James Purnell: The Aspiration Society

In six days, Tony Blair will resign as Prime Minister. This is a good time to step back from the picture, away from the brushstrokes, and look at the painting. What can we learn from New Labour's first decade in power? And what new picture are we imagining, as we start to sketch the next decade?

Looking at the big picture is vital in politics. If you fixate on the brushstrokes, you get lost. Politics shrinks to communication, press releases, photo-opportunities, lines-to-take. This is the mistake that Cameron's Conservatives are making.

They've read Philip Gould's book, and they they've improved their technique.

But, without ideas, technique becomes gimmickry.

But the big shifts in politics happen when the Party in power no longer has answers, and the Opposition catches a new mood, with a new approach. These are the big intellectual and electoral shifts – from warfare to welfare in 1945, from Butskellism to Thatcherism in 1979, and from Thatcherism's embers to New Labour in 1997.

If we'd just improved our campaigning in 1997, we would still have won. But that victory became a landslide because we had also transformed our philosophy and hence our policies. Where Margaret Thatcher had argued countries need to choose between efficiency and equality, Tony Blair and Gordon Brown argued that economic prosperity and social justice went hand in hand. Far from undermining each other, social justice could make us more efficient, and prosperity could reduce poverty.

New Labour essentially re-united Labour's ideas to the instincts and values of Labour supporters.

The history of the Labour Party in the 20th century had been a long walk by Labour leaders away from the values of the Labour movement. Those 1997 slogans are clichés now – a hand-up, not a hand out; rights and responsibilities; for the many not the few.

But that's what people thought of us – that we were only interested in hand-outs, not bothered about responsibility, lost in minority interests, for minority causes. Most of all, they thought we were against aspiration, against people getting on, against people providing a better life for their families. We were out of step not just with floating voters – but also with our core supporters.

How did we end up there?

We got lost in a cul-de-sac on the road to equality of income. The Labour Party believes in equality, or it is nothing. But, as Gerry Stoker says, that guiding goal had been followed through on the basis of two false premises. First, that equality meant making the rich poorer. And second that equality meant treating everyone the same.

New Labour pointed out those false premises, and in the main won the theoretical argument. But there is a paradox here. No one argues for these mistaken positions – indeed, they never really did. No one writes books on Socialism as the Politics of Envy, or on Public Services: Why Mediocrity is a Price Worth Paying for Uniformity.

But those premises still kindle the main disagreements within Labour politics, whether Tony Blair's discomfort in answering the Beckham question, or Roy Hattersley's objections to choice and diversity in public services.

The paradox is that New Labour has won the theoretical argument, but not persuaded our supporters of its policy implications.

I believe that is because we have still not convinced people that we have a clear and credible view of equality. We have pointed out the mistakes in equality of income. But in the absence of a persuasive positive vision, the echoes of those mistakes still haunt the corridors of our policy debates.

I want to talk today about what that vision of equality should be. It comes out of the work of the Public Service Reform Group, and Amartya Sen's capabilities approach, which is a thread running through many of the essays published in the group's recent book Public Matters.

I want to argue for a richer concept of equality – where everyone has an equal right to live the life of which they are capable. Rather than focusing on income inequality, this approach sees the greatest injustice as potential unfulfilled – and argues for an empowering state to reduce that injustice. It is a vision of a genuinely Open Society, where individuals are free both to choose their vision of the good life and to make that vision reality.

Philosophy: what's our goal?

Philosophical discussions of inequality have to start with John Rawls and his Theory of Justice. But I've always been intrigued by the gap between Rawls' philosophical importance and his political impact. He still defines the academic debate. But he is barely quoted in political speeches, far less has he ever captured the public imagination. He may be the Marx or Keynes of the last academic generation, but he is marginal compared to them politically.

I've come to think that's because he fails to capture something in our ordinary moral intuitions. His theory doesn't give enough importance to effort, and how we feel it should be rewarded.

Rawls' veil of ignorance is a brilliant device. He constructs an imaginary original position, where we are asked to decide how society should be organised, but we don't know who we are, and are ignorant of our talents and circumstances. Behind this so called veil of ignorance, we confront our fundamental social impulse, our natural sense of morality.

