Labour MPs Jon Cruddas and Liam Byrne discuss the everyday pressures facing people in Britain today. They question the pessimistic notion of 'broken Britain' and argue that a centre-left response lies in rebuilding an ethic of contribution and a new social politics that mobilises human potential.

Time for society to come out of the economic shadow

Over the last few years, since the financial crisis, there has been a lively debate across the centre-left about its analysis of British capitalism and its prescriptions for the country's political economy. This has, for instance, generated a growing consensus that tough restraint on the public finances must be combined with deep economic reform. Labour has begun to articulate a vision - for rising living standards and a more responsible capitalism - that will shape the future direction of economic policy for many years to come.

Perhaps most encouragingly, this debate has drawn in perspectives from business, academia, think tanks, trade unions, investors, consumer groups, the environmental movement and civil society groups of many different hues, as well as politicians and citizens themselves. This range of voices is vital, given that shifting the structure and character of British capitalism can't be accomplished by government on its own.

In contrast to the vibrancy of conversations about political economy, a similar process is far less advanced in relation to the centre-left's ambitions for society or its instincts on social policy. This is core political terrain yet to be grasped, defined and owned, despite the need for rethinking on a similar scale. The fallout of economic turmoil and stagnation is having profound social consequences, bringing new pressures and strains to the fore (while many longer-standing challenges remain). Meanwhile, the fiscal context reduces the scope for deploying higher spending to ameliorate social problems (coupled with a recognition of the limits of over-reliance on the central state to re-make society, and the damage to society caused by over-reaching and under-regulated markets).

This situation risks a large and growing gap between our aspirations for society and our confidence that they can be realised. Or, in other words, our capacity to make hope seem real rather than despair inevitable. This is a profound and demanding challenge for politics, questioning whether it is possible to build and maintain a good society in austere times.

What the right has got wrong (and what it has got right)

Before turning to the potential terms of a renewed centre-left politics of society, it is important to take seriously recent intellectual and political developments on the centre-right in these areas. During the last parliament, the work of the Centre for Social Justice (associated with Iain Duncan Smith) seemed to herald a new phase of 'compassionate conservative' thinking and ideas. In particular, the combination of its critique of bureaucratic centralism and its focus on the value of civic life, associational virtues and human relationships was timely and powerful. It was effective at attacking the Brown government at its weakest points, tapping into popular concerns about dependency and disorder, and seeming to offer a Toryism inspired by community concerns and social reform.

However, there were significant intellectual flaws in the analysis that became known as 'Broken Britain' and real problems with the political expression it was subsequently given through the framework of the 'Big Society'. At its most basic level, while the challenges facing society are real, the charge that Britain is broken simply didn't ring true. The diagnosis too often placed the blame on particular groups of people, perpetuating a divisive 'underclass' narrative, rather than a political project of national unity and mutual responsibility (as embodied in the One Nation frame). It also failed to recognise that social pressures are predominately majority concerns and not minority problems. Similarly, the correct assertion of family as the bedrock of society ended up retreating into a backward-looking social conservatism, while neglecting the different forms of stable, committed relationships in modern society (exemplified by so many Tory MPs' recent failure to support the extension and deepening of marriage).

Since the election, it has become increasingly clear that 'broken Britain' (and the 'Big Society') provided a far better critique of the last Labour government than a guide to governing for the Conservatives. Most obviously, halfway through this parliament, it has not provided a strategy for growing or protecting society (with the Big Society having been reduced and contorted into a series of initiatives to 'open up' public services). In arguing that, for society to get bigger, the state has to get smaller, the centre-right not only exaggerated its account of government, it also demonised a vital tool with which to pursue its social goals.

In addition, focusing so heavily on the problems of an overly bureaucratic state left the Tories far too complacent about the ways in which concentrations of market and economic power can also undermine society. There are plenty of examples of the invisible hand of the market picking people's pocket and strangling civil society - from the proliferation of betting shops on the high street to the scourge of exorbitant door step lending. In retrospect, 'compassionate conservatism' has been comprehensively trumped by a crude economic liberalism since the financial crisis. It is striking that the prime minister has turned decisively to a dystopian 'sink or swim' economic narrative, buttressed by populism on welfare, immigration and Europe.

Five years on, the contours of a centre-left alternative are emerging. For a start, there are real pressures facing families and neighbourhoods across the country, but Britain is not broken. Similarly, solutions won't be forged by blaming and dividing people, but in rebuilding an ethic of contribution, where everyone takes responsibility and plays their part. Our approach will be explicitly majoritarianism, drawing in all classes not targeting an underclass. And we will remember that the excesses of both the state and markets can dominate and disempower, while each can also liberate and mobilise human potential when put to proper use and placed under democratic constraint.

