Labour to cut spending

A future Labour government would have to find "new ways" to deliver social justice without boosting public spending, Ed Miliband warned yesterday. The Labour leader said there could be no return to the "Blair-Brown model", under which tax revenues from Britain's financial services were used to raise spending on public services.

Mr Miliband told the Social Market Foundation: "The failure of this Government's austerity plan means that the next government is likely to inherit a deficit that will still need to be reduced. So resources will have to be focused significantly on paying down that deficit." He said Labour's "new economy" would be based on creating good jobs at good wages, sustainable long-term business models and a better, more responsible capitalism so taxpayers did not have to meet the costs of spiralling unemployment.

Meanwhile, Mark Hoban, the Treasury Minister, denied forecasts of higher than expected borrowing meant the Government's deficit-reduction strategy was off course.