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.

Jonathan Todd is a consultant at Europe Economics and was a Parliamentary candidate at the 2010 General Election.

Tags: economy, GDP, Jonathan Todd, Norman Tebbit, recession

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