Lisa Nandy attacks Blair’s New Labour for maintaining ‘Thatcher consensus’, in dramatic change of tone

Wigan MP expresses frustration at last Labour government, with praise for Jeremy Corbyn

Lisa Nandy has mounted an attack on Tony Blair and Gordon Brown for perpetuating the “consensus that Thatcher built” to endure in a marked shift in tone as the race for the Labour leadership narrows.

In a speech on Wednesday, Ms Nandy praised outgoing leader Jeremy Corbyn for breaking the consensus that “economic conservatism was a bigger priority than people”.

But she also warned that Labour must change its approach or “die”, saying that the scale of radical change offered by Mr Corbyn in his manifesto for last month’s general election was “deeply frightening” to some economically vulnerable voters.

Ms Nandy’s outside bid for the leadership has gained pace, as she became the second candidate – alongside Sir Keir Starmer – to secure a place on the ballot paper, after the Chinese for Labour group added its nomination to those of the National Union of Mineworkers and the GMB.

And she was boosted by former rival Jess Phillips’ announcement, after quitting the race on Tuesday, that she will vote for Ms Nandy as her first choice as leader.

Speaking at the Centrepoint homelessness charity in London, where she worked before becoming an MP, Ms Nandy set out plans to overhaul the welfare state, funded by higher taxes on corporations and the rich and by halting a planned reduction in national insurance payments.

Under her leadership, Labour would require profitable companies that fail to pay a living wage to settle the shortfall with the Department for Work and Pensions, immediately reverse universal credit cuts before scrapping the system altogether and increase capital gains tax and corporation tax to match taxes on income, she said.

Ms Nandy issued a defence of the welfare state as “one of Labour’s crown jewels” and the taxation system as the means to fund it.

“We need to change the debate,” she said. “Tax is not an evil. Tax is how we contribute to something bigger, better than ourselves.”

In the years after Margaret Thatcher’s election, Labour had “tacitly accepted that four decades of economic conservatism was a bigger priority than people, that only by showing we could be as tight as the Tories could we buy legitimacy for helping people in the most need”, said the Wigan MP.

“It was only four years ago, with the election of Jeremy Corbyn, that Labour broke with this consensus. It was an important moment for us,” she added.

“But now we have to go further. To see that moral case reignite our passion for change, and to see our Labour values run like a thread through our services again.”

She warned: “Our welfare state is in real trouble ... support for the welfare state has weakened. We have matched this with a declining ambition for change.

“And now with a Tory government with a huge majority, we face the prospect of a government that will exploit this discontent with the politics of grievance. To stoke resentment rather than seek to remedy it.

“We have to do more than defend a broken system from attack. We change, or we die. And for the sake of so many, for ourselves, we can never allow that to happen. The challenge of today is clear: we build on the shoulders of giants to create a modern, empowering welfare state for the 21st century.”

Ms Nandy rejected arguments that a more generous benefits system would be unaffordable.

“The fact is, we can afford it,” she said. “It is indefensible and simply incredible to say that one of the largest economies in the world cannot afford to care for people after a lifetime of work, or who have so much to offer.

“The system is desperately unfair. It cannot be right that the poorest can find themselves paying the highest marginal effective rate of tax – that baker’s bonuses are taxed more than bankers’.

“The root is universal credit, and the cuts made in 2012. I would immediately reverse these, paid for by cancelling the Tories proposed changes to the NICS threshold, while we design a progressive tax system that works for the least well-off.

“And it makes no sense that we tax companies and wealth at a lower rate than income – that people who work hard to earn money should pay proportionately more than those who have the good fortune of an unexpected windfall. Capital gains tax rates should match those on earnings, and corporation tax be raised to at least the basic rate of income tax.”

The four contenders for the Labour leadership: Lisa Nandy, Rebecca Long-Bailey, Sir Keir Starmer and Emily Thornberry (Getty/PA/AFP)

Asked by The Independent what changes she would make to Mr Corbyn’s policy agenda, Ms Nandy took aim at the scattergun set of promises in the 2019 manifesto.

“Labour needs to relearn the language of priorities,” she said. “When we said we would promise deep, fundamental, radical, meaningful change, I don’t think people felt that was wrong ... But when we promised everything, it was actually deeply frightening to people who don’t have a huge amount of resilience or a huge amount of family savings and who worried about what the future will hold.

“It was the whole package taken together that cost us the trust of the British people.”

Ahead of the speech, Ms Nandy told BBC Radio 4’s Today programme she did not want to “trash the legacy” of the Blair and Brown governments, praising their introduction of the minimum wage and investment in services.

But she added: “It is certainly true to say that the consensus that Thatcher built lasted all the way through the New Labour years.

“I came into politics after 10 years working in the voluntary sector with homeless teenagers, first of all, and then with child refugees.

“And the reason I did was out of frustration with a system under the last Labour government that took small amounts from people at the very top of the system and handed it with conditions to those at the bottom.”

In an apparent swipe at the male frontrunner for the leadership, Sir Keir, Ms Nandy cautioned that Labour must not rely on “one man – a liberal reformer – stepping in to save us”.

But she also slapped down Labour chairman Ian Lavery for suggesting Sir Keir should make way for a female leader, saying: “It’s not really up to him who is in the leadership contest, it’s up to our members.”

Despite backing Mr Corbyn’s rival Owen Smith in the 2016 leadership contest, Ms Nandy said she would not “trash” the Labour leader, in comments that will appeal to his base.

She said Mr Corbyn had “undeniably helped the party to make a break in 2015 with a situation where we were promising three quid off your energy bill and immigration slogans on mugs, which undermined our very basis for being”.

Meanwhile, Ms Long-Bailey, said it was “disrespectful” to suggest she was another version of Mr Corbyn after suggestions she was a continuity candidate for the left-wing of the party.

In an interview with the Daily Mirror, Ms Long-Bailey, a front-runner in the contest, said: “Insinuations have been made: ‘Oh these men have been pulling strings in the background.’

“I’ve been proud to stand on the policy platform that we’ve had.

“That’s not to say I’m not a completely different person from Jeremy because I am, and I’ll be taking the party in completely different directions.”

The new leader and deputy leader of Labour will be announced on 4 April.