In search of a different kind of democracy: Labour's new leader must convince voters that quality services benefit everyone, says David Blunkett

WITH the contest for the Labour leadership in full swing, we have the chance to develop a new vision for Britain in the 21st century. Our new leader will need to offer a mixture of hope and realism, honest conviction and common sense.

There is today a growing popular cynicism about politics and politicians. This is hardly surprising, given the way in which the development of a global economy and the growth of transnational power have diminished the role of government; while the Government itself has abdicated responsibility for so many key areas of our lives over the past 15 years.

So we must offer new ways forward in the development of social, constitutional and economic policy. John Smith established the Commission on Social Justice to promote new ideas about the future of the welfare state. By opening discussion on fresh initiatives - such as Citizen's Service for young people - it is widening and enhancing the debate within the Labour Party and beyond.

The commission's value lies not merely in its specific policy suggestions, but more importantly in the way it defines and renews a commitment to a welfare state for contemporary Britain. In all its work, the aim is to lift people out of poverty and dependence and enable them to become self-reliant contributors to their community and nation.

At the same time we are developing new ideas to enhance democratic participation and rights in our society. These include radical changes to the constitution, the decentralisation and devolution of power to nations, regions and communities, and the empowering of individuals. Our policies must be about matching the rights and responsibilities of the individual within the wider community with those of government.

There are two contrasting versions of democracy on offer in Britain. The economic democracy of the market has taken hold under the Conservatives. In the process, the political democracy that offers a voice to those excluded by the market has been increasingly lost as unaccountable and non- democratic quangos have been encouraged and developed. Their growth is the most potent sign of government's denial of its responsibility for key aspects of our lives.

Labour's task must be to restore a sense of balance to these competing influences. Quangos have proven themselves to be costly and bureaucratic. There is a need and a growing public desire to restore accountability to elected representatives in all areas of our public life. John Major's supposed belief in a classless society rings hollow as ordinary people and their elected representatives have their power constantly reduced by those with wealth or privilege - whether that privilege is inherited or the result of Tory patronage.

But accountability is not just an issue in local government or the health service. The Bank of England and, indeed, the proposed European Central Bank, are central to all our lives. So, too, are the timetable and criteria for European economic and monetary convergence.

There is a growing belief that important financial decisions should be left to the bankers without any accountability either to Parliament or to the European Council of Ministers. Politicians who believe in democracy have a role in balancing genuine choices between alternative priorities - choices that are inevitably lost if price stability is seen as the only economic imperative, and when decisions are dictated by bankers.

We must consider these issues if we are to be serious about our proposals for full employment and a minimum wage. Much of the debate has centred on what level the wage should be, or what percentage target we should aim for in reducing unemployment. These targets are considerably less important than the creation of the economic conditions in which such goals can be achieved.

Full employment must be linked with the wider goals of a modern welfare state, to enable people to become taxpayers rather than benefit recipients - and to generate revenue for improved services without increasing the overall tax burden still further.

In our discussions of Labour's social and economic agenda, we must develop a holistic approach which recognises that greater equity in health or education, for example, produces greater economic benefits for the whole community. British rates of absence for sickness are twice as high as those of our German counterparts, while our young people leave school with fewer qualifications. Both facts are a severe setback to the competitive edge of British

industry.

We should also be ready to discuss how we might link any change in the higher rate of taxation with specific proposals to improve the NHS, our schools or our policing. Many people earning top rates of income are prepared to spend a large portion of their earnings on private health insurance, public school education and even private security patrols.

We must win people over again to the concept that quality public services are essential not as a safety net, but for all of us - of benefit to the whole community. Making that link between economic and social policy is crucial to revitalising and rebuilding our public services, in a way which sees such investment as integral to economic regeneration and growth, rather than as a drain on it.

In the May and June elections, Labour established itself as the only truly national party in Britain. The task of Labour's new leader will be to present the vision and bold ideas needed to translate our new support into concrete backing at the next general election.

The writer is chairman and health spokesman of the Labour Party.

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