But the original position also abstracts from agency. It may be plausible, behind the veil of ignorance, to think that inequality can only be justified if it benefits the poorest. But once we know what it is to be human, we know what it is to try, to fail, to succeed. And we know that we feel that those who try harder, who make more of their talents, deserve a consequence – a reward. That reward is not justified solely by the consequence it has for the welfare of the poorest in society. It is justified in itself. Distributional justice needs to be balanced with individual merit.

So, if Rawls is not enough, where do we go? It is tempting to fall back on Crosland's argument that we can leave the definition of equality to people in ivory towers, because there is so much inequality in the real world to deal with.

To an extent that's true. Where the inequality is clear and glaring, as with poverty in Sub-Saharan Africa, we don't need to know our precise definition of equality to know we have to act. That millions are on the survival line, and therefore unable to have any real life at all, is enough of an imperative to action.

But Crosland's dictum is not enough in today's Britain. The 20th century has seen a transformation in people's incomes. Even the poorest in society have standards of living that their grandparents couldn't have dreamt possible.

Because we live in an affluent society, it is harder to rally people behind a campaign for greater equality – it is no coincidence that it has been harder to motivate voters to end child poverty in Britain than in Africa. Some say that if people are poor in today's society, they only have themselves to blame.

But as progressives, we know that doesn't chime with what we see or what we believe. There are still real inequalities – our chances in life are still largely inherited at birth. But to know how to respond to that inequality, and how to create a coalition to fund that response, requires a new and richer version of equality.

Will equality of opportunity do? It's a radical concept, and fits with many of our instincts. But it is too loose to guide policy or to generate public support. This is for two reasons – first, everyone can say they believe in equality of opportunity. The driest member of the No Turning Back Group can fly this standard, and just say that those who are poor failed to take the opportunities that were given to them. But second, and perhaps more fundamentally, equality of opportunity is hard to operationalise. How does an individual know if they have equality of opportunity? What does that even mean? Equality of opportunity is hard to measure in a society; it's almost impossible to judge whether it's been realised for a particular individual.

That's where Sen's ideas about capability, and indeed those of Joseph Raz on autonomy, come in. They provide us with a richer concept of equality, and one that is a better call to action.

Sen criticises other theories of justice, and in particular income egalitarian approaches, for leaving out four relevant factors;

• The differences between people
• The diversity of their goals and values
• The inherent importance of choosing one's life
• The responsibility to take the opportunities given

To try to capture that richness, Sen proposes an alternative approach, one based on comparing people's capabilities. He defines capability as ''a person's freedom – the real opportunities – to achieve well being''.

This is a richer idea of equality than one based on income. It reminds us that there's more to life than money, that equality cannot be reduce to an IFS income distribution graph. It embodies the idea that morality must ultimately be about what people do for themselves, rather than what is done to them. It reminds us that freedom to choose between different lifestyles and beliefs is as important as the ability to pursue whichever lifestyle we do choose. And it can be operationalised – an individual can judge whether she has had the chance to make the most of her talents, to maximise her capability.

Policy: what can we do?

What does a capability approach mean for policy? First, it reinforces the importance of having a high floor – if people don't have their basic needs met, they won't be able to choose their life in a meaningful sense. Moreover, that floor will be higher the more other people have – if others can wear a suit to an interview, the candidate who can't afford one will have his chances diminished.

But second, we should focus on how far the individual has been able to realise her capability – how close to her potential she got, or how far short she fell. That means a clear focus on helping people realise their aspirations, whether they are poor or not.

As well as guiding us what to do, Sen's approach illuminates the how.

There is an umbilical chord between a capabilities approach and a devolved, empowering state. A top-down approach goes against Sen's emphasis on the importance of individuals choosing their own life. A uniform approach to public services grates when we recognise the differences between people and the diversity of their values.

If we follow a capabilities approach, the fundamental goal becomes to personalise public services to increase the individual's capabilities. It means the citizen should be actively involved in defining the support they receive. And it means recognising that this support will not always be financial – because the barriers to potential can come from prejudice, privilege or culture, as much as income.

Stating these goals is the easy part. But they can't be imposed from the centre and they don't happen by themselves. That's why centralised control is counter-productive and trusting the professional is not enough. We can trust the professional, but only if there is accountability, and the capabilities approach suggests that the best form of accountability is putting the power in the hands of the citizen, typically by giving them choice over what service they receive and who provides it.

Personalisation won't happen unless we shift the power in this way: a double devolution, giving control to the citizen, and therefore being able to shift power from the bureaucrat to the professional. It will not always be possible to create this choice-based accountability – but the capabilities approach explains why it is likely to be preferable than accountability to the centre.

