes people to be in power throughout the land.

A Labour covenant

Rebuilding Britain is not just the business of government but a national project of renewal. It will be Labour’s covenant with the people. These are difficult times, which means it will be a covenant of work, shared responsibility and contribution. In return, there would be em - ployee involvement, homes and infrastructure, and good childcare. A welfare system would provide proper financial protection against the risk of unemployment, disability and sickness. For the growing numbers of working poor and low-paid there will need to be a wages-led recovery. No one in work should be poor; no one disabled or sick should be abandoned; no child should start the school day hungry.

Labour will win people over by practical help in improving the quality of their lives, encouraging their self-confidence and increasing the opportunities open to them. Rebuilding Britain begins with honesty about the dire economic circumstances we are in. The brutal truth is that, with the state of the economy as it is, Labour will be in a fiscal straitjacket in 2015. Rebuilding Britain will need people to pull together to meet the challenges ahead. There will be no easy way out of our problems. Opportunities will not come easily but they must come fairly. Aspiration will require determination and perseverance, but it should be the preserve of all, not the few.

There will be difficult choices to make. Rebuilding Britain is ambitious. It is about hope for a better life for our children and it is about pride in our country. We have fallen and we must pick ourselves up, hand in hand. With the right strategy, Labour can make this happen. This is the task of the policy review over the next year.

Jon Cruddas is MP for Dagenham and Rainham and is head of the Labour Party’s policy review.