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Miliband: Labour's new direction will transform economy

ED Miliband will today seek to make a clean break with New Labour and Gordon Brown's time in No.

10 by insisting a future Labour government would be radically different, offering a "new settlement for a new era".

In his speech to the party's National Policy Forum, which is set to back a plan that would open up the prospect of a partial renationalisation of the railways, the Labour leader will warn activists that the party's traditional answer - "spending to fix the problem" - will no longer work because "we won't have the money", given that there is still a big deficit to eradicate.

He will reiterate Labour's "binding commitment" to balance the nation's books by the end of the next parliament and deliver a surplus on the current budget.

Mr Miliband will claim the Conservatives cannot be the answer to the country's ills because "they don't even understand the problems are problems" and that their idea of success through low wages, zero hours, bad terms and conditions at work would simply result in a race to the bottom.

But the leader's main message in a pre-election pitch as much to voters as to the party faithful will be that Britain's ills cannot be solved through "big spending" alone.

Referring to the need for a "new direction rooted in Labour values", he will declare: "Higher spending is not the answer to the economic problem we have together identified. Unless we fundamentally reshape our economy, we will only be able to compensate people for inequality and unfairness."

Mr Miliband will note that while Labour did great things to redistribute resources when in government, it did not do enough to reduce inequality, eliminate low pay or build an economy that will work for the next generation; this was because Labour did not do enough to change the fundamentals of the British economy.

The Labour leader will talk of building a "wholly new economy fit for the 21st century", in which people are given dignity at work and fairness in pay, where "no interest is too powerful to stand in the way of the public interest" and where power is devolved from London to local communities.

"It is a plan for economic transformation that is not less ambitious because we live in a time of scarcity but is more ambitious because it sets a new direction for Britain from the past.

"We have moved on from New Labour and we are not going back to Old Labour," Mr Miliband will declare.

The party leader, talking of a "changed Labour Party", will highlight its pre-election proposals - a higher minimum wage, energy bills frozen, more devolution, abolishing the bedroom tax and restoring the NHS - as showing it is now ready for government.

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