On the day before his brother’s attendance at the royal wedding, David Miliband was in Washington DC. This followed his tentative steps back towards the philosophical front line with a speech at the LSE on the decline of the left in Europe. Then, at the centre for American progress, he addressed the politics of identity and fear. On both occasions, therefore, he tackled in an international context issues of profound domestic significance.

This approach, obviously, has the advantage of minimising any sense in which David is stepping on Ed’s toes. But such internationalism is also instructive. The challenges facing Labour are similar to those facing social democratic parties elsewhere. The rise of the English Defence League is not the only instance of the search for identity turning ugly. In different ways everything from the birther movement to the success of the True Finns and Thilo Sarrazins can be seen through the same prism.

Miliband identifies “a backlash against globalisation. In the context of a big shift in power from west to east, there are no votes in being an internationalist and there are votes in being nativist”. The west-east shift is involved with a deepening of the global economy, but political impulses form a counter-reaction to this. They may be less pronounced where economies are strong. Canada’s economy is relatively healthy and Bloc Québécois, who might be considered a nativist element in Canadian politics, suffered in recent elections.

Michael Sandel, a voice worth listening to from across the Atlantic, argues “in the age of NAFTA the politics of neighbourhood matters more, not less”. Particularly given that the UK is, according to Miliband, “an over centralised country with underpowered communities”, the renewed importance of neighbourhood politics makes the movement for change more consistent than it might initially seem with the international focus of his politics.

Sandel sees contemporary dilemmas mirrored in debates of the progressive era. “Some sought to preserve self-government by decentralising economic power and bringing it under democratic control. Others considered economic concentration irreversible and sought to control it by enlarging the capacity of national democratic institutions”. With Maurice Glasman’s praise for the “worker representation on the management board, works councils, pension co-determination, regional banks and vocational regulation” in Germany, blue Labour might parallel the former instinct. The later has an echo in calls for stronger European and global governance.

Miliband noted that Labour faces a strategic question over whether to support such calls and make the EU more central to Labour’s politics. We should – for example, on international co-ordination of financial and environmental regulation – when only joined-up policy will suffice. While the international forums that should respond to these issues are vital, they are too technocratic and remote to be rallying points towards progressive senses of identity.

The less technocratic and closer-to-home institutions championed by blue Labour are now important precisely because they remain capable of forming the stuff of such identities. Miliband credited Glasman and Jon Cruddas with “genuine insight” when asked about the contribution of blue Labour by Uncut.

New Labour, like other centre left parties, embraced the opportunities of globalisation from the 1990s onwards. However, such policies as re-skilling, industrial policy and city renewal, Miliband conceded, have not enabled enough of these opportunities to be grasped for all to be convinced of globalisation’s virtues. The response to this is only partly to be found in the emphasis of centre left parties on seizing the economic benefits of globalisation. Economic growth, particularly when equitably shared, can dampen the discontents of globalisation but it cannot alone eliminate them.

It needs to be buttressed by the left winning arguments about identity. “The paucity of the economic answer”, said Miliband, “means that we can’t vacate the identity terrain”. He spoke of a “demanding pluralism”, stressing the responsibilities that should come with the rights of citizenship, as part of this.

Both David Miliband and James Purnell continue to be spoken of as potential leaders of the Blairites. Both have recently spoken internationally on domestic matters. Both are grappling with some fusion of new Labour and blue Labour. This was implicit in Miliband’s remarks last week and has been stated more explicitly by Purnell.

We need the economic openness and aspiration of new Labour. And its willingness to confront change squarely where necessary. We also need the reassurances provided by the continuity and preservation of blue Labour where these instincts can be nourished. The challenge is in knowing where and when change must be embraced and where continuity is the appropriate virtue. Simply having the later gear seems an adaptation to the vintage new Labour model. For this to move us forward it must contribute towards a hopeful and credible account of what Britain can become. This has always been provided by Labour at its best and is the most potent antidote to the politics of fear.

Manchester, so much to answer for. And questions remain. We know that David Miliband, Nick Brown and (we hope) Red Ed will not be in Ed Miliband’s top team. This really was a “turn the page” election, but the next chapter brings questions as well as answers.

Let’s start with the positives. Simply having a new leader is a step forward. We’ve opposed an ambitious and fast moving government with one hand behind our back. Having a renewed ability to adopt clear positions, particularly on the deficit, liberates us. It is even better that these positions be taken by a leader with Ed’s verve and fluency.

