Miliband warns Labour on spending

9 January 2012 Last updated at 21:08 ET

Ed Miliband has said he has a plan and a clear direction for Labour

Labour leader Ed Miliband will tell his party that it needs to accept there will be less money to spend if it wins the next election.

Mr Miliband will use a speech in London to challenge those "who say Labour is only a party for good times".

He will say he "relishes the challenge" of taking Labour forward and dealing with the UK's economic problems.

Mr Miliband is also expected to address questions about his leadership which has been subject to recent speculation.

The opposition leader will say that with less money go round Labour must rethink how it hopes to achieve fairness across the UK.

While David Cameron offers "more of the same", Labour would reform the economy to ensure rewards are "fairly shared".

'Rethink'

In his first major speech of the year, the Labour leader will tell community groups the tough economic climate is a challenge for the opposition and very different from the benign economic conditions which faced the party when it won successive elections in 1997, 2001 and 2005.

"We live in tough times," he will say.

"In the years ahead, there will be less money to spend. It is a challenge for Labour.

"It is the same challenge facing parties on the centre-left all around the world. And it is a challenge for me. A challenge I relish."

Mr Miliband will argue that the "failure" of the government's economic policy will ensure that whoever wins the next election - scheduled for 2015 - will inherit a budget deficit, spending constraints and a "different landscape" from that which they may have once expected.

"We will have to make difficult choices that all of us wish we did not have to make," he will say.

"Labour knows what fairness means. It always will. But we must rethink how we achieve it for Britain. The ideas which won three elections won't be the ideas which win the election in 2015. So we will be a different party from the one we were in the past."

'Better discipline'

Amid claims the public is unconvinced by Labour's economic strategy, Mr Miliband will argue he has led the debate in his call for "responsible capitalism" and for action to tackle the pressure on living standards for low and middle earners.

"Everyone is now joining us talking about the squeezed middle," he will say. "But it is not enough just to talk about them. Suddenly David Cameron is falling over himself to say he too is burning with passion to take on 'crony capitalism'. Now he has accepted this, the battleground of politics, I say 'bring it on'.

Labour have dismissed speculation about Mr Miliband's leadership, saying the party is united behind him and the vision he has set out for reforming the economy and society.

Shadow Europe minister Emma Reynolds rejected suggestions the speech - on the day Parliament returns from the Christmas recess - was effectively a "re-launch" of his leadership and suggested "nobody had heard" of critic Lord Glasman in her constituency.

She told the BBC's Daily Politics: "Is he re-launching? Not necessarily. We are back in Parliament. That (making speeches) is what politicians usually do. Why should that be any different to a normal new year?"

A number of senior party figures, including former Home Secretary Alan Johnson and shadow defence secretary Jim Murphy, have said Labour cannot oppose all the government's spending cuts and must put forward a credible programme for reducing the deficit while protecting the most disadvantaged.

Mr Johnson has suggested Labour's message on the economy "is not getting through".

He told the Daily Mirror that Labour had had a "shaky start" to the year in what was a "pivotal" period for the party as it tries to establish itself as a credible alternative government.

Mr Miliband's leadership has been questioned in some quarters in recent weeks with ex-adviser and Labour peer Lord Glasman saying Labour seemed to have "no strategy and little strategy".

Mr Johnson - who quit as shadow chancellor in January 2010 - said the public "remained suspicious" about Labour.

While praising Mr Miliband's leadership on key issues, he said he must do more to "hammer home Labour's message" and provide an "authentic voice".

Labour needed to hone its message, act less like a "debating society" and stop apologising for the mistakes of the last government, he added.