Media playback is unsupported on your device Media caption Ed Miliband: ''Higher spending is not actually the answer to the long-term economic crisis''

Ed Miliband has said there will be no return to the tax and spend policies of past Labour governments.

The Labour leader told activists at the party's national policy forum that higher spending would not solve the UK's economic problems.

He said Labour would be more radical than in the past - and there was a need to "fundamentally reshape our economy".

He also said the public sector should be able to "challenge" to run rail lines, which were privatised in 1993.

All Ed Miliband offers is more wasteful spending, more borrowing and more taxes Sajid Javid, Culture Secretary

The national policy forum in Milton Keynes will see Labour finalise many of the policies it will argue for at next year's general election.

'Traditional answer'

Mr Miliband said Labour would offer a "binding commitment to balance the books".

"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.

Mr Miliband said the solution to Britain's economic problems "cannot be our traditional answer of spending to fix the problem".

"Unless we fundamentally reshape our economy, we will only ever be able to compensate people for unfairness and inequality," he said.

He said Labour would "mend the link between hard work and reward".

Analysis

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By Iain Watson, BBC political correspondent

Polls suggest Labour still lags some way behind the Conservatives when it comes to being trusted with the economy.

So Ed Miliband didn't just deliver a blunt message to his activists on public spending - he wanted to tell a wider audience a future Labour government wouldn't plunge Britain deeper into the red.

But a lack of money wouldn't lead to a lack of ambition.

He admitted that in the good times the last Labour government hadn't fixed some of the underlying flaws in the economy before the financial crash hit.

So he promised to be radical in government - compelling employers to pay a higher minimum wage and encouraging more house building.

But that won't deliver his promised budget surplus in the short term and he didn't set out what cuts he would make to achieve this.

And Labour would still borrow to invest.

The coalition claims there would still be a hefty deficit if Ed Miliband becomes prime minister.

Mr Miliband said Britain could not keep spending billions "subsidising" those on low pay, and said the "living wage is an idea whose time has come".

The living wage - calculated as the basic cost of living in the UK - is more than the current minimum wage.

Mr Miliband said: "For the first time, we will make an offer to every employer in the country - you will get a tax cut on condition that you move to pay the living wage."

He also said Labour would:

build "at least 200,000 homes a year by the end of the next Parliament"

freeze energy bills

stop the "abuse of zero-hours contracts"

increase the minimum wage by more than average earnings during the next Parliament

abolish what Labour has described as the "bedroom tax"

give "more powers over tax, welfare and jobs" to the Scottish Parliament. He urged Scots to vote to stay part of the UK in September's referendum

devolve power to communities across England in the "biggest devolution of power in England that any of us has ever seen"

ensure "care and co-operation, not profit and privatisation" of the NHS. "The first thing we will do is repeal their Health and Social Care Bill," he said.

Mr Miliband said rail privatisation had too often "put the profits into the private sector and put the risk on to the government".

"We know East Coast [mainline, which has been publicly run since 2009] 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," he said.

Mr Miliband said Michael Gove, who left the role of education secretary in David Cameron's cabinet reshuffle on Tuesday, had been thrown "overboard" by the prime minister.

He said Labour would end the "centralisation" and "lack of accountability" in Tory education policy.

'No plan'

Commenting on advance excerpts from Mr Miliband's speech, Conservative Culture Secretary Sajid Javid said: "The reality is Labour haven't learnt the lessons from their mistakes.

"All Ed Miliband offers is more wasteful spending, more borrowing and more taxes.

"That's exactly what got us into a mess in the first place, and hardworking taxpayers would pay the price.

"It's clearer than ever that Ed Miliband has no long-term plan to secure Britain's future and is just not up to the job."