It is imperative that the party unites as he does so. However, there is speculation that this won’t happen. Patrick O’Flynn of the Daily Express tweeted of Nick Brown’s exit as chief whip that it “just leaves him free to be chief whip for Ed Balls”. These big PLP beasts, as well as any disgruntled David Miliband supporters, must remember David’s exhortation on Monday: “No more cliques; no more factions; no more soap opera.”

The media will be loath, however, to see the soap opera end, as it will be to drop the Red Ed tag. Tories and Liberal Democrats will encourage the media, not least at Tory party conference, in this mischief making. Ed must provide the leadership, and we must get behind him, to fully escape the soap opera and Red Ed.

He may need to go further than imploring trade union responsibility in communicating to the public that he is not the trade unions’ man. The cuts which Ed should endorse in the comprehensive spending review are likely to generate sparks. But he must firmly maintain fiscal credibility and independence from the unions.

The TB-GBs mustn’t give way to the EM-DMs. The past, as Ed has repeatedly said, is a different country. So, we must do things differently: pulling together, not apart. This would be helped by having leading David Miliband supporters – Douglas Alexander, Tessa Jowell and Jim Murphy – in prominent shadow cabinet roles. Oxygen would be denied to Red Ed if these figures were on the broadcast media backing Ed, rather than Neil Kinnock talking about how he has got his party back or Charlie Whelan denying that he is “an unprincipled butcher”.

That Ed has ascended to the leadership with relatively few policy commitments enables him now to craft a distinctive policy package, which all wings of the party can champion. His speech made useful tactical moves – implicitly endorsing the Darling plan; acknowledging that governments, as well as markets, fail; recognising the importance of units of social capital, like pubs and high streets; reaching out to Liberal Democrats on AV, Lords reform and civil liberties. But his animating theme requires further development.

It would be a significant advancement to have this coloured by rhetoric as striking as that which David Cameron provided early on his journey to Downing Street:

“There is such a thing as society; it’s just not the same thing as the state.”

This indicated intent to move his Thatcherite party to the centre. (He has in government revealed himself to be a wolf in sheep’s clothing, particularly on economic policy). As well as moving his party away from its past, this line flagged its future (the “big society”) and critiqued its opponents (Labour’s supposed big government).

The whole Cameron narrative is there: Where are we? Labour’s big state. Where do we want to go? Cameron’s big society. How do we get there? Cameron will change his party into one capable of delivering his vision and the country will vote for it.

People, ultimately, didn’t vote for it in quite large enough numbers to give him a majority. But, still, we tend to underestimate him as simply a Thatcherite. While this accurately sums up his economic views, it doesn’t capture the significance of the big society, as a force for localism and public service reform, or the appeal of the coalition, and its attendant compromises, in a post-tribal political age.

Given this, and given that the government may be able to argue by 2014/15 that its tough medicine has done its job and better times are here, we must wonder: what will be Labour’s message at the next general election?

Ed needs to have our answer soon. Hint: big government – though it may be a caricature of much of what we did in government – should be avoided. Preparing the ground for the general election campaign must communicate that Labour has changed; making us newly able to rise to country’s challenges.

Ed should move quickly. Following the election of a new party leader “the moment for radical repositioning doesn’t last long”, as Paul Richards notes in his latest book. And defeat on the scale which we suffered in May – a 1983 vote share – demands radicalism. We have urgently to seek out and to occupy this political space. The long road from Manchester to a new socialism starts here.

In doing so, we must make ourselves into the political wing of squeezed Britain. Ed’s wonks should be beavering on policies to address its concerns. More urgently, language and positioning is required which brings all of squeezed Britain into the new generation.

“Facing a new world with new challenges, we need to think again about how we can best serve the people we seek to represent”.

So argues an email which Ed Miliband sent to Labour party members last night. As Ed acknowledged in his conference speech yesterday, one of this new world’s realities, even if we were to now have a Labour government, is the necessity of cuts; and one of the challenges, therefore, is to deliver more for less.

Deficit reduction, however, has simply brought into sharper focus an inescapable trend. An ageing society makes ever less viable established means of financing and delivering pensions, health and social care. Innovation will remain a precondition of improved public services beyond the correction of the structural deficit, which all major parties are committed to achieving over this parliament. Successful adaptation to our cold fiscal climate isn’t simply about muddling through coming years but of making sustainable for the long-term, given profound demographic shifts, vital public services.

Ed accepting that there would have been cuts under Labour was hardly the stuff of Nikita Khrushchev’s secret speech. Gordon Brown isn’t, pace the right-wing media, Joseph Stalin and Alistair Darling’s deficit reduction plan was passed into law by the Labour government.