Dilemmas for a new centre-left social politics

As well as seeking to learn from the strengths and weaknesses of the centre-right, a new politics of society for the centre-left needs to confront its own internal intellectual and political dilemmas.

These are intensified by the proximity to Labour's recent record in government and the imperative to adjust to an era of fiscal constraint. The similar process of rethinking that took place in the mid-to-late 1990s did not face either of these significant challenges. At that time, Labour had not been in power for well over a decade and the economic dislocations and social unrest of Thatcherism provided a clear and present enemy. And while Britain faced serious economic challenges, the recovery from the early 1990s recession had been established.

The context we face now is clearly very different from the mid-1990s. We are far from an era when steady growth and rising incomes were established, or where public spending could be expected to rise indefinitely. Major social shifts, like greater ethnic diversity, rising longevity and declining home ownership are now entrenched. And international economic competition is only set to intensify, as China in particular continues to rise. Taking this context into account, there are two major conceptual dilemmas for the centre-left that stand out.

Goals and ambitions

The first is the debate beginning to seep from the pages of academic journals into mainstream politics about the fundamental goals and ambitions those on the centre-left have for society. It is not possible to do justice here to the richness of the arguments and principles at play, in particular, the dialogue among contemporary British and American political philosophers. But in essence, the dominance of concern for material and distributional justice (with its roots in the liberal egalitarianism of Rawls and the revisionist social democracy of Crosland) is being supplemented by a deeper understanding of new relational and democratic thinking (such as the idea of 'active' or 'democratic' equality associated with theorists such as Elizabeth Anderson). Whereas the former focuses on the pursuit towards an objective outcome or goal - such as narrowing the gap between rich and poor - the latter tends to foreground subjective practices or experience - such as the damage caused to the sense of a shared society or common life by spiralling inequality.

This debate is serving to remind the centre-left of its concern for moral worth as well as material wealth. The trouble with gross national income, as Bobby Kennedy pointed out, is that it 'measures everything except that which makes life worth living'. It also draws into sharper focus our belief in the importance of people playing an active part in solving their problems, alongside others, not living in isolation or dependency. The community organiser, Saul Alinsky, summed up this concern when he wrote: 'there can be no darker or devastating tragedy than the death of a man's faith in himself and his power to direct his future'. The long overdue return of a language of duty, virtue, tradition, belonging and place to the centre-left lexicon is one early and immediate consequence of this new wave of thinking.

The imperatives of 'distributive egalitarian' and 'democratic associational' accounts of the good society are not mutually exclusive. The task is to bring them into creative tension in the pursuit of more equality and more democracy, whether in relation to economic policy, public service reforms or renewal of the welfare state.

Political methods and governing instincts

The second challenge for the centre-left in relation to society is the tension over its dominant political methods and governing instincts. This speaks to the basic question of which sources of agency can and should be harnessed in seeking to advance our goals and ambitions for society. This dilemma bites in a number of important areas: the potential and limits of the state; the proper place of markets and the private sector; the possibilities of more local, relational and civic forms of power; and the options for individuals taking greater control of their lives themselves. It also draws attention to the potential alliances that might be mobilised and coalitions forged in pursuit of a good society, alongside the reach of government and the traditional arms of the state.

These are clearly complex issues with many different dimensions, but one starting point is the recognition that, in important respects, the last Labour government was too reticent to stand up to markets that weren't serving the public interest and, partly as a result, was too quick to rely on the levers of an overly-bureaucratic state. One consequence of this was that too little attention was paid to building up the institutions and independence of society as a brake on the potential of both markets and the state to overpower people. In truth, Tony Blair's early focus on the value of community in the mid-1990s was never translated into a core part of governing (in part because, as the Tories are finding, this is easier terrain for opposition than for government).

New Labour was right to reconcile the centre-left to the creative, innovative and anti-establishment potential of markets. But while the good economic times were rolling, Labour was too complacent about the capacity of unconstrained markets to dominate people's lives. We also too often centralised power in the state rather than spreading it out to society and sharing the task of governing with others. And there was a tendency to rely on cash transfers and delivery solutions, rather than building institutions and fostering relationships. By the time of the last election, these instincts left Labour open to the charge of not being prepared to stand up to powerful economic interests and relying too heavily on the central state to achieve its goals.

