Labour Ministers have been told by Tánaiste Joan Burton’s office that the party must “develop a distinctive identity from Fine Gael” by emphasising issues such as more cuts to the universal social charge (USC).

A New Year political memo states that “at the very least” the party must emphasise issues such as a “minimum wage increase, deeper USC cuts, action on housing affordability and rent regulation”.

The message from Edward Brophy, Ms Burton’s chief of staff, also says Fine Gael has started to move in on Labour’s traditional territory, increasing the need for the junior Coalition partner to be “bolder in our vision while remaining responsible”.

“Fine Gael’s research is clearly leading them closer to us and more triangulation around social and living standards issues is likely. It has been notable how much more social democratic Fine Gael has started to sound recently with their idea of the Just Republic, their support for improving low wages and their adoption of the social recovery theme,” Mr Brophy writes.

“To reflect this, we need to be bolder in our vision while remaining responsible - talk about living wages, a living rent, universal public services etc.

“Overall, the objective is to reinforce the view that we have more credibility on the bread and butter economic issues and can develop a strong identity around them.”

Coalition sources have already said differences between the two parties are likely to become more pronounced as the general election, due in spring 2016, moves into view.

Mr Brophy sent the memo to staff in Ms Burton and other Labour Party ministers’ offices as a template for the year ahead.

Differences have already opened up between the Coalition partners on tax, with Fine Gael believing that the template for cuts for the next budget, and for the first one following the election if the Coalition is returned to power, has already been set.

‘Nothing set in stone’

However, Labour sources say “nothing is set in stone” for any future budgets and greater USC cuts than those allowed for in the initial budget template are a possibility if they can be afforded.

Mr Brophy’s memo says: “Fine Gael has a very strong position on overall economic competence. We can distinguish ourselves by putting bread and butter economic issues like living standards, wages, USC, housing and rent certainty centre stage and shaping our economic message around them.”

The economy must be put “centre stage” and “any day not spent talking about the economy is a day wasted”.

“We [must] also turn the attention on the economy onto the opposition - they have been wrong consistently and repeatedly on jobs, public finances and growth and we should remind people about that.”