Labour controlled councils have been preparing for the inevitability of straitened times for some 18 months. Yet, the Tories want to claim that Labour lacks a plan for controlling the deficit and remains capable of committing only to spending increases. They point to the spending commitments made by Labour leadership candidates during their campaigns and the lack of firm proposals for cuts needed to flesh out the Darling plan.

It would be helpful, therefore, if Labour were able to advocate itemised cuts by the time of the comprehensive spending review. Sadly, our polling on competence and unity has nosedived in recent years. The latter won’t be helped if David Miliband does decide to leave the frontbench. The former requires that Labour exude an ability to adapt to fiscal reality.

A truly credible platform, whether at national, city or local level, requires not just resistance to the depth and speed of George Osborne’s cuts, but a demonstrable ability to achieve better public service outcomes on more limited resources. The lack of this ability will be taken by many to mean that Labour can only offer diminished public service standards and potentially rising taxes.

People will expect standards to decline under Labour if we appear unable to adapt to severely constrained budgets; and they will expect tax to rise if our only prescription for better services is more money. A hard-pressed public would begrudge additional taxation and be disappointed, if not downright angry, should we be unable to find new ways of maintaining public service quality.

We can avoid this outcome, however, as we are capable of finding these new ways. And while we should argue for a fairer tax system, we can do so while avoiding adding to the overall tax burden beyond those additions which are necessary to fulfil our deficit reduction plan. Nonetheless, such services are likely to require a changed relationship between the citizen and the state. To avoid leaving the public disenchanted by poor public services in future, we should now be starting an engagement about how this relationship can and should evolve.

These issues were under-discussed in the leadership election. Perhaps they will be raised during Ed’s Q+A on the conference floor this afternoon. He won’t, though, be in a position to put his ideas into practice unless he gets into Downing Street. In contrast, Labour leaders in local government already have the power to reform the way they deliver services. Hopefully, the ranks of these leaders will soon be swelled by a raft of new city mayors.

Steve Reed of Lambeth, as the pioneer of the co-operative council model, is one of the most dynamic of these leaders. The co-operative council embraces all of the best elements of reform: bottom-up; co-production; empowered citizens; pro-social behaviour; culture change; and much more rich gravy besides. This may sound like a wonk’s recipe list but they are the stuff of improved services and community transformation.

Nonetheless, like some of the best meals, the full flavour of the ingredients takes time to interact and be revealed. The wheels of bureaucracy invariably turn painfully slowly and the wheels of enduring cultural change within communities – the genius genie in the bottle of innovations like co-operative councils – more slowly still. So, let us use the power that we have in local government – a majority of London local authorities, for example – to release this genie as quickly as possible.

If we do this now, we are more likely to have a strong record of delivering more for less to point to the next time these councils are up for election. More importantly, we’ll have made these communities as resistant as we possibly can to the inequities that Osborne will inflict upon them.

Ed should celebrate and encourage this local innovation, while holding a strong enough line on deficit reduction to prevent fiscal credibility being a bar to him and his chancellor. Whomever that may turn out to be.

Ostensibly, Manchester hasn’t greatly changed since Labour conference was last here. The buildings are all in the same place. The distinctive cool and charm remains. The corned beef hash at Sam’s Chop House still does the job.

Yet the British economy suffered a recession which shrank it by 6 percent in the intervening period. This is officially more than half way to a depression and a very big deal. Labour at the general election lost the trust of the people to steer the recovery from this. We won’t return to government unless we again become recognised as the party of economic competence.

The leadership election hasn’t flushed out a fully formed economic offer. Perhaps it was unrealistic to imagine that it could. However, some consensuses emerged. We want tax to play a bigger role in deficit reduction than does the government. But this risks the perception that we are a party of high tax, which is electorally arid terrain. And, while Danny Alexander may have suggested that this won’t happen, it would create a marked contrast between ourselves and the government if they do offer tax cuts in the second half of this parliament, upon which the Tories seem likely to insist.

Another consensus to develop during the leadership contest is that we want deficit reduction to begin later, proceed less aggressively and be more sensitive to GDP growth than does the government. But this risks the view that the party which built up the deficit in government lacks a serious plan for correcting it. That we are, in other words, reckless economic vandals. This is slightly hyperbolic, but isn’t so far removed from how many voters, whose support we need to form a government, see us. Consider, as an illustration of this, that 47 percent of voters in the south of England, according to new research by You Gov and Policy Network, thought that the last government’s spending had been “largely wasted”.