In retrospect, we were also not sufficiently cognisant of changes taking place in the global economy during our time in power. Over this period, there has been a seismic shift as emerging economies have challenged the dominance of the West. The power of business has become more concentrated, with companies pouring vast resources into R&D to stay a step ahead of the competition. These global trends have profoundly affected people's lives and the way they work in this country: the pay they receive, the hours that they work, and the skills that they need. Tax credits were only ever a partial solution to these trends and the challenge for Labour now is to think seriously about reforming the welfare system, our skills and educational structure, and labour regulation to address people's needs in a world that has changed. For example, the social security system was built to provide support to families with a single earner who had a steady job. Now over 70 per cent of women participate in the labour force and 40 per cent of the workforce are part-time, self-employed or temporary workers.

Challenges ahead

Looking ahead, the old answers are no longer available in the current era of fiscal constraint. And Labour's approach will be much more fundamental than just a series of 'offers' to tempt voters to the ballot box. It will start by levelling with the public about the challenges the country is facing and engaging with people about the resources and energies that can be brought to bear, or put to better use, in the service of the common good. The next Labour government will aim to create the conditions for people to come together to improve their lives together, rather than suggesting that there is a government solution to every social problem. And it will focus central state capacity on strategic goals rather than the fine detail of policy implementation. This will often involve using the state to affect the circumstances of peoples' lives, but will also require everyone to contribute, step up and take responsibility. Labour will think less about 'delivering and solving' and more about 'empowering and involving'.

As an illustration of the point, Tony Blair's goal of ending child poverty in a generation, set out midway through his first term, led to major progress in boosting the incomes of poor families (especially in comparison with other advanced economies) that benefited millions of children. However, an honest reckoning must also acknowledge that, while it provided a campaigning focus for some NGOs, it did not generate real energy in the country or capture the public imagination. This was in part because, to many people, the focus for change became reduced to incremental extensions to tax credits, in place of what should have been a national mobilisation of efforts and resources where everyone - families, neighbourhoods, employers, public services on so on - had a contribution to make.

Under such a strategy, government would still have had a vital role to play and raising family incomes would have remained a crucial goal. But, arguably, advancing towards a system of high-quality and affordable childcare, a more aggressive approach to low pay, and action to address the rising cost of living and personal debt might have had greater policy prominence. Stronger connections might also have been made to the value of time for family life, the protection of space for childhood and importance of parental responsibilities. And with well over half of poor children living in a working household, the economic and labour market roots of child poverty might have been confronted more directly.

The political downsides of sub-contracting the task of ending child poverty to the state are now clear. Without an argument and strategy with deep popular roots, the vital importance of family incomes has not proved to be resilient in the face of those who seek to caricature relative poverty as being purely a statistical construct. And, as the squeeze on the public finances kicks in, the tax credit architecture has been partially dismantled with relatively little public outcry. Indeed, the very language of child poverty is now arguably a barrier to progress, rather than a call to action. Campaigners took much comfort from securing cross-party support for the Child Poverty Act in the last parliament. But this government has moved away from the targets that were set out in a piece of legislation that some now see as embodying the limits of an empirical rather than emotional approach (and has in any case been overwhelmed by the economic headwinds of the last few years).

Taking the temperature of society and the 'condition of Britain'

As the child poverty example shows, confronting these conceptual dilemmas - about goals and methods - is an essential foundation for shaping a coherent social policy agenda and guiding a plausible strategy for governing. However, this must also be complemented by a deep and honest exploration of the condition of the country today and the lives of those who live in it. Getting under the skin of society is crucial for understanding the issues that really matter to people, as opposed to the concerns of the political elite. Just as importantly, it is vital in grasping how those issues are experienced, talked about and coped with in everyday life. Labour's priorities must start from people's lives - their struggles, hopes, fears and dreams - not an abstract utopia. This is also how real energy and purpose for a new social politics can be generated.

Such a starting point is necessary to bridge the gap between the political class and ordinary people, which risks leaving the former without an authentic vocabulary, because it lacks a real feel for the rhythms and concerns of the latter. During the last election campaign, Gillian Duffy came to personify this disconnection. Therefore, before trying to help 'sort things out', we need to understand things better. And at a time of tight resources, it is even more important that those committed to centre-left politics look for partners, build alliances and make friends. Determining our priorities must start from a proper grasp of the pressures and strains experienced by people in their different walks of life. But just as important is the task of finding the resources that people have got to offer, those that are currently underused or going to waste, and the answers that already exist in the systems of everyday life.

