Miliband to give rank and file power on policy

Members to be trusted with 'difficult choices'

Labour will give its members the real power to decide its policy and will not dilute the influence of the trade unions in the party under reforms planned by Ed Miliband. In an interview with The Independent, Peter Hain, a close ally of Mr Miliband, said party members should be trusted to make "difficult choices" such as whether a future Labour Government would stick with university tuition fees or replace them with a graduate tax – Mr Miliband's preferred option. "The route back to power is for our members to feel empowered again," he said.

Mr Hain chairs Labour's national policy forum, to whom Mr Miliband will tomorrow make his first major speech since the party's September conference. He also heads a review of the party's inner workings – including how it should elect its leader.

The shadow Welsh Secretary does not have a "pre-set agenda". The test he will apply to policy and party reform proposals is: "does it make Labour a more popular and party capable of winning the next election, capable of reaching out to our members and supporters and Middle Britain as well?" He is not going to be terribly interested in "pet projects from one faction or another".

Mr Hain said: "Ed Miliband believes very strongly that, however successful we were as a government and New Labour was as a project, it disempowered our members and through that, disempowered our supporters. We lost both and we lost the election. We have got to reinvigorate the party and re-enthuse our supporters. They have got to be missionaries, which they have not been for a long time. The party has been hollowed out."

He described Mr Miliband's mission as to "almost re-found the Labour Party" and transform it into "the most powerful political force in British politics".

Mr Hain criticised the "control freakery" and "command and control" culture of the Blair-Brown years, but insisted that giving more power to the policy forum and annual conference would not mean a return to the bitter divisions of the 1970s and 1980s between a left-wing party and more moderate leadership.

Mr Miliband's "new politics" will offer a deal under which party members and unions will be asked to show "responsibility" in return for more clout. They will have to make decisions with the head rather than their heart, Mr Hain said.

Blairites hoping that his party machinery review will loosen Labour's ties with its union founders look likely to be disappointed. "I can't see how cutting the union link is going to enlarge our connection with the voters of Britain because it would immediately disenfranchise a couple of million affiliated [union] members," said Mr Hain. "That doesn't seem to me a very bright way of making Labour a more popular party."

He is open to ideas about the balance of voting power in future leadership elections but dismissed complaints that the unions deprived David Miliband of victory even though he "won" in the other two sections of the electoral college – MPs and party members. Recalling that Tony Blair won over union members under the same system when he won the leadership in 1994, he said: "If David Miliband had been as popular a candidate as Tony, he would have been able to do the same. He didn't. The rules are the rules."

He added: "If the right wing press thinks it can bounce or frighten Labour into a particular course, I think it is going to be disappointed."

Mr Hain dismissed the muttering against Mr Miliband from some Labour MPs who fear the party is "drifting" and recalled that David Cameron faced similar grumbling early in his leadership. "It's Westminster bubble nonsense," he said. "If it were true, we would not be ahead in some opinion polls."

Labour's new policy chief is in no hurry to bring forward the programme on which the party will fight a 2015 general election. Although a package of internal party reforms will be approved at next autumn's Labour conference, he said it would be "preposterous" to finalise policies then. But he promised that Mr Miliband would give a "very clear steer on the direction of travel."

Mr Hain's instincts are in tune with his leader's – not least on income tax. Mr Miliband wants to make permanent the new 50p top rate on income above £150,000 a year even though the shadow Chancellor Alan Johnson regards it as a temporary deficit reduction measure. "I cannot imagine there is going to be a big constituency in the country that wants people earning over £150,000 to get a whacking great tax reduction," said Mr Hain.

How Labour leaders handled the party

Neil Kinnock

First Labour leader chosen by electoral college. Used party machine to overhaul Labour policies, paving the way for New Labour. Expelled Militant Tendency.

John Smith

Agreed to demolish trade union block votes and switch to a "one member, one vote" system in internal elections.

Tony Blair

Scrapped Clause IV commitment to public ownership. Doubled Labour membership to 405,000 but ignored party conference.

Gordon Brown

Failed to complete Blair's "unfinished business" on internal party reform. Avoided a Labour leadership election in 2007 when Blair stood down.

Ed Miliband

Aims to revive party by giving members more say on policy.