The attractions of the economic consensuses which were produced by the leadership election are clear. Nonetheless, to be blind to the risks which attach to these consensuses is to ignore the traps which George Osborne has laid for us. History suggests that we’ll struggle to get a full hearing for our (yet to be worked out) economic offering. We don’t want to gain an audience only to lose it immediately by blundering into Osborne’s traps.

This observation from Norman Tebbit in 2005 shows why we’ll have to fight to have our economic offer heard:  “For some 30 years prior to Black Wednesday, Gallup’s monthly tracking polls had asked respondents which party they saw as the more competent to manage the economy. Only once in all those years was the answer Labour. In the 12 years since Black Wednesday, only once has the answer been the Conservatives.”

What should this teach us? First, leadership on economic competence swept Labour into office and our loss of this lead swept us out of it. It is the economy, stupid. Second, once a party gains a lead on economic competence it doesn’t relinquish it lightly. The last time the Tories had such a lead over us it took us 30 years to overcome it. And, third, it took a catastrophe of Black Wednesday proportions for us to do so. But what made the political consequences of Black Wednesday different from, say, Black Monday, the stock market crash of 1987? Perhaps that we had Gordon Brown as shadow chancellor in 1992 and we didn’t in 1987.

As soon as he was appointed to this position, in the face of a media and political climate just as inclement as that which will greet our next shadow chancellor, Brown was utterly relentless and forensic in crafting an economic platform that would appeal to the whole country and overcome any southern discomfort. He courted prudence long before Sarah and the political impact of winning prudence’s hand was just as happy as his marriage to Sarah.

Black Wednesday, of course, helped us gain a lead on economic competence. But this lead may well not have materialised – even after the debacle of the exit from what Tebbit calls the Early Recession Mechanism – had we not had someone like Brown as shadow chancellor. Osborne’s economic stewardship undoubtedly threatens disaster. But warning of this won’t be enough for us to regain leadership on economic competence. After all, that’s what we tried to do at the general election.

Nor should we assume that the actuality of calamities induced by Osborne’s cuts will necessarily result in voters placing their economic trust in us. We will only reap a political benefit from such disasters if we can offer a credible and robust alternative approach.

Fully formulating this approach is the key task facing Ed Miliband and his shadow chancellor. Yvette Cooper, Liam Byrne and Pat McFadden are expected to address this afternoon’s plenary session on prosperity and work. While Ed Balls and David Miliband may be the front runners, this is a chance for them to make a pitch for the shadow chancellorship. Whoever comes to hold this post will be under tremendous pressure and will have only 13 days to prepare a response to the comprehensive spending review.

It would be best if they do so while making a concerted effort to avoid the traps that Osborne has carefully, but rather obviously, set. Once we accept that we won’t recover a lead on economic competence if we are seen as a party of high taxation, profligate spending and deficit denial, the way ahead on economic policy, though difficult, should be clearer. We should be party of tax justice, not high tax; effective public spending, not spending for its own sake; and a party of pragmatic and fair deficit reduction, not blanket opposition to all cuts.

The budget response is the great set-piece political challenge. Your opponent has an age to prepare and all the resources of treasury. You stand up when they sit down. By the time you sit down, the political context is virtually set, not least because your opponent’s spinners have tried to fix this. Given the centrality of economics to present politics, it is a bigger challenge than ever. Harriet Harman must rise to this as our acting leader.  Which transience of tenure, of itself, reduces her potential agility compared with a permanent leader. You have to feel for her. Here are a few, hopefully helpful, suggestions.

The first task is to distinguish pragmatic economics from small-state ideology. As the need for deficit management is widely acknowledged, pragmatism is required, but only Thatcherites see this crisis as an opportunity for ideological resurgence.

The second task is to oppose the manifestations of this ideology, while the third is to provide a coherent alternative economic prospectus. This prospectus must contain tax increases and spending cuts, but the mix should reflect a very different ideology from that supported by Tory MPs agitating for a budget akin to the Thatcherite “cold shower” of the 1981 budget. Overarching all of this is the need to gain an audience in a media climate favourable to the coalition.

These steps are crucial to Labour’s hopes of returning to government. However, while this budget intends to frame public finances over the full parliament, Labour’s navigation of these steps will evolve. Harman cannot provide a definitive take. This isn’t just because events – for example, a double dip recession; the risk of which is increased by Osborne’s cutting – could overtake whatever fiscal consolidation plan Osborne has. It is also because the necessary Labour policies will only emerge under new leadership.