That is why we are delighted to see the launch of IPPR's new 'The Condition of Britain' project - and will pay close attention to its insights and conclusions. We take particular heart from the inspiration it draws from previous examples of social engagement and investigation giving rise to political struggles and advocacy for change. For example, some of the major social reforms of the early 20th century were driven onto the agenda by studies like Seebohm Rowntree's 1899 exploration of 'real life' poverty in York and the ground-breaking 1913 report Round About a Pound a Week, exposing the daily struggles of the 'respectable working class' in Lambeth (in particular women and children).

Later in the century, major sociological and empirical works, such as GDH Cole's magisterial examinations of British society before and after the second world war and Peter Townsend's and Brian Abel-Smith's 'rediscovery of poverty' in the 1960s, had a major impact on the development and evolution of the welfare state. Cultural moments, like Cathy Come Home and Boys from the Blackstuff, can also be located within this tradition, both of which had significant popular and political traction on the issues of homelessness and unemployment. Drawing on this rich tradition, we hope the IPPR project helps us to understand the distinctive pressures that people are facing across Britain today, shine a light on the sources of strength in everyday life that could be mobilised in response, and think through where government can play a role in securing strategic goals and affect the circumstances of people's lives.

Perhaps just as importantly, we hope the project plays a part in reconnecting the priorities of politics with the real concerns of society. Without prejudging the research, this might touch on the different types of pressures bring faced in the context of economic uncertainty and social anxiety. For example, households under financial pressures as the cost of living rises but wages are stuck, leading many into unsustainable debt. We also know that families of all shapes and sizes are facing caring pressures as they try to raise their children and look after older relatives (while having enough time for each other). For many others, life is blighted by terrible personal pressures, ranging from depression and anxiety, to the experience of loneliness and isolation. And there are neighbourhoods under real social pressures, as a result of segregation, disorder, incivility or just the pace of local change.

Instincts and directions for a new centre-left social politics

Back in the early 1990s, IPPR's Commission on Social Justice was central in helping to re-think the centre-left's approach to core social policy questions, particularly around welfare, education, caring and community. It sought to 'bridge the gap between the country we are and the country we would like to be', diagnosing a Britain that was 'tired, resentful, divided and failing' because of the economic weakness, social division and political centralisation wrought by over a decade of Thatcherism. In setting out a broad and ambitious policy agenda, it sought to explain how 'the strengths of this country, and above all the untapped talent of its people, can be the basis of national renewal'.

The context we face now is clearly very different from the mid-1990s. But while the times have changed, the task is similar: to develop a set of instincts and directions for the centre-left, addressed to contemporary social needs and in tune with the political character of the time. If the central task in the 1990s was how to reconcile social justice and economic efficiency, the question for this generation is whether it is possible to build and sustain a good society in austere times? Can life in Britain be characterised by decency, compassion and hope, despite the considerable economic challenges we face?

We are only at the foothills of this journey, but the contours of a new centre-left social politics are emerging on the horizon. First, we want to pursue an 'active equality', concerned with contribution as well as distribution, moral worth as well as material wealth. Second, we want to mobilise resources from across society and within people's lives, while prioritising government spending on strategic investments. Third, we want to redistribute power to people and places, rather than centralising it in the state. Fourth, we want to place limits on the reach of markets to protect the public interest and the space for a democratic society. And fifth, we want to advance a majoritarian political project, where everyone has a stake and a contribution to make, rejecting both sectional politics and social division.

Such a set of instincts points Labour in fresh and creative directions: rooted in people's experiences, building alliances across society and putting all our collective talents and potential to use in the service of the common good. IPPR's 'The Condition of Britain' project is just getting started, but Labour's policy review is well underway. And what we've found is that, out in the country, people are full of hopes for society and ideas about what we can do together to make it better. There is a hunger to find ways we can: end the waste of long-term unemployment; lift the deadening burden of personal debt; mobilise the leadership of our towns and cities; ensure disabled people are in charge of their own lives; provide all young people with a shot at making something of themselves; release the energies of the people and institutions who provide our public services; and connect those with time and a sense of compassion with those who lack relationships and suffer from loneliness or isolation.

The challenges facing the country are great and we will not have a good society by accident; it will depend on how each of us choose to live and the sort of politics we are able to forge. In the last century, Britain fought two world wars and lived in the shadow of nuclear destruction. Yet we created the NHS, built a welfare state, educated all our children and ensured a measure of security for older people - alongside unprecedented scientific, medical and technological advances. Our task now is to show how we can silences the siren calls of pessimism to offer the hope that, by coming together, we can overcome the obstacles facing this generation and build a good society for all our citizens.