Along with Andy Burnham's role as election coordinator and Alan Johnson's appointment to the key role of Shadow Chancellor, the appointment further highlights the new leader's focus on party unity, including offering key roles in Labour's political strategy and policy development to party figures who supported other leadership contenders.
Byrne spoke about the role at the launch of the new Policy Network pamphlet 'Southern Discomfort Again' by Patrick Diamond and Giles Radice in Westminster on Monday afternoon, where Byrne joked that his election to the Shadow Cabinet by a single vote left him well placed to talk about the challenges of tight elections.
Byrne acknowledged that the historic record of Labour policy reviews had been "mixed", offering the classic revisionist formula that these had worked best where the party had been clear about values but open-minded about the means by which these should be pursued.
Noting that the Kinnock era "meet the challenge, make the change" policy review had come with its own song of that title, Byrne said that he was unable to promise that this would be emulated.
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Byrne is widely respected in the party for his detailed engagement with questions of electoral and political strategy. Byrne voted for David Miliband for the party leadership, but has been among those leading Labour figures - along with John Healey and John Denham - to pay most attention to the "squeezed middle", a challenge which Ed Miliband has identified as central to an effective future Labour political and electoral strategy.
In particular, Byrne thinks there are important analogies with the (deeper-rooted and more long-standing) problem of stagnant middle-incomes in the United States, which President Obama's Middle-Class Taskforce is seeking to address.
He has blogged that:
We have nowhere near the same kind of problem as the US, but our hard-working classes have been surrendering their share of UK plc’s profitability for a good five years now. The TUC has an excellent study here. For me that means Labour’s next leader needs not one economy plan but two. How do we speed up growth – and how do we give Britain’s hard-working classes a bigger share of the pie?
Incidentally, it can be seen that the need for a broad electoral coalition across AB, C1 and C2 and DE voters has seen an evolution in the New Labour shorthand of "hard-working families". Byrne now talks of the need to deliver for the "hard-working classes", which could be seen as a 'traditional values in a modern setting' attempt at a convergence of new Labour and old.
Rather more substantively, that small shift in terminology does signal a renewed interest in political economy, and a willingness to ask questions about who gains from growth which were not part of New Labour's discourse. New Labour argued that the case for flexible labour. Byrne does not resile from that, but notes that recent years have seen markedly increased gains to capital and falling returns to labour, particularly since 2004 in the UK.
Byrne noted that the falling share of national earnings to labour meant that£23.4 billion less was passed out in wages in 2009 than would have been the case had wage labour received its post-war average of 73% of national earnings.
He sees this as an important driver of frustration about both welfare and immigration, particularly on those earning between £20,000 and £30,000 a year.
The policy challenge is to devise the strategy not just to generate growth and for ensuring that it is fairly shared, which does not follow automatically. The public and political legitimacy of a relatively open economy also depends upon this. This call for "fair shares from the recovery" is, beyond campaigns for a living wage, likely to form a significant pillar of Labour's emerging thinking about the party's future political economy. If fiscal pressures make it is harder to pursue the model of public investment and redistribution, then social democrats are going to want to look harder at how and why economic gains are distributed as they are in the first place.
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There is very little detail yet about the form and nature which the policy review will take. The leader has appointed Peter Hain as chair of the National Policy Forum. (Hain was an early Ed Miliband for leader supporter).
The party is also beginning to consult about its highly opaque internal policy-making structures. These are widely viewed as in need of a very significant overhaul if they are to be fit-for-purpose and trusted by party members and supporters as offering credible ways to have a voice which counts in significant policy and political debates, but there is less agreeement on how to get this right.
Former special adviser Paul Richards wrote for the Progress website recently of both the tactical and substantive case for a policy review:
The best thing Ed can do is avoid detailed policy prescriptions until 2013 or 2014, and the most effective way to do that is to announce a policy review. This should involve the party and its affiliates, and embroil the new shadow cabinet in a whirl-wind of consultative activity. Unlike the ill-starred Labour Listens campaign in 1988, which involved shadow cabinet ministers telling small public meetings what was good for them, this time we can use the full range of consultative methods to tap into modern Britain's concerns.
I made a similar point in the opening editorial commentary in the Fabian Review, just before the leadership result was announced.
Labour’s new leader would do well to look at how Blair – just as Cameron did – introduced himself to the public in broad brushstrokes, resisting demands to flesh out policy detail too early. (It is necessary later, as Cameron rather neglected.) Gordon Brown’s speeches were always ‘policy rich’ from his first days yet never articulated what his overall argument for ‘change’ was about.
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