David Miliband last week produced some neat ideas: mansion tax on £2m homes (ok, but why not simply a land tax?); extending the bankers’ bonus tax (fine, while it works – evasion this year was surprisingly low and the tax take, therefore, unexpectedly high, which is unlikely to persist); and ending the tax subsidy to private schools (great for Croslandites like me, but Friday’s “Miliband’s class war” editorial in the Evening Standard indicates that it won’t be a completely easy sell).

Ed Balls has played the VAT card, stressing its regressive nature. However, the coalition probably sees this coming and will try to protect those who are on low incomes through changes to income tax – and in so doing, protect themselves from Balls’ attack. Balls isn’t wrong to be assertive on VAT, but our VAT-based attacks should acknowledge the full consequences of the coalition’s tax changes or we will appear partial.

While I expect any VAT increase to, rightly, produce Harman fireworks, as acting leader she has limited ability to pick up the good ideas that the leadership contest is generating and craft them into a response redolent of Labour philosophy. Perhaps a permanent leader would have already made a better fist of the case that, rather than scrapping the child trust fund, it would be fairer to reduce tax relief on ISAs, say. Sadly, we can expect many occasions today when it would be preferable to have someone at the dispatch box able to say: “you wouldn’t need to do X if you had done Y”, where, to paraphrase J K Galbraith, X equals something disastrous done by the coalition (e.g. scrapping the child trust fund) and Y equals something unpalatable that Labour would have done instead (e.g. reducing tax relief on ISAs). The coalition knows this and will try to take advantage.

However, disastrous things have already been done and popular protest has been underwhelming. Since the election of President Obama, possibly the biggest change to the American political landscape has been the emergence of the tea party movement. This has been fantastically effective at mobilising grass-roots opposition to Obama’s “big government”. Labour leadership contenders grasp towards elements of Obama’s movement politics. But, this is already slightly old-hat. Alternatively, they could plant more seeds for the emergence of a leftist equivalent to the tea party movement to rally against injustices like the abolition of the child trust fund.

Robin Cook once said that millions of people think that they benefit from tax credits due to obscure machinations of the inland revenue, not because of Labour decisions. A leftist equivalent to the tea party movement – building on campaigns like don’t judge my family – would leave people in no doubt as to which politicians are responsible for reversing popular Labour policies.

The utility of such a movement is underlined by how quickly media coverage of the deficit has shifted since the General Election. Then, the main focus was when to start cutting and the £6bn at issue is the tip of the iceberg to come. We rightly conceded, during the election campaign, the need to address the deficit over this parliament, but were also right to argue that this job shouldn’t begin this year, as to do so would imperil a fragile recovery. Harman should repeat these points in her budget response, but she shouldn’t expect much media kudos for them. Coverage has moved on, swallowing the coalition’s line that cuts had to come this year, with too few tears shed for the child trust fund and the future jobs fund. The outrage that these cuts merit won’t come from the media, but should come from a mobilised grassroots movement.

Another thing illustrated by the speed with which debate has moved on since the General Election is the thin, but real, distinction between economics and ideology. Were the cuts this year pragmatic or Thatcherite? Certainly the micro consequences – the loss of the child trust fund and the future jobs fund – should be resisted. But lots of economists who would balk at being labelled Thatcherite, including the Labour peer Lord Desai, indicated that cuts this year should be part of a pragmatic deficit response. Economists do not speak as one and it’s usually possible to find one who buttresses your ideology.

The easy course is to seek out this economist and use their arguments to provide a veneer of protection for ideological positions. However, like most veneers, cracks can easily be exposed. The tell-tale sign of this tactic is argumentation predicated upon less than credible claims. For example, the coalition’s habitual canard that their austerity programme is needed to stop us turning into Greece. Harman should read Rachel Reeves on why their scaremongering is ideological motivated. But, just as the coalition are grasping towards economic arguments that allow them to retreat to their Thatcherite comfort zone, so, too, there are economists who encourage Labour to remain in our ideological comfort zone.

Their charms should be resisted by Harman, who should instead be carefully studying last week’s report by the office of budget responsibility (OBR). It showed that the economy is in stronger shape than the coalition’s apocalyptic talk implies. Consequently, if Osborne takes actions as dramatic as this talk suggests, then, he will have defaulted to Thatcherite instincts. If Harman can use the OBR’s report to expose this, she will have done a great job. The other things that we need – a full Labour plan for deficit management and growth; a left-ist movement to resist the coalition’s extremes – are for further down the line; hopefully, to be crafted and inspired by our next leader. But an important task can be accomplished today: to damn Osborne’s fiscal trajectory as regressive, ideological and Thatcherite.

