Ed Balls and Ed MilibandEd Miliband is due to warn that the next Labour government will not be able to simply increase tax credits for the less well-off.

The public finances his party will inherit if it wins the next general election will prevent a return to the kind of wealth redistribution of the Gordon Brown years, the Labour leader will say.


In a speech to a major conference on growth at the London Stock Exchange, Mr Miliband will say he expects to have to continue cutting the deficit after 2015.

"The Government's economic failure means that whoever wins the next election will still face a deficit that needs to be reduced," he will tell the assembled economists, chief executives and academics.

"The redistribution of the last Labour government relied on revenue which the next Labour government will not enjoy. The option of simply increasing tax credits in the way we did before will not be open to us."

He will call for a move to greater "predistribution" - or doing more to ensure that work pays for the disadvantaged in society - in a bid to increase spending power and drive growth.

"Centre-left governments of the past tried to make work pay better by spending more on transfer payments. Centre-left governments of the future will have to make work pay better by doing more to make work itself pay," he will say. "That is how we are going to build growth based not just on credit, but on real demand."

Mr Miliband will warn that "failure" of the coalition did not mean that the Labour Party could just "attack the Government, sit back, wait for it to fail, wait for it to fall, so that we go back to governing as we did before.

"The lesson that (shadow chancellor) Ed Balls and I take from this summer of economic and political failure is the opposite - we need more change, not less."

Mr Balls will tell the conference, hosted by Policy Network, that new ideas are needed in response to the recession in the UK and around the world.