With the election some three months away, hopes of a new transformative political settlement looked under threat - until around 7:15 this morning. That was when shadow Chancellor George Osborne appeared on the Today Programme to discuss the Conservatives' plans to encourage radical innovation through extending employee ownership of the public sector. David Cameron affirmed these ideas in a speech on co-operatives in the public sector later on the same day.

Until then, the opportunity represented by the coming fiscal crisis had not engendered a radically new policy agenda for the British economy. A double dip recession and the worst financial crisis since the war was being approached as if nothing new were possible. It is not that we were fighting this economic war like we did the last – we were not even engaging in the battle for a better future.

Yet encouraging signs could be discerned in George Osborne's rhetoric in the last few weeks. It was wise of him to call for a new economic model - the only fear was that no new policy was there to fill the void that was named. Meanwhile, the left and right engaged in a tired debate on tax and spend that offered little or no radical solutions to our many economic problems.

In the debate that took place around the Westminster decision-makers - in the press, in think tanks and on other blogs - very little by way of new thinking about our economy, our public services and our society has been proposed. Yes, we have spoken about breaking up the banks but there has been no different account about the type of institutions that they could be broken up into. Our discussions on economic policy have all too often had a strangely dated feel. The left-leaning commentators argued that the current crisis once more demonstrates the need for a strong state yet in so doing they demonstrate no account or knowledge as to how the state (in a perverse act of corporatism) underwrote and still underwrites the risk of investment bank activity – the very speculative logic that created the current crisis. The right-leaning commentators by contrast have been presenting 'Thatcherism redux' as the answer to our current problems - as if the economic policies adopted for an inflationary recession are those applicable for the deflationary downturn that threatens us now. Moreover there was no acknowledgement on the right that abandoning wholesale any capital controls rendered central bank attempts to control the money supply by interest rates entirely redundant. The higher the interest rates are raised to control demand the more capital is sucked in to increase the money and credit supply all of which financed the bubble economics that brought us to this sorry state.

The lack of self-critique on both left and right underpins the lack of economic vision and the dearth of a transformative thinking. Where for instance will future British growth come from? Consider that the majority of our economic growth over the last ten years was in financial services, housing and the public sector, and this precisely is why radical public sector reform is a sine qua non of a transformative economic platform, and why today's news on the Conservatives' approach to co-operative ownership in the public sector is so exciting.

With innovative ideas now at play in the public sector, we can now move into a real, meaningful, mature debate on tax and spend. With no account of growth, economic regeneration or innovation in the real economy the politics of the 1980s have returned but the ideologies being deployed no longer if we are honest, correspond to the current crisis or indeed the future we need to create. If we do not tackle vested interests and extend the economy beyond the M25, the future for the UK looks very bleak indeed.

All of which goes to show two final things. First, the rampant disconnect between the radical thinkers at the heart of the Conservative and indeed the Labour parties - and those who commentate and pontificate on such issues for the public. Secondly, that the old centre ground of British politics has collapsed beneath our feet – the policy agenda that was built upon it is finished. The middle part of our society and its economy is broken; yet the new debate and the new centre ground upon which the debate takes place is now being formed and if we can extend that vision we can ensure that it will be remade.