The Labour Party is in disarray, and looking for a new leader. But being the official opposition party is an important duty, and can change the terms of the political debate. Here are the policy issues the party should concentrate on if it wants to make an impact in opposition, and eventually restore its electoral prospects. 

1. Emphasise housing and planning reform

We are unlikely to see sorely needed housing reform with this Conservative government. After all, most Tory MPs will have committed to protecting the Green Belt during their election campaigns, and their Help-to-Buy policies will probably make ballooning house prices even worse. The application of Right-to-Buy to Housing Associations also risks further lowering the UK’s already low house-building rate as they’ll lose all incentive to build more. 

Labour can use housing to out-flank the Conservatives on the economy, making the case that rising house prices and the policies that worsen them will needlessly stifle economic growth. For example, we need Green Belt-constricted areas like Cambridge and London to not drive away innovative start-ups as rents skyrocket. Labour should emphasis this in its appeal to entrepreneurs and small businesses, while using it to regain trust on the economy.

Housing is also an issue where they may outdo the Conservatives on aspiration, constructing a vision of mass home ownership with affordable housing. Labour tried to appeal to renters and young people for this election, but in a way that smacked of statist heavy-handedness with its emphasis on greater regulation. Yet parents and grandparents who already own their homes will also be worried about their children stepping onto the housing ladder in the face of rising prices. 

Labour therefore needs to adopt policies that are attractive to renters and owners alike, with the overall aim of bringing housing inflation under control. De-regulating planning laws would be a central step to achieve this. Many owners would welcome a reduction in the time and cost it takes to improve their property, and deregulation would also allow the housing supply to be boosted further, satisfying renters. Combined with a re-zoning of the Green Belt, Labour should emphasise the boost to economic growth that a house-building boom would cause.

By emphasising private solutions to out-of-control housing inflation that would also boost economic growth, Labour would further enhance its economic credentials. They would no longer need to answer awkward questions as to where the money would come from to build more government houses.

2. Regain trust on the economy by calling for tax reform

Labour desperately needs to regain trust on the economy. One way to do this would be to outdo the Conservatives in calling for tax reform. Rather than proposing Mansion taxes to spook home-owners, they need to call for wholesale Council Tax reform. Re-scaling the tax bands would be a start, but they can afford to be radical in their proposals. Any policy they come up with should focus on potential economic gains to be had from using empty houses and brown-field land more efficiently.

Labour also has a golden opportunity to reframe National Insurance as a tax on workers and jobs. They could call for it to be more progressive, perhaps even to merge it with Income Tax. This would be one way of making current taxes appear more regressive, without necessarily needing to call for higher top rates – it should now be clear that Labour cannot win in England if it is to punish people for aspiring to earn more. Reframing National Insurance would thus allow them to focus on the injustices faced by lower and middle-earning workers under the current system.

Proposing cuts to Inheritance Tax, Capital Gains Tax and Corporation Tax are likely to be anathema to the Parliamentary Party and members. However, they should not oppose Conservative moves in this direction – they need not alienate those who benefit from it. Indeed, if Labour MPs are flexible enough, they should make the difficult case for Corporation Tax to be lowered on the basis that it ultimately falls on workers. 

3. Become the party of civil liberties

Theresa May is staying as Home Secretary and is likely to be very authoritarian. By making itself the party of civil liberties in opposition, Labour will have the opportunity to reconnect with voters who previously voted Liberal Democrat. It would also allow them to deliver the final blow to the LibDems by squeezing out any space for them to be relevant. 

Over the course of the next five years, Labour needs to tap into our instinctive concerns about privacy and government intrusion.  They should therefore make opposition to the Snoopers’ Charter a core plank of their policy, while framing the Conservatives as the party of “Big Brother”. As part of this, Labour MPs should educate themselves about internet policy, and oppose attempts to regulate free speech. If May is the new Conservative leader in 2020, forming this line of attack as early as possible will be crucial to Labour.

