Leader: David Miliband is correct: Labour must rethink and reform

Miliband is right to warn against privileging the central state.

The United Kingdom is on the brink of another recession, unemployment is rising towards the three million mark and George Osborne is expected to ask for more than Alistair Darling ever planned to borrow as chancellor. In spite of all this, as Rafael Behr writes on page 26, David Cameron retains the advantage and his personal poll ratings remain high. Economic failure for the Conservatives has not translated into political success for Labour. The Tories have a 12-point lead in the polls as the party of economic competence.

It is in this context that David Miliband makes his most significant political intervention since the Labour leadership contest. In an essay on page 22, the former foreign secretary outlines his vision of modern social democracy, challenges his party to be much bolder and denounces a faction that he calls, in a resonant phrase, "Reassurance Labour". His piece is a call to arms and an attempt to explain how Labour can win again at a time when the centre left holds power in just three of the European Union's 27 member states. "Reassurance Labour feels good," he writes. "But feeling good is not the same as doing good - and it gets in the way when it stops us rethinking our ideas to meet the challenges of the time." The essay can be read as a demand to recapture the radical and reforming spirit of 1994.

We welcome his intervention, as others surely will in the party and beyond. Indeed, on page 16, Mr Darling praises Mr Miliband's "knowledge" and "judgement" and says that he would like to see him return to the front bench. Mr Miliband, perhaps still fearing "perpetual, distracting and destructive attempts to find division where none exists", has chosen not to rejoin the shadow cabinet. However, any doubts about whether he is an asset to Labour have been dispelled by his speeches and commentaries on the crisis of the European centre left, the rise of the British far right and the coalition's NHS reforms. While he has so far devoted himself to single-issue causes, his essay is a more ambitious attempt to set out an intellectual route map for the Labour Party.

He is correct to warn that the public won't vote for "the prescription that central government is the cure for all ills". Too often, Labour has focused on the need to redistribute wealth but ignored the need to redistribute power. In what remains the west's most centralised state, it should support plans to introduce directly elected mayors in the 12 largest cities outside London and empower local government through what Mr Miliband calls "double devolution". And it should support greater devolution, even fiscal autonomy, for Scotland. At the same time, Labour should not lose sight of the need for a comprehensive reassessment of the market, which, though indispensable for generating wealth, is seldom the best vehicle for improving performance or allocating resources in the public sector.

As Mr Miliband argues, Labour must combine a reckoning with the failures of the last government with a more explicit account of its successes. He rightly praises the party's "rescue of the NHS", an achievement now threatened by Andrew Lansley's arrogant and destructive reforms, and its success in narrowing the gap between the best and worst schools while improving educational performance in general.

The challenge for progressives is to develop what the pollster and commentator Peter Kellner described in the New Statesman in September 2010 as a new "business model" for social democracy. The failure of the last Labour government to reduce inequality exposed the limits of tax and spend, and the UK economy is no longer capable of the levels of growth hitherto thought possible. Mr Miliband's assertion that this is a time for "restless rethinking, not reassurance" reflects this grim inheritance. One crucial task is to shift the burden of taxation away from productive investment and towards unproductive assets.

Mr Miliband's intervention will be dismissed by some as the last gasp of Blairism, but the former foreign secretary has long defied caricature. Many know that he served as head of the No 10 Policy Unit during the Blair years; far fewer that he left because he was considered insufficiently reformist. He writes again here of "the red thread", a phrase he first used in a long interview with Jason Cowley in early 2009, that should run through all of Labour's policies. His vision of social democracy transcends Blairite and Brownite cliché.

The left is fond of preaching the virtues of free thought but all too often quashes discussion for fear of disunity. Now, as Labour awakes from intellectual slumber, all wings and factions of the party should take up Mr Miliband's call for a "comradely and serious debate".