Ed Miliband is no doubt worrying about his first Budget as Labour leader this week. But he faces a much more profound problem over the coming years: how to prevent Labour's historic coalition of the working and middle classes from disintegrating, and thus avoid the fate that is befalling some of the great social democratic parties of continental Europe.
A new group has emerged in the party – called Blue Labour – which thinks it has an answer, and Miliband is listening. Blue Labour, whose best known backer is Dagenham MP Jon Cruddas, proposes an unusual mix of "flag, faith and family" social conservatism and economic interventionism, an odd marriage of the Mail and The Guardian.
The problem Blue Labour tries to address is this. Labour has lost around 4 million working-class voters since 1997, and at the last general election, for the first time, Labour's middle-class vote (in the ABC1 sense) was higher than its working-class (C2DE) vote. To win an election, Labour needs to win back lots of those blue-collar voters; the trouble is that Labour's middle-class voters, especially the liberal graduates among them, have increasingly divergent values and interests.
Academics call this the liberal versus communitarian value divide. Broadly speaking, middle-class liberals place most stress on individual rights and cultural openness. They are highly mobile and pro-diversity and pro-immigration. They are softish on criminals and green on the environment. They are comfortable with globalisation and benefit from it both economically and culturally. At the more extreme end they are universalists, who feel no greater obligation to someone in Birmingham than to someone in Burundi.
Working-class communitarians, by contrast, have a more collectivist view of rights, and place great stress on community membership. They worry about welfare free-riding, they value the familiar and the local, and are sceptical about mobility and mass immigration. They are draconian on crime and not very green. They are uncomfortable with globalisation, and tend not to benefit from it economically or culturally. At the more extreme end, they shade into racists.
This divide is a feature of all rich societies, and affects all parties. It has been a perennial problem for the centre left, but has got a lot worse since the arrival of the "security and identity" issues – immigration, national identity, extremism – at the centre of politics. The rise of populist parties in the Netherlands, France, Denmark and Sweden has sucked working-class communitarian voters from the main centre-left parties. They have been left shadows of their former selves, increasingly dependent on liberal graduate voters.
Labour has been protected from this trend by the first-past-the-post electoral system, and the lack of a serious electoral threat from the populist right, but Labour is now struggling to find policies that bridge the liberal-communitarian divide. In the 1970s, the two groups could happily co-exist. Labour's liberals worried about minority rights and apartheid, while communitarians got on with defending trade unions or welfare provision. But globalisation and mass immigration have changed that, as in the rest of Europe, and brought the two groups into conflict.
The value clash is borne out by a previously unpublished YouGov poll of centre-left voters. Asked whether Britain now feels like a foreign country, working-class centre-left voters agreed by 64 per cent to 26 per cent; middle-class graduate centre-left voters disagreed by 67 per cent to 28 per cent. Asked whether employers should be given incentives to hire British workers, the working-class left agreed by 65 per cent to 25 per cent, but the graduate middle-class left disagreed by 52 per cent to 35 per cent.
For Radio 4's Analysis programme, I investigated Blue Labour. It thinks Labour is dominated by Fabian elitists, like Gordon Brown, who are contemptuous of the party's working-class base. "Blue Labour has an affection and an understanding of the concerns of working-class people. I don't think that New Labour really liked working-class people," says Maurice Glasman, the leading Blue Labour thinker and former speechwriter to both Milibands.
That makes Blue Labour sympathetic to culturally conservative views – on issues of place, work and welfare – and hostile to mass immigration. So far, so Daily Mail. But it also has a more leftist critique of the economics of globalisation and wants to see more controls over capital flows and company takeovers to defend national interests. It also dislikes the top-down bureaucratic state and stresses the importance of localism, mutualism and human relationships, in public service delivery, and life in general. This can make Blue Labour sound a bit dreamy and "golden-age-ist" and it is not clear how it proposes to avoid alienating the growing number of Labour liberals.
Yet it has the ear of the leadership: Miliband recently elevated Glasman to the Lords. Leading Blairite James Purnell, who resigned from Gordon Brown's cabinet, is also sympathetic. He says: "Labour's renewal will come from a synthesis of New and Blue Labour." Purnell argues that Tony Blair was quite communitarian on social and crime issues but didn't understand anxieties about globalisation, and became "change manic".
Expect to hear more Blue Labour language and ideas. The combination of cultural conservatism and social democratic economics is attractive; it might even be the "hidden majority" in developed countries. But given both the reality of globalised Britain – our "hub" economy is dependent on mass immigration and financial services – and the demographic, electoral and intellectual momentum of the liberal forces in the Labour Party and society at large, it is hard to see Blue Labour being much more than a swansong for a dying working-class tradition.
David Goodhart is editor-at-large of 'Prospect'. Analysis is on tomorrow, 8.30pm, and repeated next Sunday