In his speech to the Oxford University Labour Party, Lord Mandelson asserted that one of the key factors in winning an election was the perceived “instinct” of a party, the principles that it falls back upon in a crisis. Over the last twenty years, Labour has transformed itself from a far Left socialist workers’ Party, dedicated to privatisation, into a modern, successful party. The Left, if it does not want to face the relegation to irrelevance that the Tories suffered at the end of Major’s government, must embrace and refine the principles of New Labour that have been so successful. The principles are that government has a role in protecting, directing and shaping the market and that public sector investment produces wealth. Finally we must ensure that the upcoming election is not a referendum on whether people like living in a recession, but instead a true ideological decision on whether the people wish to be governed by a Tory Party that would let banks crumble, savings evaporate and homes be repossessed simply through an instinctive fear of government intervention or a Labour Party that has shown itself to have one of the best understandings of modern economics in the world. A glance at the fact that every world government has acted to stimulate its economy shows that no people across the planet have gone with the former option.

This is, of course, incredibly difficult to achieve. Given people’s natural instincts to blame, and eventually punish, the government in power at the time of a recession, it is a challenge to convince the voters that Labour has consistently acted to mitigate the recession. However, this is a goal which can be achieved in two ways. Firstly, as the economy starts to recover, which will almost certainly happen before the election, and people see that Britain has vastly outperformed the pessimistic estimates made by international bodies, it will naturally follow that the praise will go to Labour. We must also continue to propose and implement progressive, sensible economic policy. This is not the time to swing wildly to the left, nor is this the time for the radical left of the party to undo the work of the last 12 years that they have always distrusted.

The question is what should these policies be. Over the last decade, New Labour has done much to improve the economic situation it inherited from Thatcher, through such measures as the minimum wage, yet there is much still to be done. The first issue that should be worked on is getting people off unemployment benefits and back into useful employment. This remains a controversial topic, for Labour given the approach of Mrs. Thatcher, however, it is an area that has potential to not only provide great economic benefit but also to improve the self-esteem and living conditions of the long term unemployed. No Labour supporter, and indeed few on the right, would approve of attempting to coerce people into work by economic or social sanctions, if only because they clearly do not work. Instead a progressive, nuanced Labour should remove the huge disincentives to work which presently exist. Rather than taking Thatcher’s approach and starving the poor into work, we should remove those on the minimum wage from taxation and we should replace the current welfare system with a sliding scale that encourages people to work full time instead of effectively capping many people at a 16 hour part time week. Of course these changes would be initially expensive, but not only would the employment of a large section of our current unemployed be a far more useful investment than aircraft carriers, but in the long run the double effect of more economic output and fewer welfare payments would provide a platform for growth over the coming decades.

Furthermore, we should not be so afraid to stand up for, and fight for, the public sector that we believe in. Currently we are allowing the opposition to dictate to us the tone of the whole debate about the public sector. Labour is constantly accused of hypocrisy on this front, and rightly so. We spent ten years espousing the idea that public sector investment creates growth, and yet as soon as the moment for investment comes, we are suddenly silent and surly, unwilling to stand by our convictions! There are two ways to save money and repay the deficit. The first is to go into our shell, hack away at public expenditure and hope the money saved is greater than the damage to the economy. The second is to continue to invest wisely as we have been doing, so that the economy grows by more than government expenditure. This is the principle that won us the last three elections, and yet the minute we are tested on it, we abandon it and simply try to limit the extent of Tory cuts.

We have seen that the political impetus and energy is still Labour’s to lose after twelve years in office, and I genuinely believe that Labour can win the next election. However, to keep this energy and to have any chance of capturing that fourth term, we must stick by the principles of New Labour, the principles that have led to a progressive Britain, and not use this test to opportunistically undermine the progress the Left has made.