Sen's emphasis on responsibility is also important. It means trying to create a capable society, rather than a dependent one. It justifies a certain amount of intervention, for example where children's life chances require it. But it stops short of being authoritarian because the goal is to empower people to make choices about the outcomes of their own lives. It means recognising that some will work harder and should be rewarded as such. It suggests a welfare state that focuses both on need and contribution – in other words, a welfare state which provides a floor which lifts people out of poverty, but rewards those who contribute more. This is the approach, for example, of our current reform to pensions, and explains the strong attachment of the Labour movement to the contributory principle.

These ideas are not new. They have increasingly been the guiding principles of our approach to public service reform . They explain why there is so much interest in moving from a top down view of public services to one based on empowerment, variously described as the enabling or servant state.

But the capabilities approach should give us confidence in going further down this road. Far from being a departure from Labour's core values, they are a richer embodiment of our idea of equality. It is not just that they happen to work – it is that they speak to something fundamental in our values.

What implications does this have for policy? I don't have all the answers. Indeed, the capabilities approach suggests the answers should increasingly come from the individual, rather than the politician. This approach doesn't just lead us to a new set of policies. It suggests a new way of making policy, based on a dialogue between politicians and voters, where politicians create processes in which the public can shape the eventual decision.

This is the approach that worked for pensions, and we now need a similar approach to aspiration and capability. I would favour government sponsoring a Life Chances Commission to establish the evidence, and enable the public to take part in a debate which would lead to new policies.

It could start by clarifying some of the muddled thinking around life chances – for example the accusation that life chances have shrunk under this government, when as Tony Giddens points out: "we should first dispose of the canard that social mobility has declined under Labour … [since] it takes a minimum of 30 years to measure how socially mobile someone is, because we are comparing the jobs people are in today with those of their parents." If social mobility shrunk under a Labour government, then it was that of Wilson and Callaghan.

Once we have a shared view of the data, we can move on to policy.

The policy implications would be quite different for different groups in society.

First, the socially excluded. Labour has focused on this group, in part because of a meritocratic concern – that children born into social exclusion would have no real chance in life. But there is a deeper reason – Michael Young was right to be uncomfortable with the idea of a pure meritocracy, which just told those who were poorest that they deserved it. As Philip Collins said in Prospect in 2001, "meritocracy must be accompanied by a universal idea of equality of respect which transcends an individual's ability."

That's why our approach has been to raise the minimum income families get, but also to give them a chance to lift themselves beyond that minimum. Our approach to social exclusion recognises that it's a long-term problem, and that we need to address not just low income, but worklessness, drug and alcohol dependency, mental health problems, as well as crime and participation in the shadow economy.

A capabilities approach chimes well with these existing policies. But does it help us develop new ones? I think it does.

It reminds us that we cannot make people capable – that we can provide them with support, and a minimum income, but that the State cannot solve child poverty by itself. People will need to take the opportunities they are given.

It reminds us that our support isn't just about income. So, our support for parents needs to include tax-credits, but it also support for parenting, particularly in communities with widespread worklessness and broken family networks. The state already provides ante-natal classes – but should we be doing more to support parenting skills before and throughout the child's life? And should it be the state providing this advice, or mentors and voluntary organisations?

A capabilities approach suggests that we could let parents control the support they get. Should we extend the success of individual care budgets to parenting? Could we give parents more flexibility over the money they receive from the state, and the budgets of the services that are there to help them? Would a family account allow them to have more control over how they combine working and raising a family – for example, to allow one parent to stay at home for the couple of years, or to paying grandparents or friends to look after their children?

A capabilities approach reminds us that responsibility sometimes needs to be required, not just encouraged. There can be a danger that unconditional support can reinforce barriers to escaping social exclusion. If it's possible to earn enough money without working, then we can incentivise unemployment, or illegal work. If there are no limits to individual behaviour, we can foster anti-social behaviour rather than curb it. The supportive floor we are trying to create must not become quicksand. So, if we are right to believe in redistribution to provide that support, we also need to be clear that we expect people to exercise their responsibility, and that there will be consequences if they don't. That speaks to a greater emphasis on a requirement to work for those who can, and to limits to behaviour, whether in social housing or in education.