4. Promote the benefits of immigration

One of Labour’s many problems in this election was its stance on immigration. Ultimately, any attempt by Labour to be harsh on immigration will be unconvincing, and is one of the reasons for its mug’s infamy. The party needs to accept that it will never be the party of controlling borders, and play to its strengths instead. It therefore needs to make the case for the benefits of immigration so that it can turn public opinion over the next five years and consolidate its hold over urban areas.

Ultimately, Labour needs to paint a vision of Britain as the most attractive country for the world’s top talent. For example, it should promote foreign students as a source of creativity and innovation to boost economic growth, and celebrate foreign entrepreneurs as a source of new jobs. This economic emphasis would be inspiring if done well, and should be central to regaining trust on the economy. Labour should bear in mind that it may have to compete with Boris Johnson on similar terms in 2020, given the positive noises he has made about immigration.

Labour also needs to emphasise the importance of immigrants and their contributions in paying for public services. For example, it might frame Conservative attempts to control borders as a subtle attack on pensions and the NHS.

5. Call for the legalisation of cannabis

Labour needs to see off the growing far-left threat of the Green Party, while also mopping up the few remaining Liberal Democrat voters.  To re-unite the left, Labour should therefore call for the legalisation of cannabis. It would need the next five years to help turn public opinion in its favour, emphasising rehabilitation and the positive experience of similar reforms around the world. Most importantly, it would be a less risky strategy than attempting to outdo the Greens on economic issues, while getting many younger voters enthusiastic about the party.

By taking the initiative on this, it would also force the Conservatives to take a position on the issue. This may cause havoc with Cameron’s attempts to modernise his party, as many of the Conservative MPs elected in 2010 and 2015 are of a younger generation that is likely to be more amenable to legalisation. It is worth bearing in mind that Cameron himself was broadly in favour of decriminalisation before becoming Conservative leader. This could therefore be a chance for the Labour party to shift the centre-ground of politics on social issues, despite being in opposition.

6. Call for people-powered public service reform

Labour retains its position as the party most trusted to run many public services. However, it should not squander the opportunity it has to put the Conservative government on the back foot. It failed to make any electoral headway with pledges for more funding and peddling fear of privatisations. Part of the problem was that funding promises did not square with deficit reduction, and the warnings about “saving our NHS” seemed exaggerated and insincere.

Instead, Labour should propose alternatives to privatisation that focus on civil society. It needs to grow up in how it conducts debates over the NHS, accepting the need for reforms aiming at greater efficiency and higher quality. This should be part of a wider attempt at rebuilding the party’s activist base, involving the party more directly in civil society, friendly societies, co-operatives and mutuals. It should promote communities and civil society organisations as a viable alternative to both inefficient bureaucratic state control and for-profit exploitation. For example, it should propose allowing patient-led groups to commission care services alongside GP-led consortia, and champion the use of friendly societies and mutuals as healthcare providers within the NHS.

If it were to be particularly bold, Labour should do all this while making the case for the NHS to be reformed to a more European, social insurance model. This would be one way to play up its Social Democratic credentials while also achieving positive and meaningful reform. As the self-styled “party of the NHS”, it would be a shame if it did not use its position to improve Britain’s health.

7. Become less paternalistic towards working class lifestyle choices

Labour needs a way to head off the potential threat posed by UKIP. In the North of England in particular, UKIP often came in second place, and this should be a cause for concern. Labour should accept that it will never outdo UKIP on immigration or on leaving the EU, but also realise that much of UKIP’s appeal is cultural. 

Many of these voters would have been attracted by UKIP’s tolerance of vices like alcohol, gambling and smoking; in stark contrast to the paternalistic, London-elites-know-best tone taken by both Labour and the Conservatives. Labour should therefore take the sting out of UKIP’s tail, and re-establish its credentials as a culturally working class party. For example, it should call for cuts to alcohol duties, which would have the advantage of being both popular and cheap.

Anton Howes is a Fellow of the Adam Smith Institute, and a PhD student in Economic History at King's College London. He blogs at Capitalism's Cradle.