The Tories’ killer case at the election was the charge that Labour spent too much, caused the financial crisis, left an economic mess and want to do the same again. This is good politics but lousy economics. It worked a treat for the Tories and it is clear that George Osborne wants to replay the same political theme through to 2020.
Labour should certainly contest this version of the past more vigorously than we’ve done for the last five years. But what matters most is our case for the future. And as we rebuild, our biggest task is to re-think Labour’s economic argument - and how we talk to the public about our approach.
This is the number one challenge for the new leader because it defines our scope to offer Labour alternatives on the broad sweep of policy, and can help us avoid the shambles we saw on the Welfare Bill vote last week.
But right now the Labour leadership debate risks being broadly split between two camps. On the one hand a worry that the only way to convince must-win Tory waverers is to back more Tory spending cuts.
On the other, a belief that that only an outright rejection of all Tory cuts will be enough to galvanise members and potential supporters.
Both positions rest on little proper analysis or argument, and so both would be a poor platform for any aspiring Labour government.
No Labour alternative should simply accept George Osborne’s terms of debate about the deficit - set purely for political gain in 2010 and deliberately restated throughout his 2015 Budget this month.
But neither can we duck the recognition that building a different Labour case requires hard graft to convince a sceptical electorate. No-one with serious intent to be Prime Minister would make the case to the country in terms that excite Labour activists but leave the voters we must win back cold.
As I’ve set out before, two fiscal facts from the dawn of Tony Blair’s government in 1997 can give the centre-left searching for an alternative an unexpected source of support.
First, the deficit this year stands at 3.7% of our national income, only slightly higher than the 3.3% Labour inherited in 1997.
Second, debt repayments are in fact a lot lower, and more affordable, than they were at in 1997 – 2.5% rather than 3.3% of GDP – because of low borrowing costs.
Together they show that the state of the public finances is substantially different to 2010 and suggest that our view now on the fiscal discipline required of government should be broadly the same as Blair's and Brown's then.
In that first Labour parliament after 1997 we set tight controls on day-to-day spending meaning we ran a budget surplus and reduced government debt, while still securing average growth at over 3% a year and vital public service investment.
Setting similar fiscal rules now means scope for a real alternative to Tory proposals.
Figures from the IFS show what could be done – over the next five years the government could double investment spending, avoid deep cuts to departments and social security, raise no taxes, and still eliminate the current budget deficit and have debt falling by the end of this Parliament.
It means there is no fiscal need – just as there is no social policy case – for such punishing benefit cuts, so we could afford to protect vital tax credits and housing and disability benefits.
It means there is no fiscal need – just as there is absolutely no economic case – for further cuts to public capital investment, so we could secure vital public investment in homes and infrastructure. Just as any business would do if faced with ample investment opportunities and rock-bottom borrowing rates.
Above all, it means there is no political need for Labour be shackled to the Chancellor's anti-state deficit dogma and deny ourselves and the country a more balanced and upbeat vision on the economy.
After the Office for Budget Responsibility (OBR) revised down growth in its Budget reports, and the International Monetary Fund cut UK growth forecasts for this year and next, our alternative Labour plan must be a centre-ground argument for good growth.
Without more growth we can't create enough good jobs and unwind the productivity malaise; without export and investment-led growth we can't make the recovery sustainable; and without more equal growth across the country we can't spread opportunity widely.
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George Osborne rejected this route in the Budget as a calculated political choice, and so the OBR confirm Britain will end this parliament with the Tories spending a lower share of GDP on public services than at any time since 1965.
It’s vital that Labour’s aspiring leaders do battle with Osborne on the economy. And to do this successfully, we need a mainstream Labour argument that takes the voters we’ll need in 2020 with us.
John Healey is Labour MP for Wentworth & Dearne and a former Treasury minister
