I don’t think Tony Blair’s made his own mind up yet, but according to the prevailing view amongst political commentators there will be a General Election by the summer of next year.

So this will be the last party political conference season before we all hit the campaign trail. An opportunity for each party to outline how it will translate its ideals and values into practical policies that will make a difference to people’s lives.

This task presents the biggest challenge to the governing party of the day. How does it demonstrate renewal in office without opening itself up to the accusation that it has wasted the years that it has already had in office?

Exactly this dilemma was faced by Margaret Thatcher in the run-up to the 1987 election. People nowadays are inclined to forget the difficult period she’d been through. The resignations of Michael Heseltine and Leon Brittan over the Westland affairs; giving permission for US plans to use British bases to bomb Libya and a general sense of drift and not being prepared to listen.

In the face of these difficulties Margaret Thatcher’s strategy was to lift her sights and demonstrate fresh thinking and new ideas.

This wasn’t achieved without a fight within her own Cabinet who preferred a more defensive approach. She asked them to come forward with policy proposals that would be popular and capture the public imagination. Their first attempts were modest in the extreme. As she says in her memoirs, “they couldn’t take the skin off a rice pudding”. But after major revision they formed the basis of the successful ‘next steps forward’ conference in October 1986 which led to a comprehensive victory in 1987.

Labour now faces a similar choice. Whether to adopt an essentially safety first, steady as you go approach or be prepared to push forward and map out a bold vision for the direction in which a third term Labour government would take the country.

Given the recent difficulties faced by the government the consolidation approach has its attractions. Especially when the opposition is so weak and the opinion polls are indicating another election victory – albeit with a significantly reduced majority. In such circumstances why not simply stand for re-election based on your record in office? For Labour the record is impressive. A strong economy with two million more jobs; inflation under control; investment flowing into our public services; half a million children lifted out of poverty and greater protection against abuse for those in work.

A safety first approach, whilst superficially attractive, would, in my view, be dangerous. The modern electorate is inclined to bank the positive things done by the government and then come back and ask, ‘what are you going to do next?’

So Labour has to come up with a fresh offer to the electorate. We need to reveal a progressive programme building on the strong foundations of the first two terms in office and which reflects the historic ideals of the Labour Party – a commitment to social justice; the provision of opportunities for all and a belief that we achieve far more by working together than we can as individuals on our own.

This then begs the question – what should these policies for a third term be? The first point to make is that they have to be well thought through, costed and relevant to the needs and aspirations of the electorate. It is worth remembering that the seeds of Margaret Thatcher’s downfall were sown by the 1987 manifesto commitment to reform the system of raising local council revenue through the rates by introducing the poll tax.

A priority for Labour will be to demonstrate that the extra investment in public services is leading to significant and lasting improvements. In addition it will need to be able to demonstrate that it remains in touch by identifying new issues which are now of concern which may not have been the case in 1997 and 2001.

On public services it is vital and Labour does not pull back from the agenda of modernisation and reform. Whilst many on the left feel uncomfortable about the importance of choice it has to be recognised that it needs to be at the heart of modern public services. People will no longer accept the one size fits all, take it or leave it approach.

Choice in public services will be one of the key battlegrounds in the election campaign. The Conservatives use the language of choice but in practice will only make it available to the few who can afford to top-up the taxpayers’ subsidy with their own money and go private.

The Liberal Democrats are going through an internal battle on this issue. Their compromise position is to say that choice is irrelevant because what people really want is an excellent, popular and high performing school or hospital in their own community.

Frankly this misses the whole point about choice which is by making it available you put power in the hands of the patient or parent and in so doing take it away from the professional who all to often represents the producer interest. This is precisely why Labour should wholeheartedly embrace choice. By empowering people in this way standards will be driven up and the quality of services improved.

Offering choice is essential if we are to bind into the public sector those that can afford to go private and ensure that we avoid the real inequality that comes from the two tierism of private as opposed to public provision.

The need to improve public services has been on the political agenda ever since Labour took office in 1997 but in order to show renewal in office Labour will need to offer solutions to problems that have only recently appeared on the political radar screen.

Let’s just take two examples – the position of carers and the difficulties being faced by first time housebuyers.

The 5 to 6 million carers in this country are a hidden army supporting the welfare state. They look after elderly parents, ailing partners and other close relatives. In so doing they provide a quality of care and attention that would not otherwise be available and in the process save literally billions of pounds for the public purse.

We need to do a great deal more to support carers. In its first two terms Labour has concentrated on providing a comprehensive childcare strategy and giving new rights to working parents. Whilst continuing to build on these measures we must in a third term provide a new deal for carers.

After full consultation a package of measures should be brought forward. Polling amongst carers shows that their first priority would be an extension and improvement in the range and quality of support services available. The next priority is the right to request flexible working hours from their employer.

I have no doubt that a package which reflected the wishes of carers would have broad and popular support.

Research has shown that for the 70 per cent of adults who own their own home the recent increase in house prices has been a source of some satisfaction. However it has been bad news for those not already on the housing ladder.

First time housebuyers are being squeezed out of the market. Shelter has calculated that a first time home is now 33 per cent less affordable than it was ten years ago and that first time buyers accounted for just 29 per cent of the market in 2003 compared with 50 per cent in 2001.

Home ownership is one of the key ways in which Labour can tackle inequality. Yet due to the dramatic increase in house prices we have seen inequalities widen.

As a result in England the children of a home-owner will on average inherit an asset worth £180,000 whilst the children of parents who rent will receive no such benefit.

So extending home ownership should be a third term priority for Labour. This will mean increasing the supply. The recommendations of the Barker review are crucial in this respect and need to be given strong political backing.

But Labour needs to go further. The shared equity plans which the government has developed in respect of key workers in certain parts of the country should go nation wide and be extended to all first time buyers.

In addition ways should be found to give financial support to first time buyers. For example why not exempt them from the need to pay stamp duty on the first £130,000 value of a property which is the average price of a house bought by a first time buyer in England. The saving of £1,200 on the purchase of a house for £120,000 would be a great help to a struggling first time buyer.

Labour has done much to narrow inequality. Traditionally the centre left has seen tackling income inequality as being the means by which social justice can be achieved. In our modern world it is not just a question of income but having an asset you can call your own is of crucial importance. Support for first time buyers would have an important part to play in reducing inequalities.

Extending choice in public services; a new deal for carers and backing for first time housebuyers are just three examples of what might be in a progressive programme.

The challenge for Labour in the months ahead is to have the courage of its convictions and adopt a manifesto which allows the party to move away from defensiveness and define itself positively.