Thousands of Labour party members, trade unionists, and those in the parliamentary party have been receiving their leadership voting forms. Their collective decision will have a big impact on UK politics and possibly on Britain itself. Last night, Channel 4 held the last TV debate between the leadership candidates. David Miliband most impressed with his talk of redistributing power, wanting to talk about the future and acceptance that Labour needs a credible debt reduction plan.

David Miliband: The ‘Red Tory’ candidate

By previously criticising New Labour’s “paternalist authoritarianism”, where government is promoted as being the only possible problem solver, Miliband has offered the sharpest Labour analysis of his government’s greatest failure. The logical next step to this critique is one that is at the heart of Red Tory thinking: the redistribution of power and responsibility so that we all have a part in achieving a better society. He took this next step during the Keir Hardie Lecture in July:

“We need a creed that could combine solidarity with responsibility, freedom and equality. Without community ethics, lived and upheld, it is difficult to generate the civility we value. I take Big Society seriously.”

As the rhetoric in the leadership race has lurched left-wards David Miliband has not felt comfortable enough to develop his “Good Society” theme, but neither has he rejected it. The other candidates have fallen into the comfortable trap of violently rejecting everything the coalition does, and using the same bitter tone towards the Lib Dems that a jilted lover would use to describe her cheating ex. This type of yah-boo politics is emotionally satisfying but it does not appeal to the electorate at large.

David Miliband for Leader

On 25 September I want David Miliband to be crowned Labour leader.  Cameron is rightly concerned that David Miliband has the best chance of making Labour a real alternative government. Tim Montgomerie in yesterday’s Times pointed out by signing-up to Alistair Darling’s – a Labour politician who is still very well thought of by the public – debt reduction plan, it’s harder for the Tories to paint a David Miliband-led Labour as deficit deniers. In politics, as in life, the best results are achieved when there is strong competition. Would Thatcherism have been a more rounded ideology if she faced a credible social democratic opposition who supported economic reform, but also the inclusion of a caring hand in the free market? Could Tony Blair have gotten away with his attention-deficit sofa style government – or authoritarian streak – if the Tories had picked someone of Ken Clarke’s calibre?

For me Cameron’s red TORY ideas will always be preferable to Miliband’s RED tory vision, but I look forward to the argument. The tectonic plates that represent UK political consensus are shifting. Let the proper political debate begin!

The IFS has recently released a report criticising the Coalition’s claim that the budget was “progressive” by stating that it will hit the poor hardest. Instead of criticising the IFS’ work, I believe it is more appropriate to discuss why any genuinely progressive government needs to reform the country and that only through reform can we tackle the structural problems in society.

The first tranche of reform came in the 1980s with the major liberalisation of the British economy. This freed up enterprise and risk takers and created a new and burgeoning middle class. It also was in an era of unbelievable ideological battles between the forces of collectivism and those of liberalism. Ultimately the latter won, but it left a bitter legacy for millions of British people who only remember unemployment, wasted lives and broken families.

The second tranche of reform begins today and we have learnt from the experience of the 1980s. The most vulnerable to change in society cannot be cast off because while some rise to the challenge, others fall by the wayside. The Coalition has been explicit in focusing on the needs of the most vulnerable in society at the expense of “easy” reform.

The most vulnerable in society are not just the poorest, but also the aspirational and middle classes. The recession has resulted in many Britons with lower incomes than before. Higher living costs mean that many are wary of what the future holds. People who have mortgages know that the low rates will not continue forever, but are fearful that they will not only be unable to afford higher interest rates but that they will be unable to realise any capital gains on the sale of their property. Indeed, the most vulnerable are not only those who are reliant on government largesse, but are many who have barely survived the most brutal downturn since the 1930s.

The people I have identified above are not only the most vulnerable; they are the forgotten people in Britain. They are forgotten because they do not have unions and others advocating for them. They are forgotten because the media bypass them. They are forgotten because they get the occasional outpouring of righteous indignation from politicians, only to see any promise of a New Jerusalem soon whither away to the stark reality of modern life. Luckily, these people are now at the heart of the Coalition’s agenda. Rather than the patronising smile of a Labour politician handing out cheques and then abandoning them to their fate, they will get a Coalition politician who understands the problems and the struggles and who does not leave them to fend for themselves.

