Analysis - Labour struggles to rebuild after defeat

LIVERPOOL, England (Reuters) - Ed Miliband has a long way to go to convince voters -- and some in his own Labour party -- that he is a credible prime minister in waiting who can manage the economy.

At their annual conference in Liverpool this week, a year after Miliband won the leadership in the wake of national electoral defeat, Labour officials said the coalition is likely to hold together until an election in 2015.

But, rather than forecasting victory under Miliband, some in the party fear it may take longer than four years to win back voters and heal the internal wounds of infighting between rival supporters of former premiers Tony Blair and Gordon Brown.

The 41-year-old, who narrowly defeated his elder brother in a leadership vote, has benefited little in polls from economic worries troubling the new government. And within the party, the conference has shown him struggling to appeal to both centrists and left-wingers.

"He has still got a lot to learn," Dave Prentis, the leader of Britain's biggest public sector trade union Unison, told Reuters. "He still has to develop an appeal to the electorate.

"But that may come with confidence."

Miliband used the conference, held in the party's northern heartland, to sketch out his direction for the party. A keynote speech on Tuesday was touted as a radical rethink, repudiating both Blair and Brown by talking up social responsibility over market greed and distancing government from big business.

But Miliband, the son of a Marxist academic whose leadership campaign had strong trade union backing, also praised policies introduced by Margaret Thatcher, the radical Conservative leader of the 1980s, and attacked vested interests in the state sector.

LEFT AND RIGHT

He has also used the platform to try to counter what critics deride as a publicly gawky, geeky, personal style.

But that concern about image and his cautious policy statements disappointed some in the party who wanted a greater focus on widespread anxiety among voters over Prime Minister David Cameron's plans to cut public spending.

Writing in the left-wing Morning Star newspaper, veteran Labour member of parliament Jeremy Corbyn wrote: "Despite the compelling case for fresh thinking from Labour, there is a strange disconnect at conference.

"The party seems more concerned about what right-wing commentators say than the desperation of ordinary people in defending their living standards and jobs."

One party official, who voted for Miliband last year because he was "the best of a bad bunch" of candidates, complained the new leader had since surrounded himself with young policy wonks who did not understand what "real" people's lives were like.

And others in the party wondered if Labour was missing a trick, given signs government spending cuts may hurt both Britain's economy and its social fabric, by taking so long to develop clear policies instead of going on the attack.

But an aide to the party leadership defended their approach.

"Everyone would call us communists," the aide said, if Labour were to take the line some on the left of the party want on government spending and ignore Britain's mountain of debt.

Cameron's government blames Labour for much of the present crisis, an assertion which many voters seem willing to accept.

Miliband faces more trouble on the left. The party's relations with the trade unions who helped found it last century risks going sour because Miliband has criticised public sector unions for going on strike during negotiations over pensions. A larger strike looks like going ahead in November.

Unison leader Prentis said Miliband needed to do more for his public sector members if he wanted to keep their votes: "If Labour does not reach out to them, they will not vote Labour at the next election," he said.

But there was also concern at the conference that internal feuding between left and right could delay a return to power.

"We've got Ed Miliband and we've got to support him," said local party activist Ray Hensby, who said he had backed finance spokesman Ed Balls in the leadership race last year but now believed Miliband was capable of leading a recovery.

"We want people we can trust at the moment," Hensby said. "And I think we can trust him."

WAITING GAME

Given the difficulty of balancing Labour's varied electoral constituencies, some analysts say Miliband's best hope of winning in 2015 is simply to count on economic hardship turning voters off the Conservatives, or Tories, and Liberal Democrats.

If the coalition's gamble to cut the deficit spending at twice the rate Labour thinks is sensible backfires and Britain slides back into recession, Miliband has a chance, they say.

But others believe that more than the vagaries of the economic cycle is required to win back sustained support.

"The classic Conservative-Labour floating voters who would have swung to the Tories in 2010, they haven't come back, and that's the group that you've got to talk to," Gideon Skinner, a research director at pollsters Ipsos MORI, told one of many soul-searching conference fringe events in Liverpool.

"You've got a lot of time to the election but you can't just rely on problems with the economy, you can't just rely on satisfaction with the government falling."

In defence of a subdued, reflective conference, former minister Hilary Benn said Labour should not rush and needed time to heal past divisions, over economics and over the invasion of Iraq: "We've been having to spend time reconciling with our past, what did we get right, what did we get wrong?" he said.

"It's essential if you are going to start to win back the trust of the people and the voters that you lost ... This is a long haul and we are three and a half years away from the next election."

(Editing by Alastair Macdonald)