A fierce debate is raging behind the scenes at the Labour conference

How should Labour adjust to the dramatically changed political landscape?

Aided by the government’s self-inflicted wounds, an upbeat Labour Party finally sniffs a return to power after 12 long years in the wilderness. But a fierce debate rages behind the scenes at the party’s Liverpool conference about precisely how Labour should adjust to the dramatically changed political landscape.

Does the Tories’ turmoil, and a 17-point Labour lead in the latest opinion poll vindicate Keir Starmer’s “safety first” approach? Or should Labour seize the moment to go “big and bold” in setting out its alternative vision for the country while voters are bemused by Liz Truss’ “new” government?

In a confident speech to the conference this afternoon, Starmer straddled both sides of the internal debate, characteristically seeking out its middle ground. Not before time, he spelt out how the UK would change by the end of a five-year term of Labour government. There was a new policy in Great British Energy – not the nationalisation many in his party want but a state-owned company to exploit the opportunities of green energy so they are not hoovered up by foreign-owned firms.

Starmer made an unashamed pitch for the political centre ground, an obvious move when the Tories have suddenly veered off to the right in an ideological crusade that worries many of their own MPs. He invaded natural Tory territory, positioning Labour as the “party of home ownership” (with an aim of raising it from 65 to 70 per cent in five years) and “aspiration”, stressing his own working-class roots. (The public is sceptical about them, given that his name starts with “Sir”).

Starmer genuinely relishes the prospect of fighting the next general election on the economy. Of course, all Labour leaders have to say that, even if they prefer the party’s comfort zone of the NHS and other public services. But events have given Starmer the confidence to mean it. He vowed to win a fight with the Tories over wealth redistribution and workers’ rights, with “fairness and economic reason on our side”.

The pound’s slump since last Friday’s mini-Budget might not be the economic equivalent of Black Wednesday, when the UK was ejected from the European exchange mechanism in 1992, but it could prove the political equivalent – with the Tories suffering the same catastrophic loss of economic competence. Handed this open goal, Starmer argued credibly that Labour is now the party of “sound money”.

He acknowledged the state of the public finances Labour would inherit would make rescuing services “harder than ever”. But he raised the spirits and the sights of his audience, who showed how the party had changed by giving him several standing ovations during the speech. “This is a Labour moment,” he declared, citing Labour’s watershed election victories in 1945, 1964 and 1997.

Although some Labour MPs had hoped for more policy announcements, the speech passed the “vision” test. Starmer has not yet given us the complete picture, but he has started to sketch it out. Given the unexpected backdrop, he needed to show voters he could provide the stability and sensible and dependable leadership the Tories are patently not giving.

Starmer’s declaration that Labour is again the “political wing of the British people” – a deliberate echo of Tony Blair’s mantra shortly before his 1997 landslide – angered his left-wing critics. It was a poke in the eye for the trade unions, who regard Labour as the political wing of their movement.

Under Starmer, the party has rightly stopped trashing the New Labour era – never a good look to voters who, after all, gave Blair three terms in office. Labour can now leave the brand-trashing to the Tories, as Liz Truss blows up much of what was done by Rishi Sunak, Michael Gove and even some of Boris Johnson’s works.

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However, there is no guarantee the Tory and market turmoil will last. That is why some Labour MPs whisper that going “big and bold” now could make the difference between a hung parliament with Starmer heading a minority Labour government and winning an outright majority – still a massive mountain to climb given Johnson’s 80-seat majority in 2019.

The case for the defence, as one adviser put it, is that Starmer “is occupying the centre ground but the policies are centre-left”. He cited the party’s pledge to restore the top 45p rate of income tax and its ambitious green energy plans. But Starmer doesn’t want to frighten the horses. Labour has avoided talk this week of taxing unearned income, which it is looking at, for fear of headlines about a “wealth tax” that would be portrayed as “class war” by the Tories and their newspaper cheerleaders, handing Truss some desperately needed ammunition.

As I watched the speech, I could imagine Starmer making a good prime minister – perhaps more of a reassuring, competent Clement Attlee figure than a Blair mark two. But first, he has to get there.