Voters will reject tax rises, Labour think tank warns Ed Miliband

Fabian Society tells Miliband public won't support his spending plans to beat austerity

A Labour group has warned Ed Miliband that the public do not support the party's spending priorities and will not vote for higher taxes to pay for them.

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The Labour-affiliated Fabian Society has sounded the alarm that the party risks being out of step with public opinion on the crucial issue of tax and spending at the 2015 general election. It suggests that voters have become more "small c-conservative" in the age of austerity.

Its warning, based on extensive opinion research, is a reminder to the Labour leadership that its eight to 10-point lead in the polls could melt away in the heat of an election campaign.

The Fabians found that fewer than one in five people accepts the need for higher taxes to fund more public spending in four core areas seen as a priority for Labour – job schemes; nurseries and childcare; higher education and public housing. Twice as many people want cuts as support increases in subsidised housing.

Andrew Harrop, the society's general secretary, said: "In a hugely challenging fiscal environment, Ed Miliband has to do far more to convince the public of the need for increased provision of public services in the areas Labour values.

"The British public are overwhelmingly small-c conservative when it comes to public spending – in six of the eight policy areas we polled, the most popular response was that current levels of tax and spend were 'about right'. Clearly, there is little appetite for a major change in government spending priorities. If Labour wins in 2015, it will have to face difficult decisions on public spending."

However, one ray of hope for Labour is that the public do not understand how much is spent in key policy areas. The YouGov survey of 2,000 people, to be published in Fabian Review, found that people vastly over-estimate the amount spent on welfare, unemployment benefit, child benefit, housing benefit and tax credits. "Correcting the record on the real level of spending in 'unpopular' areas might allow Labour to break out of the race to the bottom on public spending," said Mr Harrop.

The findings will put pressure on Labour to propose "switch spending" from one area to another rather than raise overall budget limits it would inherit from the Coalition if it wins power. These will include at least two more years of cuts after 2015. Mr Miliband has warned his party there can be no return to the high public spending of the Blair-Brown era, but the party is keeping its policies under wraps.

The poll found that people support higher spending in two areas – the NHS and care for the elderly. Labour supporters are a lot more positive about higher budgets than Tory and Liberal Democrat voters.