Labour's Miliband wants voters trust on the economy

LIVERPOOL, England (Reuters) - The leader of the Labour party sought on Tuesday to regain voters' trust on the economy, responding to accusations that high government spending during the party's 13 years in power contributed to the country's big budget deficit.

Ed Miliband, elected Labour leader after former prime minister Gordon Brown lost the 2010 parliamentary election, told his party's annual conference he would offer voters a "new bargain" based on wealth creation for all.

"I am determined to prove to you that the next Labour government will only spend what it can afford. That we live within our means. That we will manage your money properly," he told the party's annual conference in Liverpool.

Miliband has made a lacklustre start as head of the centre-left party, which is still regrouping after it suffered one of its worst electoral defeats set against a backdrop of financial meltdown and bitter internal rivalries.

Labour's economic credibility will have to be rebuilt if it is to beat the coalition in an election not due until 2015.

Miliband's plans include breaking the dominance of big energy companies, curbing pay for high earners and awarding government contracts to firms that take on apprentices.

BLAIR NAME BOOED

The 41-year-old former cabinet minister, who narrowly beat his older brother David to lead Labour, said the party would not be able to reverse many of the coalition's spending cuts.

"If this government fails to deal with the deficit in this parliament, we will deal with it in the next," said Miliband, a policy wonk who often looks awkward under the public glare.

There were signs of the party's internal divisions when activists booed a brief mention of former Prime Minister Tony Blair, who won three elections but alienated many members with his backing for U.S. President George W. Bush's war in Iraq and centrist policies.

Miliband has ordered a wide-ranging policy review, leaving little substance to announce to a public that remains sceptical about his party and his potential as a future prime minister.

A ComRes opinion poll on Tuesday showed Labour had fallen behind the Conservatives for the first time in a year, even though fears about Britain's struggling economy are growing.

A Reuters/Ipsos MORI survey showed only four in ten people thought Miliband was a capable leader.

"There are still a lot of unanswered questions - what direction will he take the party in and there was also not much on the deficit," said Mark Wickham-Jones, a politics professor at the University of Bristol, who heard the speech in person.

"They wanted a series of soundbites to reassure the party and to begin to win over the electorate and they got that. He looked like a mature political leader in a way he didn't come close to last year."

Conference delegate Judy Pugh, 73, a Labour town councillor, said Miliband had been "more inspiring than I have ever heard him, thank goodness." She said Miliband had made progress in uniting the party after last year's divisive leadership election. "I think it will work now," she said.

The Labour Party has announced some policy measures during its week at Liverpool, such as promising to cap university tuition fees at 6,000 pounds, down from the 9,000-pound limit introduced by the coalition.

Finance spokesman Ed Balls has urged the government to bring forward investment projects and give companies an incentive to hire staff to boost demand, alongside previous proposals for a cut in VAT sales tax and a tax on bank bonuses.

Miliband, winning applause every time he criticised corporate greed, said he wanted to change the values that drive Britain's economy.

He singled out former Royal Bank of Scotland boss Fred Goodwin, arguing he should never have been honoured with a knighthood under the former Labour government. Goodwin became a symbol of corporate greed for taking a lavish pension from the bailed-out bank.

"We must learn the lesson that growth is built on sand if it comes from predators and not our producers."

(Additional reporting by Keith Weir; Editing by Matthew Jones)