First, Gordon Brown will lead Labour into the next General Election. The reaction (or, at least, non-resignation) of other leading figures in the party - particularly, Peter Mandelson, Alan Johnson and David Miliband – to James Purnell’s resignation finally confirmed this.

Second, as I have previously said, Labour has three options: 1.) Back Brown, 2.) Replace him, 3.) Allow him to continue without backing him. The third of these is the worst for Labour and choices of Mandelson et al have closed off the second. Thus, the first must be genuinely embraced by the party.

Third, in yesterday’s Guardian ICM poll, Labour only out-scores the Tories on one issue – better protecting public services.

Fourth, as Liam Byrne’s press conference earlier this week illustrated, Labour’s current line on future spending is not the strongest in the world.

Fifth, this is recognised by people. A new poll  on Politics Home finds that only 16 per cent of voters think that Labour is being most honest on tax and spend, behind the Tories on 37 and the Lib Dems on 28. Not even a majority of Labour supporters think Labour is being straighter on this than other parties.

Sixth, the government genuinely is providing real help now, as the tag line goes, to prevent this recession producing the kind of build up of youth unemployment that recessions under the last Conservative government witnessed in the 1980s and 1990s. Martin Bright recently noted: “There are still some potentially promising ideas knocking about. The Future Jobs Fund, which provides a subsidy for employers willing to take a 14-18 year old at risk of long term unemployment, and the Young Person’s Guarantee, which promises to find work for young people unemployed for over a year, are both attempts to tackle the unemployment tsunami about to hit Britain. The Graduate Talent Pool proposed by DIUS to match graduates to internships is the seed of a good idea and the proposals from the Communities and Local Government department to fill empty high street businesses with creative ‘pop-up’ shops and could also help”.

Sixth, the good work  on youth unemployment lacks co-ordination. Bright goes on to say: “Without coordination, (these policies) risk becoming just another set of eye-catching initiatives … One of the most useful jobs to be carried out by Tessa Jowell in the Cabinet Office or Lord Mandelson in his new Department of Everything would be to coordinate all the work being done to stimulate employment and tackle the recession”.

Ninth, while the economy undoubted still faces major challenges, it has started to grow again. Labour’s activism on tax and spend must have contributed towards this improvement.

Tenth, the British public are far from sold on David Cameron, as Michael White notes.

So, where does this leave us?

The first and second points tell us that Labour has no sensible option but to unite behind the architect of the 2005 General Election campaign: Gordon Brown. A key theme of this campaign was Labour investment versus Tory cuts. The third point might suggest that this strategy should be deployed again but the fourth and fifth points imply that this would not be credible. Instead, the government should build out of the support that it enjoys for protecting public services – the third point – to create support for what can be achieved through public services.

Our story on public services shouldn’t be about how much we invest in public services but about what we can achieve through public services. Our politics and policies should be focused on outcomes, like reduced youth unemployment, not inputs, which discussions about investment always constrain us to. Let us make a make a mission of the outcomes that we prioritise and let us be defined in these terms. The spending choices that we make should reflect these priorities, re-enforcing them both in the minds of Whitehall and the public. Which of our missions, for example, is satisfied by persisting with ID cards? The spending commitments that are not central to our missions should be subjected to the strongest scrutiny.  

The upturn in the economy – the ninth point – is beginning to give a taste of the outcomes that might be achieved when government targets its resources and energies on well-defined objectives and makes missions of them. Youth unemployment must be a mission. Thinking of the other things that should be missions makes me think of something Neal Lawson said recently:

“The story of the last thirty years has been the transfer of risk from the collective, the social and the community to the individual”.  

The risk of being left on the scrap heap of unemployment is not a risk that anyone, least of all the young, should have to face alone. The risks of growing old in an ageing society will be far larger than they should be for far too many people unless we collectively decide to make a mission of improving health and social care for the elderly. The risks of climate change are massive for all of us and can only be tackled by any of us on a collective basis.

This is the stuff of a positive case for government. It is in setting out this positive case that Labour’s best hope for the next General Election resides. This is a different kind of strategy from the 2005 campaign but one which needs to be embraced. It wouldn’t pretend that government can provide the answers to all our problems – this country still needs to have a more mature conversation about what government can and cannot do and what the responsibilities of citizens are and are not - but it would provide a coherent basis for Labour building upon the success which the beginnings of a turn-around in the economy represents. 

The anti-government reaction of the Conservatives to the banking crisis (e.g. opposition to fiscal stimulus, etc) suggests that they may be wrong footed by a strategy predicated on a positive case for government. From George Osbourne’s economic policies to Iain Duncan-Smith’s social policies, they still see government as more problem than solution. Let’s start, however, by building a positive case for what we can use government to achieve, rather than erecting unconvincing dividing lines on spending. 