But a capabilities approach should also reinvigorate our policies for the aspirational majority. That means being ruthless about escaping the cul-de-sac of equality of income. That cul-de-sac can mean a tendency to focus exclusively on improving the chances of the worst-off. Those who end up in this cul-de-sac worry that helping those who already do well will make the task of creating an equal society even more arduous.

But a capabilities approach gives us a different starting point – the recognition that a good society is made up of individual good lives. It makes clear that every individual is entitled to expect support to develop their capability, whatever their background, whatever their talents. On the one hand, it shows that grammar schools are the wrong approach – because they focus on helping a few to escape poverty, and in doing so narrow the capabilities of the rest.

But it also shows the focus we should have on mainstream education. Academies are important in turning around failing schools. But the principles behind academies are just as important for the rest of our education system.

The capabilities approach suggests a set of principles which would guide such a reform:

• The student and parent would be involved in shaping the education that they wanted, and how it was delivered
• There would be accountability to the parent and student, through providing good information about the quality of the service, but also the right of exit to another provider
• Because the service was accountable to the user, and because there was good information about outcomes, there could be real relaxation of how those outcomes were achieved. This would mean devolution to teachers, and a reduction in central regulation and direction.
• It would mean a right for other providers to enter, and a level playing field between public, private and voluntary providers.

The mark of a really devolved approach is that we don't know precisely what would happen. In fact, that's part of the point. In a world of clear inequalities, collective action could more easily be decided by one-off votes every four years. Rival parties would present rival outcomes and the winner set about implementing them. But in an affluent society, the inequalities are more contested, and the visions of the good society more plural. The role of government shifts from imposing a vision to facilitating change.

We would be freeing up the system to find the right solution. By devolving power to the users and professionals, and removing the centralised rules, we would be recognising that they are best placed to know what they want, what the barriers are and what support they need. The system could become self-reforming.

[DN: delete? But such a system would be more likely to develop people's capabilities, because it would give them the power. It might well mean that clearer lines were drawn on discipline – not so much selection at the top, but more selection at the bottom, where those who prevent everyone else from learning lose their right to be part of the school. It might mean giving individual students talent budgets, slices of income that they could spend on extra tuition to get to university, on setting up a business, or on developing artistic or sporting gifts.]

Finally, a capabilities approach should also support people's well-being. This is in part because of the intrinsic value of people controlling their own lives. But it is also because this approach recognises the limits of just thinking about society in terms of money or competition. It recognises people's differences and their different goals. It doesn't judge everyone by the same standard, and therefore could make possible a less meritricious society, but still meritocratic society.

The politics: could this be emulated by the Tories?

So, the capabilities approach gives us pointers to new policy: to a more meritocratic society, with a higher floor, both to improve the life chances of the poorest and to reflect the equal worth of each individual.

But how would such an approach distinguish us from the Conservatives, when David Cameron feels comfortable saying that he's a meritocrat?

Well, leaving aside the cheap shot about the credibility of an Etonian meritocrat, there are two problems for the Conservatives.

The first is that a real commitment to meritocracy entails supporting policies that they find hard to stomach. That is what lay behind the grammar school row – that the Conservatives wanted to reposition themselves closer to us, and embrace the goals of our education policy, but that this repositioning entailed them ditching policies that their suppporters wanted them to keep. But it also requires a higher floor than they would feel comfortable with – and higher than it is now. A commitment to capability means more redistribution than they feel comfortable with, as well as a model of public services that is about supporting everyone rather than just an elite. It is, if you'll allow me, for the many, not the few, and they still struggle with that.

The second problem is that this approach is radical, and would mean some fundamental changes to the power structures in our society. If we can make it real, it will mean the benefits of privilege cascade less down the generations. That is difficult for a Party that is conservative, with a small c. David Cameron may be trying to be a modern conservative, but he is still a conservative. He is attempting the role that falls to Conservative leaders every generation or so, of trying to persuade their Party that the world has moved on, and that there is a new status quo to conserve.

He wouldn't have supported the changes of the last ten years, from Bank of England independence to investment in childcare. But now that they're here, he won't reverse them.

The problem he faces, though, is that such conservatism is incompatible with meritocracy. Because we are still so far from our society being meritocratic, that it will require that we continue to make difficult changes – for example, increasing house building to ensure that you don't have to have propertied parents to have a chance of a good life. The Tories' discomfort with this policy shows that a meritocracy will continue to require more change than he or his supporters will feel comfortable with. And certainly more than they would ever initiate.

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