The Coalition will be undertaking a second tranche of structural reform. The first achieved a liberalisation of the economy. The second is about converting the State into local community organisations and about achieving structural social change. The biggest problem with the past Government was their assumption that every problem could be handled centrally and that a State is most effective when dictating outcomes irrespective of the needs of individuals. This is simply wrong.

No two communities are the same and therefore public services cannot be universally applied in the same way. “Equality of outcome” is not universal public services with no difference in what is being offered, but rather public services that match the needs of the local community, that are socially and economically sustainable and that acknowledge the uniqueness of local communities. This idea, commonly known as the “Big Society”, combines the best of Conservative and Liberal intellectual thought. It also learns the bitter lessons of previous years and the accumulated wisdom of past experience.

Welfare reform is a major step to change the social culture of this country towards effort, hard-work and enterprise. The State now acts as a giant spin cycle with money coming in from taxpayers only to be spat out to the same taxpayers. This creates a reliance on government handouts for financial security irrespective of need. It also creates a reliance on handouts to maintain a standard of living. This will now change.

Education reform will see the most radical transformation in schooling in generations. It will allow individual’s unique talents to be properly appreciated in schools that match those talents rather than be forced to certain schools as a glorified social engineering project. Do not forget that the current system is designed for social engineering – yet humanity is too complex, too dynamic, to be fine-tuned like a motor. By forcing parents to go to a bad school the inevitable outcomes are parents who pretend to hold religious beliefs or to move house to secure a good school place. Parents care more about their children than the State ever could. These school reforms will help parents without punishing them. It is about liberating families across the country from the dead hand of government bureaucracy.

The economic reforms are about making our public finances sustainable for the long-term. We are facing massive challenges in welfare, education, pensions, energy, infrastructure and many other areas. Raising expectations about permanently high government spending is unrealistic, is unsustainable and is unfair. What on earth is fair about leaving the next generation with over £1 trillion in debt?

This government is progressive. It combines the best Liberal and Conservative traditions and despite what people think, it is a government that will create sustainable, long-term jobs in the face of an economic catastrophe and will help the forgotten people of this country.

Deflation has been imposed on Greece.  It is unlikely that the Greek economy will be able to grow for many years to come.

The Spanish economy has stumbled into marginal growth, with the country suffering from an unemployment rate of around 20%.

The unemployment rate in Portugal is the highest for three decades.

The Irish economy has collapsed and unemployment is at a 16 year high.

What have all these economies got in common?  They are all members of the Euro.  They have all decided that a political goal of a single currency should be created on the backs of the unemployed.  For the first time since the Gold Standard, national Governments decided to sacrifice the interests of their domestic economy for the sake of the viability of an international economic ‘dream’.

And the people of Spain, Portugal, Greece and Ireland are paying the price for their leaders dreaming that dream.  They have been placed in a straightjacket, unable to devalue their currency or set their own interest rates.  As Paul Krugman said:

“The fact is that three years ago none of the countries now in or near crisis seemed to be in deep fiscal trouble. Even Greece’s 2007 budget deficit was no higher, as a share of G.D.P., than the deficits the United States ran in the mid-1980s (morning in America!), while Spain actually ran a surplus. And all of the countries were attracting large inflows of foreign capital…

Then came the global financial crisis. Those inflows of capital dried up; revenues plunged and deficits soared; and membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap.

What’s the nature of the trap? During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line.

But that’s a much harder thing to do now than it was when each European nation had its own currency. Back then, costs could be brought in line by adjusting exchange rates — e.g., Greece could cut its wages relative to German wages simply by reducing the value of the drachma in terms of Deutsche marks. Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is.

The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t.”

The single currency, founded almost purely on the basis of orthodox neo-liberal economic ideas should be anathema to anybody who describe themselves as progressives.  The problem is that many progressives have forgotten the meaning of the word.  They are prepared to put their vague belief in ‘internationalism’ above any faith in democracy or any belief that nation states should have economic weapons to handle conditions unique to their country.

Just as previous generations of politicians risked economic catastrophe because of their dedication to the Gold Standard (Keynes, as ever, is worth a read on this one), so progressive politicians today can be blinded by their dedication to the Euro.

