Leading article: The task for Labour's new leader in the age of coalition government

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Today the Labour Party will know the identity of its new leader.

It will also have learnt something about itself. A close contest came down to a fraternal argument between a Blairite who dared not speak the name against a younger politician of an older Labour stamp. In its narrow parameters, the contest disappointed, but it offered a debate the party had to have.

Whoever prevails will have the dual task of reuniting the party and convincing the country that Labour can again be the party of government. In fact, as the faithful convene in Manchester, the challenge does not look quite as formidable as it might have done. There is still much to play for.

While Labour was convincingly defeated at the election, it did not suffer the total meltdown widely forecast, depriving David Cameron's Conservatives of the overall majority they craved. Harriet Harman put in a creditable performance as caretaker leader, steering Labour through its first months in opposition. And – paradoxically – the long drawn-out leadership election may have acted to the party's advantage, as it left experienced former ministers to shadow their novice opposite numbers.

The fact of a Coalition Government offers Labour another advantage: that of being the sole opposition party. It has already demonstrated that there is political mileage in exploiting cracks between Conservatives and Liberal Democrats. But this approach also contains dangers, chief among them that the party will be seen as negative. Voters have shown time and again that they dislike attack for its own sake. Labour must offer alternative solutions that are seen as realistic and appropriate to the country's straitened circumstances.

Nor can Labour count on Coalition mistakes – still less on its collapse. For all that the two governing parties are new to office and do not see eye to eye on everything, they have created an impression of competence that often eluded the previous Labour government. It also enjoys, for the time being, an unexpected level of popular goodwill.

Labour will have to compete on positive policies, recognising how canny the Coalition has been in closing off obvious points of opposition appeal. The early decision to ring-fence NHS spending was one such. The speech on capitalism to the Liberal Democrats by the Business Secretary, Vince Cable, was another, and yesterday's announcement that there would be no revaluation of council tax bands in England was a third.

That said, the economy will be the battleground on which Labour has to fight. And one crucial decision for the new Labour leader and his Cabinet – to be elected during the party conference next week – will be whether, or in what form, to retain Mr Darling's pledge to cut public spending. Doing so would allow Labour to renew its commitment to fiscal responsibility, but leave Labour's policy less clearly differentiated. Abandoning the pledge in order to put growth first would make for a clear demarcation line, but risk charges of fecklessness.

This key decision will have to be made as Labour also adapts to the changed political context. And here it must judge whether all-out opposition is the best course, or whether a more attenuated line might not only be more productive, but more prudent, especially if it wants to keep the way open to a coalition government of its own one day.

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