Miliband prepares for post-Brown party

Foreign Secretary keen to shake off Blairite label before possible leadership battle

David Miliband described New Labour as “too timid” at a private dinner this week as he set out his personal credo to Labour activists in a foretaste of his campaign to win the party leadership.

Although the Foreign Secretary insisted Labour could still win the general election, he and the Schools Secretary Ed Balls are regarded by Labour MPs as being “on manoeuvres” ahead of a Labour leadership contest if the party loses power, after which Gordon Brown would be expected to resign as party leader. Other Labour figures could enter the race but Mr Miliband and Mr Balls look certain to be the first two out of the traps.

Cabinet ministers say that Labour has finally united behind Mr Brown after last month’s internal coup against him collapsed. But they admit privately that alliances are being secretly formed, and MPs, trade unions and party members are being quietly wooed because a leadership election is possible later this year.

Mr Miliband would be widely seen as the Blairite candidate but appears keen to throw off the label. Speaking at a private fundraising dinner for Labour candidates on Wednesday, he praised Labour’s achievements since 1997 but was surprisingly candid about its mistakes. He admitted that the political system is “broken”.

Although he praised Mr Brown, his critique of the Government will be seen as a coded criticism of the Prime Minister as well as Mr Blair.

“We will only be able to win, to expose the Tories, if we have an agenda of our own,” he said. “We have got to be the change.

“We are able to say New Labour was right about the importance of wealth creation as well as wealth distribution. New Labour was wrong to fear that action by government would always mean picking winners and ending up with British Leyland [the car company bailed out by the Government in the 1970s]. We are now proud to say that we are the party of active industrial policy that will support growth, bring jobs and green industries and new industries of the future.

“New Labour was right to say that rights and responsibilities are at the heart of a modern welfare state. But New Labour was too timid when it came to talking about responsibilities at the top of society as well as at the bottom of society. So today we are able to say that responsibility needs to apply in the City as much as it does in the welfare state.

“New Labour was right to say that Britain needed a political revolution in its institutions of power. But New Labour was wrong to stop at Scotland, Wales, Northern Ireland and three quarters of House of Lords reform. So today we are saying we need to move with purpose and real drive on electoral reform, House of Lords reform and we should be the party to say that the political system is broken and we need to fix it.

“New Labour was right to be the party of internationalism. But it was wrong to make speeches about Europe only outside Britain, not inside Britain. So today we are the party able to say proudly we are pro-Europe and pro-reform in Europe.”

One senior Labour figure who attended the event described it as the best speech he had ever heard Mr Miliband make. Friends say he would definitely be a candidate if a vacancy arises this year.

Mr Balls, who would be Mr Brown’s favoured successor in a future Labour leadership election, is said to be winning strong support among the unions who, along with MPs and party members, each have one-third of the votes in the electoral college that chooses a Labour leader.

A close ally of Mr Balls insisted last night: “We are going to win the general election.” He added that the backing of union leaders for any candidate would not necessarily translate into votes because the union section of the college is decided on a “one member, one vote” basis.

Critics of Mr Miliband say he damaged his leadership prospects by hesitating at three crucial moments when he might have toppled Mr Brown by resigning from the Cabinet – after writing a critical newspaper article in the summer of 2008, when his friend and ally James Purnell quit the Cabinet last June and during last month’s attempted coup.

Some Labour MPs want the Foreign Secretary to stand aside for his younger brother Ed, who has grown in stature as Energy and Climate Change Secretary. They say Ed Miliband would have wider appeal among the Labour Party and the voters. But David Miliband still enjoys the support of several Cabinet colleagues, who argue that he has more experience than his brother.

Other possible contenders include the Health Secretary Andy Burnham; Labour’s deputy leader Harriet Harman, who has said she will not run but could emerge as a “caretaker leader”; the backbencher Jon Cruddas; and Mr Purnell, the former Work and Pensions Secretary now on the backbenches.