Ed Miliband: Labour make big changes without big spending

Leader will argue that his party now has a policy platform which 'moves on' from New Labour without returning to Old Labour

Ed Miliband will admit that the party could not throw money at public services to improve them (Getty Images)

Ed Miliband will today urge Labour to rally behind his “radical and credible” election agenda as he tries to unite factions with differing views about how to deliver social justice in an age of austerity.

In a speech to Labour’s national policy forum in Milton Keynes, Mr Miliband will admit that the party could not throw money at public services to improve them or cut poverty by raising benefits and tax credits, as it did in power from 1997 to 2010.

He will argue that his party now has a policy platform which “moves on” from New Labour without returning to Old Labour. There has been tension in the Shadow Cabinet over whether to make a bold offer at next year’s election or a more cautious one aimed at winning economic credibility.

Today Mr Miliband will try to square the circle by arguing the flawed economy revealed by the 2008 crash requires radical solutions, but saying they must be achieved without a public spending spree.

“It is a plan for economic transformation that is not less ambitious because we live in a time of scarcity, but is more ambitious because it sets a new direction for Britain from the past,” he will say.

“Moving on from a time when rising inequality was just a fact of life – or when we acted as if there is nothing we could do about markets that aren’t fair or aren’t working. Not seeing big spending as the answer. Not going back to make do and mend.”

He will tell Labour delegates: “You and I know we won’t have the money. For all of the cuts, for all of the pain under this government, Britain still has a deficit to deal with and a debt to pay down.”

In a criticism of New Labour, he will say the party did great things in government to redistribute resources but “ did not do enough to reduce inequality, or eliminate the problem of low pay, or build an economy that will work for the next generation.”

He will add: “The reason is that we did not do enough to change the fundamentals of our economy. That is what this programme and the next government will do.”

Key policies would include a higher national minimum wage; an end to the abuse of zero-hours contracts; skills and careers for all young people; banks working for businesses again; energy bills frozen; 200,000 homes built a year by 2020; abolition of the “bedroom tax” and restoring the NHS.