Labour must admit it made mistakes and failed to get value for money from public spending, Birmingham MP Liam Byrne has insisted.
But the shadow Cabinet member, who is leading party leader Ed Milibands policy review, predicted the party could return to power as quickly as the next general election.
Mr Byrne (Lab Hodge Hill) has been given the task of drawing up the policies that will help Labour get back into government, following last years devastating election defeat.
He will reveal the findings of a year-long public consultation at a meeting with party activists in Wales this weekend.
But the MP is braced for a battle with some Labour MPs and members, after this policy review found that the public want Labour to be tough on benefit cheats, to control immigration and to limit public spending.
He said in an interview: The public like our members expect us to learn from our past, and not live in it.
We mustnt shy away from confronting the weaknesses of the past; but its more important to confront the challenges of the future.
And he admitted: We did make mistakes we should call a spade a spade . . . We are confronting head-on the things we got wrong.
Mr Byrne and Mr Miliband are considering a range of tough policies including ordering unemployment claimants to sign on once a week rather than once a fortnight, and giving working people priority in the queue for council housing.
Mr Byrne, Labours shadow Work and Pensions Secretary, is also considering the idea of introducing a system of unemployment insurance, based on a scheme already operating in Denmark.
This allows people to pay into a fund which then provides an income if they lose their job, allowing them to maintain the standard of living they are used to.
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