Leader: Labour must change to survive

The Labour government remains a superior option to the Tories but it needs credible policies to meet

Philip Sinden

The two greatest challenges for every country in the world today are the global economic crisis and the approaching reality of catastrophic climate change.

We are still passing through the worst economic crisis since 1929. There is no pain-free way out of this. The historic failure to invest and the supremacy of banking within the economy leave Britain in a weaker position than France or Germany in the global financial crisis.

However, the TUC's leader, Brendan Barber, was right to warn on 14 September about the negative impact of spending cuts on the chances of economic recovery. Public debt repayments can be spread over decades but we need economic recovery now.

This is where the Tories are simply wrong. David Cameron's media puff for his pinprick plans to increase prices in Westminster canteens showed that he has no serious vision to take us forward.

The Tories have abandoned the cuddly image that Cameron had nurtured in favour of a doctrine of immediate and savage cuts in public spending - which we can be sure will hit the poorest hardest. Cameron would have spent £5bn less than Labour in this year alone. At the same time, he guarantees an inheritance tax cut worth £200,000 each to 3,000 millionaires.

Cameron's approach is no surprise. Should the Tories win the election, the MPs who would fill his benches would be from the same political mould as Thatcher. While Cameron emotes for TV and offers up Ken Clarke like a security blanket, assembled behind him is a group of hard-faced young men and women who, to paraphrase Mr Baldwin, did very well out of the boom.

Opinion surveys of incoming Tory MPs show over 90 per cent are Eurosceptic Atlanticists. They would like to turn Britain into a mini-America with more for the wealthy, meaning an even bigger underclass. A Tory government could permanently recast the economic and social structures of Britain along these lines. Any who doubt this should look at the scorched-earth policies of Tory London boroughs such as Hammersmith and Fulham or Barnet.

For all its many faults, Labour's record shows it is different from, and better than, the Conservatives. A minimum wage, peace in Ireland, devolution and the expansion of public services are all examples of where Labour has delivered.

The Labour government remains a superior option to the Tories, but Labour must change to regain support. That means the government must exercise real control over the part of the banking system it owns to provide the lending without which companies cannot survive and families cannot buy homes.

Public spending that benefits the population and aids economic recovery must be sustained through more progressive taxation and cuts to spending of no public benefit: cancelling ID cards and the Trident replacement, and reducing military spending to the same share of our economy as Germany. This last step would cover the cost of servicing the debt from the bailout. Areas of the economy in near-total collapse, notably housebuilding, need direct state intervention to restore investment. Labour should never have maintained Thatcher's ban on local authorities building houses. And the government needs a courageous approach to climate change and the environment. We need taxes and incentives to cut traffic pollution and congestion, tough targets to cut emissions by the whole country and the vigorous promotion of energy saving (such as home insulation).

Part of that economic and green agenda must be a reorientation of Britain in the world, away from being the poodle of the US to a new relationship with the rising economies of Asia and Latin America.

Labour must change to survive, and that means credible policies to meet the huge challenges of the world.