Christian Guy is Director
of the Centre for Social Justice. Follow Christian on Twitter.

Screen shot 2013-07-29 at 07.11.31In the 21
months between now and May 2015, Labour's biggest challenge is to win
economic credibility in the hearts and minds of the British people.

argument that Labour lost control of spending, and ignored a cavalier culture in
the City, has resonated in living rooms, playgrounds and pubs across the country.
Polling regularly finds them lagging behind the Conservatives on economic trust
and no matter how passionately they protest, little is changing in the public’s

Labour, if this wake-up call on credibility is to prove truly
significant, it
should transform much more than the party’s headline economic
commitments. Yes, Labour needs to present a credible plan for public
spending in the context of deficit
reduction. But if the Labour leadership
is to get right to the heart of its present challenge, it should also
how, why, and where Labour spends taxpayers’ money, not just how much it

Take the debate about poverty as
an example. I have
written here previously about the need for new Conservative approaches to
social justice
, but there remains a reluctance on the Left to come to terms
with a number of the things that ravage the poorest neighbourhoods too. This represents a stark disconnection from the people
the Labour party says it was established to serve.

Take the south London housing estate I visited last week. Gang
warfare – fuelled amongst other things by chaotic families, worklessness, and
low aspiration – has become a fact of life for residents. ‘Stabbings and
shootings happen every day but unless someone dies they never make the news’,
one former gang leader told me. ‘You can
buy a clean gun for £2,500’, he said, ‘but they’re much cheaper if they’ve got
bodies on them’.  Gang members would
police the estate’s borders and control who came in and out – using what they
described as ‘passports’ to travel. Some
earn £5,000 a day.

With very few positive
male role models, illicit substances flowing like a river, crime and overcrowded
housing, life is precarious for local people. Westminster, only a few miles away, feels like a different planet when
you walk those streets.

That besieged
estate is no extreme. In recent
CSJ/YouGov polling, 55 per cent of people said that at least one of their
local communities is plagued by broken families, crime and poor schools. Nationally we know that one million children
have no meaningful contact with their father, more have a drug or
alcohol-addicted parent, and record numbers are being taken into care. The working age welfare bill for London alone
is £36 billion a year – other cities are well into the billions too – and local
job markets are volatile. Every day 56,000
pupils play truant and unmanageable debt rips families apart. Countless people are stepping in to turn
things around in their communities but the list of issues, and the vast public
spending required to pick up the pieces, goes on.

have begun to engage with these areas in new ways, but what is Labour’s
offer? The hard fact that the Left must
wrestle with is that many of these estates are ‘Labour areas’, and have been
left to rot for decades. The people
there know it.

So Labour
has to adjust quickly – heart and mind. Talk
to people in the toughest parts of the UK, and many feel as abandoned by the
modern Labour party as they do by all the others. This is
because for decades many on the Left have argued that this social breakdown
comes down to low income, and that the welfare state offers the surest way out
of deprivation. This has given rise to
ever-increasing benefit cheques and narrow ‘poverty-line’ politics. But too little has changed in these

Labour MP David Lammy sums it up in his book Out of the Ashes. He recalls
a conversation with Gordon Brown in No.10. When the MP for Tottenham raised concerns about knife crime, absent
fathers, and parents not coping, the then Prime Minister simply said "don’t
worry, they’ll get tax credits", patted him on the arm, and ended the

course income matters, but the broken parts of our society, plagued by
many problems, should be transformed with many tools, not just a
faceless welfare state. If mass public spending was the
answer then poverty would be a problem of the past. Labour
has to wake up to this for the sake of its credibility in the poorest parts of
the UK. It needs to focus on radical but
realistic things that will turn lives around. Here are three areas they should focus on.

Welfare reformTemporarily famous for its ‘education, education, education’ mantra,
Labour’s new focus should be ‘work, work, work’. The current welfare settlement isn’t credible
any longer and the British people know it. Welfare has become a damaging and expensive way of life for too many
who, with the right support and opportunities, could be free from it.

This is incredibly difficult for Labour to
accept for all kinds of reasons. But
given the way that the system has come to trap people in poverty, and the
urgent need to bring more private sector employment to our economic coldspots, Ed
Miliband should focus relentlessly on work, not welfare, as the greatest
transformational tool at his disposal.           

Family breakdownSome
the Left don’t believe family breakdown matters, and more consider
structures irrelevant. Worryingly, many
also reject the idea that instability at home causes poverty or social
problems. This has to change. Family breakdown is shockingly high and
wreaks havoc on estates like the one in south London. Much evidence
points to couple formation
and marriage as stabilising factors, bulwarks against life’s inevitable
shocks. So Labour needs to take a deep
breath, have the debate, and develop a plan for family stability – not
just family

Education:  Labour
has been out-gunned on education. Its
core challenge now though, in terms of social justice, is to find a way of closing
the tragic and expensive 'truanting – exclusion
– crime – welfare'
path that so many young people in our communities
walk. This means ideas for learning and
skills that build aspiration and employability. Robust, ambitious, and rigorous education as a driver of social mobility
would make a radical difference to people’s lives.

broadly Labour should also recognise that voluntary groups and the private
sector can achieve what the State cannot. Sensible thinkers like Jon Cruddas, David Blunkett and Lord Glasman get
that, but they cut lonely figures at times.

The Labour Party still often occupies the social justice territory un-opposed. That is a mistake Conservatives are beginning
to wake up to. Life has been tough for decades and people
feel voiceless. They feel there has been political failure, including during 13
years under Labour.

In 2012 Labour’s
conference slogan was Rebuilding Britain,
but until now they have refused to acknowledge that parts of it are
broken. On welfare, education, and families, like or loathe the
policies, it is the Right which now represents change, and the Left the
status quo. For those living on the numerous estates like the one I
visited in south London, Labour’s credibility is on the line like never