One of the great questions of recent years is why so many so called progressives have embraced the European project with such fervour in recent years.  One of the great triumphs of British radicalism has been universal suffrage and popular sovereignty.  Now, as Tony Benn famously said, many on the left have decided that   “a good King is better than [what they view as] a bad Parliament.”  It is very hard to understand how anybody schooled in the traditions of British radicalism could take that view.   Benn continued:

“We are discussing whether the British people are to be allowed to elect those who make the laws under the which they are governed. The argument is nothing to do with whether we should get more maternity leave from Madame Papandreou than from Madame Thatcher. That is not the issue… My next job therefore is to explain to the people of Chesterfield what we have decided. I will say first, “My dear constituents, in future you will be governed by people whom you do not elect and cannot remove. I am sorry about it. They may give you better creches and shorter working hours but you cannot remove them”….I know that it sounds negative but I have always thought it positive to say that the important thing about democracy is that we can remove without bloodshed the people who govern us. We can get rid of a Callaghan, a Wilson or even a right hon. Lady by internal processes. We can get rid of the right hon. Member for Huntingdon (Mr. Major). But that cannot be done in the structure that is proposed. Even if one likes the policies of the people in Europe, one cannot get rid of them… Secondly, we say to my favourite friends, the Chartists and suffragettes, “All your struggles to get control of the ballot box were a waste of time. We shall be run in future by a few white persons, as in 1832.”

In wresting economic control from national governments at a time of economic crisis, the Euro is being distinctly regressive – possibly the most regressive financial instrument since the Gold Standard.  In wresting democratic power from national electorates, the EU, as it is presently constituted is ignoring the great tradition of the Levellers, the Chartists and the Suffragettes.  That is something that should give some progressives pause for thought.

This fuss over the ‘landmine’ of the Equality Act is completely ridiculous. The Act doesn’t require anything beyond a consideration of how government actions impact on people – which frankly is something I would expect any halfway competent politician to do anyway.

I think there is an argument to be had about the way that governments expect to pull a lever and have a wide-spread social effect – but it’s not specifically that Act.

More widely, I think the furore shows us something instructive about how Labour and the Conservatives approach society.

Labour is all about phrasing , not delivering , and just showing that they ‘care’; and requiring; and splitting people up into discrete little groups so politicians can try to target what are effectively bribes at them.

Conservatives are about making sure that overall, people have the opportunity to make of themselves whatever they want. It’s not about putting people in boxes – it’s about making sure that they all have equal opportunity to break out of whatever box they have been abandoned to by Labour.

The Emergency Budget was – let’s face it – tough on everyone. It had to be. The problem is not that our taxes were too low, but that our spending was too high.

There are a few things that strike me as obvious but which clearly aren’t for some – firstly, that to make work pay you have to make sure that living on benefits becomes less attractive: that doesn’t mean punitive, but it does mean, for example, that lavish housing benefits far beyond what people in good jobs can afford have to go. Secondly, that of course when you cut spending, those who use public services the most would be disproportionately affected if you make no other changes to reform those public services in order that they deliver better (this is the great argument that Betapolitics has been advancing in recent weeks). And finally, that when bodies like the IFS have considered fairness and progressiveness, they only look at what the state pays out. Why don’t they look at the opportunities for growth, for better jobs, for more social mobility as well?

It isn’t all about the state. It is all about society.

But not the people journalists mean.

Matthew d’Ancona, in his Evening Standard column on Monday, trivialised the important and necessary debates over welfare reform into a soap opera style personal battle. The Coalition does not have the luxury of choosing between cuts and reform.  Labour’s legacy of record debt and “broken society” demands that there must be cuts and reform.

Tensions during the spending review should be celebrated as a sign that the Government is facing up to the difficult choices it must make. Trivialising the debate ignores those in the real world who are impacted by the decisions being made.

Cabinet government is about discussion, argument and then compromise. No single Minister can govern every part of our complex society alone – they are in it together.

Mr d’Ancona underplayed the fact that Iain Duncan Smith argues his case from a place of authority. When David Cameron appointed IDS, he knew exactly how his think-tank, the Centre for Social Justice, wanted to reform the welfare system, so it must be assumed that Cameron wants those reforms to happen.

These arguments are not about the past, they are about the future. Cuts without reform will not resolve the deep-seated problems this country faces, and neither will reform without resolving Britain’s unprecedented financial crisis. Compromise, via frank and – yes, sometimes – heated debate, is the way to achieve the right balance.