We made mistakes on welfare, admits Ed Miliband as he pledges Labour cap on social security spending

'We will tackle the deep, long-term causes of social security spending and tackle the costs of failure like housing benefit'

Ed Miliband will pledge to restore the 'contributory principle' to the welfare state (Getty Images)

Ed Miliband admitted today that the previous Labour Government made mistakes on welfare as he pledged to impose a cap on social security spending if the party wins the 2015 election.

Mr Miliband said the Blair and Brown governments should have acted sooner to cut the rising bill for incapacity benefit. He said Labour was right to provide tax credits for low paid workers but admitted:"We didn't do enough to tackle Britain's low wage economy... Our approach for the future needs to make good on what the last Labour Government did not achieve." But he refused to admit that Labour overspending caused today's budget deficit.

In a landmark speech in Newham, London, the Labour leader set out "the choice" between his party and the Conservatives on welfare as he tried to bolster Labour's economic credentials and answer Conservative claims that his "the welfare party."

He said: "We will tackle the deep, long-term causes of social security spending and tackle the costs of failure like housing benefit. They (the Conservatives) will not."

Mr Miliband said David Cameron would describe anyyone looking for work as "a skiver" while Labour would "protect the dignity of work and make work pay."

Mr Miliband argued: "Controlling social security spending and putting decent values at the heart of the system are not conflicting priorities. It is only by reforming social security with the right values that we will be able to control costs."

He said the level of most welfare spending Labour inherited from the Coalition would be his party's starting point and any changes would have to bew fully funded. A three-year cap would allow Labour to plan ahead and bring in "greater discipline, as ministers from across departments will be led to control the big drivers of spending."

Mr Miliband confirmed that Labour would not reverse cuts in child benefit affecting families with one earner on £50,000 a year from this January. "It won't be our biggest priority to overturn," he said.

Mr Miliband promised to switch part of the £24bn-a-year bill for housing benefit to housebuilding by allowing councils to negotiate lower rents for tenants of private landlords. "Any attempt to control housing benefit costs which fails to build more homes is destined to fail," he said.

He urged employers to join Labour in a "national mission" to tackle low wages by paying the living wage rather than the lower national minimum wage.