The trend detected by Lawson implies that the Conservatives’ anti-government tendency is out of kilter with the times. This may explain – the eighth point – the fact that the public remain to be sold on Cameron. Labour successfully presenting a positive case for government over the next year may make him more politically vulnerable than he now appears.

These are desperate times, indeed, for Labour and while the expenses revelations “will hurt the reputation of all politicians”, argues Andrew Rawnsley, ”the damage is likeliest to be greatest to Labour at the next election”. Another poll supports Rawnsley’s view. There have been many highs and lows under PM Brown. But each low seems lower and more desperate than the last one. I didn’t think it was possible to go any lower than the McBride affair but recent days have probably managed it.

It may be that everything that has been revealed in recent days was “within the rules”. What McBride was up to certainly was not. Nonetheless, Brown’s response in both cases was to blame the rules and insist upon their reform. But people, especially public figures, have to take responsibility for their actions, irrespective of what the rules may or may not say. While the McBride affair was undoubtedly depressing in the extreme, there is something even more depressing about the expenses revelations because the people concerned are people who are widely respected and admired within the Labour Party, in contrast to McBride.

Of course, as I have heard Tessa Jowell and Ed Miliband say on TV, we should avoid making judgements on the basis of partial information and Ben Bradshaw and Phil Woolas also challenge the versions of events that have been reported about them. I am afraid, however, that, whatever the reality of the situation may prove to be, the damage has already been done and the dye has been cast for Labour. The party can now only, to mix metaphors, walk into the hurricane of public anger.    

What a prospect. It must make the most battle hardened Labour campaigner nervous about door knocking. Those lions have been lead to this by the expenses claims of the donkeys that lead them. Alan Johnson, however, doesn’t appear quite so donkey like. According to Rawnsley, he, along with Hilary Benn and Ed Miliband emerges ”as acmes of frugality who make modest and entirely reasonable claims for performing their duties”.

James Forsyth argues that this increases the likeihood of Miliband “winning the leadership after the next election”. But the question will increasingly be asked whether, if this were to happen, this would make him the next leader of the Labour Party. Even before the expenses story broke The Mirror did not seem disinclined to the prospect of the frugal Johnson, who has recently appeared to indicate more of willingness to take on the top job than previously, replacing Brown before the election. That frugality must have been good for his conscience at the time and now also appears a smart career move.

 Matthew D’Ancona speculates that he ”may yet be the first person to become Labour leader by going on television and radio repeatedly to deny that he is either capable of the job or interested in it”. These denials mean that Johnson is considered to lack a steely, Michael Heseltine or Brown like determination to accede to the very top. Given this and past experience – the lack of any challenge to Brown either when he became leader or last summer – D’Ancona seems justified in his view that “for all the sound and fury we can expect over the summer”, in terms of plots against Brown, ”the PM will still survive and fight the general election”. But D’Ancona was writing prior to the expenses story. Is this story a game changer? And, if so, how will the game end?

Martin Bright is right think to that there is a “distinct possibility that (it may end with) the Labour Party (going) into terminal decline as a credible political force”. He argues that the best way to avert that outcome is for “the younger generation of Labour politicians … to take control now”. Who can he have in mind? I don’t think Johnson or Harriet Harman, another potential successor to Brown, can be considered part of the younger generation. But James Purnell and Jon Cruddas could. Allegra Stratton has them down as a ‘dream ticket’.

“Why don’t James and Jon grow some balls and get together and challenge GB”, a “Labour grandee” apparently recently told her. The “grandee” will presumably hope that the expenses story has made these balls grow. At this stage, however, I am not sure whether it is certain that Purnell, nor Ed Balls or Yvette Cooper, either of whom (but surely not both?) might well consider standing in any contest that featured Purnell, is out of the expenses wood - though, this is far from the only question that might be raised about the supposed dream ticket. They are usually considered, for one thing, to be on opposing wings of the party. David Miliband – another member of the younger generation with leadership ambitions – certainly hasn’t come out of the expenses story as well as his brother or Johnson.    

If Brown can be prised from Downing Street – and that definitely remains a big if – then the number of names discussed here (Johnson, Harman, Purnell, Cruddas, Balls, Cooper and both Milibands) would seem to open up the spectre of an unseemly scramble for Number 10 – if they all were to grow balls, as it were - at a time when we face challenges so grave that Frank Field has been talking about the need for a national unity government. Peter Mandelson may insist that Brown is focused on these challenges, not his cleaner, but polls of 23 percent cannot fail to darken Labour’s mood music. It may now be the Tories turn to hold the expenses spotlight but David Cameron senses enough weakness around Brown to be edging towards a confidence vote, via the Royal Mail vote.

