No short cuts 

This Labour conference takes place in seemingly benign economic times. Yet all is not well. The need for political renewal is more pressing and more challenging than it has been for a generation. But the answer is not to simply call for Jeremy to stop being Jeremy.

The United Kingdom economy is growing at a fair pace at the moment. In the year to June GDP was 2.6 per cent higher than a year previously. There are signs that the growth rate will be slower in the current quarter but so far not considerably so. Meanwhile, the proportion of working people actually in work is at a higher level than previous recoveries in the recent past. The data also suggests that more people are moving from part-time and self-employment – in effect, the hidden unemployed – and into full employment. Wages had been lagging inflation, creating a cost-of-living crisis. Now average earnings are up 2.9 per cent and inflation is zero, driven by lower fuel and food costs.

Opposition is tough at the best of times. It is more difficult during a recovery when people are feeling better. But this was always going to be a risk for Labour. We spent too much time opposing in the here and now and not enough time looking ahead. When you try to work out what the challenges will be at the next election, you soon realise you cannot rely on simply saying the other side have got it wrong.  You are forced to take a hard look at your values and work out how to apply them afresh.

We are still counting the various reasons for the disastrous election result in May. One key reason surely is that the mainstream of the party, and certainly the leader and shadow cabinet, never properly analysed what caused the financial crisis or how effective the measures to combat it were. There was a sort of self-imposed boycott on any talk about our time in government which meant we got into all sorts of confusion trying to decide whether we should apologise for a crisis we did not cause, or whether we should apologise for losing discipline over spending, which was unrelated to the crisis in reality but not in Tory propaganda. The five years in opposition were wasted.

The measures to combat inequality in our 2015 manifesto were sticking plasters on a deep wound that actually required surgery. Leading members of our party could provide no convincing explanation for what was wrong with our economy, and this state of affairs has continued to prevail since May. The success of our new leader can be ascribed to a large extent by his willingness to engage at a fundamental level with the economic causes of inequality. There are underlying imbalances in the global economy which need to be addressed. In the UK, the government is relying on households borrowing more and more to be able to claim credit for its own housekeeping; that is hardly a sustainable or fair policy.

That is why calls for Jeremy Corbyn to dust off the old playbooks and make conventional sounds about spending and debt are way off the mark. That worked in the 1990s because Labour accepted the broad economic consensus. But we do not accept it today, and nor should we have for at least the past eight years. Yes, we have to restore economic credibility and we have to be wise about it, getting it right both with people and financial markets and not being slaves to ideology of either left or right.  And we have to deal with the fact that people think Labour will waste their money (we need effective spending). However, automatically handing control of our economic policy to the prevailing consensus, whether perceived or as explicitly outlined by the Office for Budget Responsibility, the Bank of England, or other regulators, will sound as if we have learned little from the financial crisis. There is a significant debate to be had in the Labour party about economic policy. Let us approach it with open minds, determined to be both radical and credible.

This article was first published by Progress on 27 September 2015.