08/02/2012 17:54 GMT | Updated 09/04/2012 06:12 BST

Why My Grandmother Would Agree With David Miliband

Reading David Miliband this week, my mind turned to my grandmother. Let me explain.

She had no expectation that either the state or the local rich mill owner would provide for her and hers, so she banded together with her family and, together, they relied on their own endeavours to better themselves and their community.

These traditions of local working class self-help involved her (and her sister and her brother-in-law) setting up women-only speaker meetings, literacy classes, choirs - you name it. My great uncle Sam even turned his living room into a library! We have to thank this kind of personal agency for the freedoms and opportunities we now take for granted.

The post-first world war, pre-welfare state generation was remarkable. And we can learn from them. That generation gave me my political values: each of us has a personal responsibility to do it for ourselves and a social responsibility to our neighbours. A single mother and twice widowed, my grandma taught me that you don't have to be a Conservative to have aspiration.

It is through that prism of my Rochdale family that I read the debate that has broken out about the renewal of the Labour party. It is one of the most important in my life time.

There is a tempting option open to the party. David Miliband, in his much-discussed intervention last week, called it reassurance Labour. I think of it as the back-to-the-future option. In the mid-1980s we were deciding the future of the party and for young members like me we faced a choice between the politics of envy and the politics of aspiration.

The party's renewal began when we convinced the party that aspiration was a Labour value - put simply we weren't scared of success. The party that won elections by embracing the politics of aspiration and levelling up is being tempted once again by the hair-shirt politics of levelling down. Reassurance Labour, warns Miliband, risks taking us back to the politics of envy.

The challenge today is to marry together a modern social democratic politics of aspiration with a modern politics of participation. As David Miliband argues:

Active government is important beyond the demands of a minimal state. But it will only be effective when it mobilises people, whether as patients or parents or employees or citizens, to make choices and take decisions that reshape their own lives. That is why we are enjoined on our party membership cards to put power as well as wealth and opportunity in the hands of the many, not the few.

We need to ask "what would contemporary versions of my grandmother's local activism look like?" And at the other end of the social scale we should use the post-crash mood to open up a dialogue with the bankers and so called 'Masters of the Universe' in the city about using their wealth to help? After all, they want Britain to be successful and a great place to live and bring up their children. They already do give millions but they can do more.

We on the left have a problem. Whenever anyone talks of personal responsibility and of philanthropy and co-operation they are accused of proposing a move back to 'charity'. We need to get over this - philanthropy, localism and cooperation were essential building blocks of the welfare state during the industrial revolution (and of the strength of the working class). Asking individual citizens to do more will not undermine our commitment to the welfare state or to the state per se. It will enhance both.

We are not anti-capitalists but we do need to learn the lessons of the last Labour government. First, that we got the big issue right. David Miliband is absolutely correct to point out that we need to remain committed to "a politics of economic growth, not just redistribution and regulation" because "growing the pie and distributing it more fairly should be mutually reinforcing. Miss one of them out and we cannot help those who need it." But we do need a retooling of our economic policy. We achieved great things in government but as David points out, "it was funded in part from the unsustainable proceeds of the financial sector - far more sensible grounds for concern, as both Eds have said."

One of Labour's historic achievements was the creation of the welfare state. But we can't run away from the fact that the law of unintended consequences got to work, and we ended up with a dependency culture rather than a responsibility culture. My grandmother would have been appalled, frankly. We should be the people who strive to ensure the system is fair, and is seen to be fair. We need to say loud and clear that the individual has responsibilities as well as rights. My grandparents understood a basic truth: you get out what you put in. People of my step-daughter's generation often haven't had to fight for any of the rights they enjoy and consequently don't value them or understand how to maintain them.

During the Labour leadership contest Andy Burnham argued that "Socialism should be about aspiration." His philosophy also grew out of his working class roots, he said: "It's not about leveling down, but people coming together to let people get on and make something of themselves." Exactly.