Miliband confident of party support
Labour leader Ed Miliband is confident of winning support from his party's grassroots for a programme that will commit it to austerity measures while creating a "wholly new economy".
The party's National Policy Forum (NPF) is set to back policy papers pledging to balance the books and get the national debt falling, although there has been resistance from some sections of the party to the spending plans.
In his speech to delegates in Milton Keynes, Mr Miliband confirmed proposals which could see parts of the rail network taken back into public ownership if Labour wins the general election.
The move was announced as Mr Miliband attempted to distance himself from the New Labour era of Tony Blair and Gordon Brown, promising the party would tackle inequality while taking a responsible approach to the nation's finances.
The policy package includes a commitment not to allow additional borrowing for day-to-day spending in 2015/16, which would mean planning for reduced departmental budgets.
But there could yet be votes on the reforms, with resistance to elements of the rail policy, renewal of the Trident nuclear weapons system and some opposition to the approach on spending.
A senior source said: "The talks have been quite tough on things like housing. Lots of people wanted to spend much more money."
Labour is committed to building 200,000 new homes a year by the end of the next parliament, and the source said " we think we have got a policy that will get us to 200,000".
There had "obviously been difficulties along the way" in the policy process and "there may yet be votes on rail and Trident, and maybe a vote on spending" but the leadership is not expecting any major revolt to upset its plans.
The rail package has faced resistance from g rassroots activists and trade unionists who have been pressing for a return to full re-nationalisation.
In a keynote speech to the NPF, Mr Miliband said the decision to privatise the rail network was based on "dogma" rather than for the benefit of passengers.
He said: "We know East Coast has worked in public hands, so on the basis of value for money let's extend that idea and let the public sector challenge to take on new lines.
"Let's end the situation where you can be a European public rail company and run lines, but not if you are a public operator from Britain."
The measures are expected to include legislation to create a new body to ensure the best deal for taxpayers and passengers.
Mr Miliband set out his plan for a "new settlement" with the British people, with measures aimed at tackling inequality but accepting that Labour could not return to being a party of "big spending".
He said: "It is a plan for economic transformation, a new settlement that is not less ambitious because we live in a time of scarcity, but is more radical, more ambitious because it sets a new direction for Britain."
It was "moving on from New Labour" but "not going back to old Labour".
The plan meant "not seeing big spending as the answer" and he added: " For all of the cuts, all of the pain under this government, Britain still has a deficit to deal with and a debt to pay down.
"That's why our programme starts with a binding commitment to balancing the books in the next government.
"We will get the national debt falling as soon as possible in the next parliament. And we will deliver a surplus on the current budget."
He said Labour had not done enough in Government to "tackle inequality or eliminate the problem of low pay or build an economy fit for the next generation".
Policy review chief Jon Cruddas, who has made a series of criticisms about the direction of the party, was praised by Mr Miliband.
Mr Cruddas has blamed the leadership for shelving bold reforms in favour of ''cynical nuggets of policy'' designed to appeal to the press and focus groups, and warned that the top of the party wields a ''profound dead hand at the centre'' that blocks plans.
But Mr Miliband said Mr Cruddas had done "incredible work" and produced "inspiring conclusions for our policy review".
The NPF, largely taking place behind closed doors, will back the policy papers which will form the first draft of Labour's manifesto for the May 2015 election.
Looking ahead to next year, Mr Miliband said: "At this election, the public will have the chance to vote for a changed Labour Party with a programme to change the country."
That included " a higher minimum wage; stopping the abuse of zero-hours contracts; skills and careers for all our young people; banks working for businesses again; energy bills frozen; 200,000 homes built a year by 2020; power devolved; the Bedroom Tax abolished; and our National Health Service restored".
But Liberal Democrat Treasury Chief Secretary Danny Alexander said: "Ed Miliband is neither credible, nor convincing, when it comes to the economy.
"He talks about 'balancing the books' but knows in government Labour nearly bankrupted Britain."
Martin Griffiths, chairman of the Rail Delivery Group, which brings together Network Rail and train operators, said: "We want to make Europe's best railway work even better. Any changes need to avoid unnecessary upheaval which would be bad for passengers and taxpayers at a vital time for the railway.
"As yet, there is no detail on how a public sector bidder would compete on a level playing field with private sector bidders when government is both referee and player in the competition for franchises."