Big brother refuses to tell Ed if he'll serve on the front bench

The former Foreign Secretary may quit frontline politics, reports Andrew Grice

David Miliband kept his younger brother waiting last night as he agonised over whether to quit frontline politics following his dramatic and painful defeat in the Labour leadership election.

Although Labour put on a public show of unity at its Manchester conference, tension erupted after Ed Miliband declared the New Labour era was over and raised the prospect of higher taxes and cutting the public deficit over a longer timescale than the party currently supports.

But Alistair Darling, the shadow Chancellor, will warn the conference today that Labour should not abandon his plan to halve the deficit in four years. In an interview with The Independent yesterday, he said: "Labour fought long and hard to establish ourselves as a party that is responsible on tax and spending. We have to keep that in mind. If you spend money, you have to justify every single penny of it. If you are taxing people, you have to justify every single tax rate. Nobody likes paying tax – even people who consume public services. You have to be very careful here."

Blairites were dismayed by David Miliband's narrow defeat and expressed fears that Labour would lose the next general election. One told The Independent: "Ed thinks he can win by not being New Labour because it is 'the past' while throwing in the occasional reference to aspiration to show he is on the side of ordinary working people. It's hopeless."

A Blairite former Cabinet minister added: "It is a miracle result for the Tories. Ed is fatally damaged. We have a second-best leader who wasn't even elected by a majority of his own party members or MPs."

David Miliband has until 5pm on Wednesday to decide whether to stand in the election among Labour MPs to choose the shadow Cabinet, after which his brother will allocate frontbench posts. Today, he faces a gruelling appearance in front of delegates, whom he is to address on foreign affairs.

Aides said he wanted to "chill out" and consider his future. He moved out of the main conference hotel in Manchester to try to avoid the spotlight.

David Miliband received conflicting advice yesterday. If he walks away now, critics may accuse him of flouncing out after losing. But if he intends to bow out of British politics in the medium term, it might be better for him to go sooner rather than later.

Mr Darling urged the former Foreign Secretary to stay. "My guess is that he will stay and fight his corner. The party will be much better with him on the front bench than without him. He is passionately committed to the Labour Party and will want to play his full part." But another former minister said: "He is finished. If he's got any sense, he might as well get out now."

Some Blairites claimed David Miliband had shown he lacked the killer instinct by refusing to fight back hard against his brother. They suggested David could have won by saying more strongly he was the man to win the next general election. "He allowed Ed to faze him. For ordinary, unpolitical party and union members, there seemed to be no price to pay in voting for Ed," one said.

Yesterday Ed Miliband said of his elder brother: "He needs time to think about the contribution he can make. I think he can make a very big contribution to British politics." He insisted there would be no lurch to the left under his leadership and denied he would be a prisoner of the unions, who secured his victory: " I am nobody's man; I am my own man."

However, he described Mr Darling's deficit reduction plan as a "starting point" and said Labour would look to see how it could "improve" it. He declared that the Chancellor George Osborne's proposal to eliminate the structural deficit by 2015 was "economically dangerous".

The Labour leader also stressed his personal commitment to universal benefits and backed a graduate tax in which graduates would pay higher taxes worth between 0.3 and 2 per cent of their incomes for 15 or 25 years.

Ed Balls, who came third in the leadership election and wants to become shadow Chancellor, called for the starting level of the 50p top rate of tax to be lowered from £150,000 to £100,000—a move that may be considered by Ed Miliband but would appal Blairites.

Mr Balls said the Darling plan had been mistaken and involved cutting too quickly but circumstances had changed. "Ed [Miliband] was clear today: get the deficit down in a gradual and careful way... I totally support that," he said.

Ed Miliband summoned Labour MPs to a special meeting in Manchester last night and won warm applause after a 10-minute speech. His brother was not present. Jim Murphy the shadow Scottish Secretary, who ran David Miliband's campaign, said he was "just taking a few hours out... He will be back tomorrow morning".

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