The chances are that Brown will avoid a confidence vote by giving enough concessions to Labour backbenchers to win the Royal Mail vote with Labour votes, while losing Cameron’s support for his Royal Mail plans. But how many concessions can Brown give without losing the support of the responsible Minister, Mandelson, a potential Geoffrey Howe in this drama if ever there was one? It’s bizarre that Brown has ended up in a position of such dependence upon his old foe – The Sunday Telegraph speculates that Brown may reduce this dependence, in respect of the Royal Mail vote at least, by moving Mandelson to the Foreign Office, “a post he has long coveted”. How these once bitter rivals play their cards on the Royal Mail vote may go some way to determining whether everyone’s favourite ex-postie, Johnson, ends up as PM. The Sunday Telegraph also suggests that Brown may try to prevent this happening by making Johnson Chancellor and, thus, “binding him in” to Brown. This creates the risk, however, as Peter Hoskin notes, that Alistair Darling will play Howe.

All of this, however, is just fluff and hot air – or “sound and fury” to use D’Ancona’s term. Not only is it fluff and hot air, it is fluff and hot air at a time of crisis. Shuffling deckchairs on the Titantic is the right expression. Martin Bright correctly grasps the depth of the crisis facing Labour. The worst thing Labour could offer now (and I have stopped assuming that things can’t get any more desperate, as that assumption has proved sadly, too unrealistic) is more fluff and hot air. That is to say more talk of a challenge to Brown. Talking about challenging Brown but not actually challenging Brown, i.e. not growing balls but pretending to, is the worst of all Labour worlds. It is worse than growing balls and challenging Brown. It is also worse than not growing balls and supporting Brown.

This is a crisis of fluff and hot air in a deeper and more dangerous sense than this, however. Brown promised the country a vision but, frankly, this only came into view with the credit crunch. This gave his government a sense of purpose that it otherwise lacked. Once a government and a party becomes so lacking in purpose that it needs a global crisis to give it one, it is little surprise that the public have little sense of what the party’s purposes, motivations and convictions really amount to. I fear that those battle hardened Labour campaigners, who are newly nervous about door knocking, would struggle to give a convincing answer as to what the point of a fourth Labour term would be, if asked on the doorstep. These lions have again been let down by the donkeys that lead them. And just as badly let down as they have been in respect of expenses.

The Labour Party, whoever leads it, desperately needs a stronger sense of direction. Until the party rediscovers, re-imagines and revivifies its purposes, it cannot complain about these purposes being unclear to the electorate. The most encouraging thing about the latest ‘date‘ between the ‘dream ticket’ is that it occurred at the launch of an exciting new Demos pamphlet. The Liberal Republic is a great publication by Richard Reeves and Phil Collins, which is likely to appeal to Alan Milburn, a name sure to be mentioned among the plotters. The likes of Milburn, Purnell and Cruddas are intelligent and bright enough to think through the thoughts that will need to be thought through for Labour to really rediscover its sense of direction. They should have the balls to do so and not to get distracted by the fluff and hot air. Only one of these pursuits, ultimately, will make a real difference. We were promised vision and we were promised substance. That is still what is required, whoever leads Labour.

“Fortunately”, however, as Collier writes, “while the ability of governments to cooperate has declined, the ability of citizens to cooperate has increased. The Obama campaign was a spectacular demonstration of this at the national level, but there are examples internationally. It may be that cooperation at the level of civil society can be a substitute for that between governments in introducing common responses to global problems”. The Extractive Industries Transparency Initiative (EITI) is an example given by Collier to support an argument that has much commonality with David Miliband’s thinking on the – apologies for the jargon - ”we can” generation. Essentially, this is about citizen-centric policy on a global scale, which is all very exciting, but apologies for layering jargon upon jargon.

The historian Peter Clarke distinguishes between the “moral” and “mechanical” reformers. Perhaps, I can escape charges of jargon by switching to this terminology. Collier is more optimistic about the potential for moral, rather than mechanical, reform. However, “moral and mechanical reform have to go together”, as Miliband has noted. The point here is that global problems seem so vast that we cannot be sanguine about the decline in the capacity of governments to cooperate. The development of a global citizenry is certainly to be welcomed but governments must also raise their game. This week at the G20 would be very good place to start.