Well that title seems like a contradiction in terms: how the new left should embrace liberal economics ? Well it already has, it is just that there has to be a further realigment of attitudes to social policy in respect of the economy: who benefits and who pays ?
As I have said before, the new, newer left have to stop punititive taxation. What they should be doing however is firmly moving the taxation burden up the scale while at the same time, winning over more affluent middle class voters.
Currently the Conservative have levelled a high tax burden on the poorest in society by raising VAT. This is a perverted-robin-hood trick Thatcher also played: we seem to have more money in our paypacket, but it is taken back from those who can least afford it. The wealthy and the corporates seem to not only be able to pay ever less a proportion of their income and capital in tax, while actually attracting more back door subsidies in the aftermouth of the "failed sub prime casino" front door bail outs. Now there is talk of growth stimulation, which just a couple of years ago would be medling, nanny state keynsian economics.
Back to Liberalisation;: Firstly, once again aim to reduce burden on employers for social costs and rather than subsidising slavery ( "envelope opening apprentices" this week) with grants, they should reward investment in people and training on a level playing field, such that it becomes the business standard rather than the exception, to take the risk to train people balanced by the attractiveness of tax rewards. Secondly they should infact raise the limit for higher rates of tax: this will attract high wage, middle class employee voters and engage them more with qaulity-of-life politics of the left. Also it injects money at the right level of liberal trickle down: much of this money is actually public, as these are doctors, civil servants, and lawyers (bank rolled often on legal aid) and it will inject it back into local economies. These are the section most likely to invest in home improvements for example.
Why stop there, why not say carry on from a top rate applied at 60K pounds ? ( what I am suggesting to reward many of the top performers in public and private administration and "technical delivery") Why not do what they do in eastern europe, 25% flat? Well the super rich are an international bunch and trickle down is as much trickle out. Effectively they never pay top rate anyway, so there should be other tax efficient mechanisms to recirculate their money in the real, national and local scale economy.
On an important point, really what new labour tried in part, leave business alone - by in large. Pick your battles while otherwise charming them with strict budgets in line with GDP and debt leverage targets. The battles to pick are then with the overly inflationary former utilities, who are reigned in over the majority of europe to being chained tigers rather than the uncaged sharks of the UK. Competition and some level of efficiency and quality of management, tethered to below inflation price rises, more social pricing and directly comparable tariffs.