Ed Miliband warned of Tory tax-and-spend trap
Ed Miliband is being warned that Labour could fall into a Tory "trap" of being cast as the party of tax and spend.
The Labour leader says his party's mission in 2012 is to show politics can "make a difference".
In his new year message, he said "optimism can defeat despair".
But one of his shadow ministerial team says Labour will face defeat if it is seen solely as the defender of public spending.
Shadow pensions minister Gregg McClymont says Mr Miliband must appeal beyond his core vote and set out policies to promote growth.
Writing for the Policy Network think-tank, he warns Mr Miliband that he risks suffering the same fate as former leaders Michael Foot and Neil Kinnock.
"Labour can sidestep the electoral trap being sprung by the Conservatives by refusing to be driven back to its core support," he says.
"A patriotic appeal to the nation to improve growth and living standards, not a simple defence of the public sector and public spending, is crucial to foiling Conservative attempts to render Labour the party of a sectional minority."'Win-win situation'
In his new year message, Mr Miliband accepted that Labour must "renew and reinvent its mission" and "rise to the challenge" in the year ahead.
"Some believe things would be the same whoever was in charge," he said.
"And others fear the government is in the grip of forces so powerful that nothing can be done.
"It suits the current Conservative-led government to go along with this idea.
End Quote Gary O'Donoghue BBC Political correspondent
The problem for Mr Miliband is that despite all the economic woes his party's poll ratings have been slipping. ”
"Having failed in their promise to make Britain a safe haven, they now say that there is no alternative to rising joblessness and years of falling living standards for working people. It is a counsel of despair."
But Mr McClymont warns him: "If the key political challenge facing the country over the long term becomes defined as cutting public spending, then the Conservatives are more likely to prosper.
"Prolonged austerity reinforces this perception, rather than undermining it.
"The Conservatives could potentially be in a win-win situation.
"If growth does ultimately return and an end to austerity heaves into view, then they can pledge tax cuts rather than a return to pre-crisis levels of spending."
In his message, Mr Miliband said he was not prepared to stand idly by.
"When so many are sceptical about politics the easy route for politicians is to join in and accept the cynicism.
"To say simply that in hard times nothing can be done. But that's not why I came into politics and it's not what the Labour Party stands for.
"My party's mission in 2012 is to show politics can make a difference. To demonstrate that optimism can defeat despair."
Mr Miliband said the autumn statement had been more generous to bankers than to the lowest earners, and said Labour would bring in a more "responsible capitalism".
"I believe this country needs profound change, not small change.
"Not to seek simply a continuation of what Labour did in government but to renew and reinvent our party's mission in response to the urgency of changed times.
"Everything I have seen and done since I got this job has convinced me I am right to believe that.
"Throughout our country's history, tough times have seen us not lower our sights but raise them.
"We need equal ambition for the future if we are to avoid our country heading further and faster in the wrong direction: a lost generation of young people, Britain struggling to compete in the world, and greater inequality."
Labour would seek to build an industrial future "beyond financial services", tackling vested interests from banks to utilities that "squeeze living standards" and a "fairer sharing of rewards so that we discourage irresponsibility at the top and the bottom of society".
Mr Miliband's message comes the day after Lib Dem leader Nick Clegg warned that next year "poses many great challenges for everyone".