Ed Miliband is warned today that Labour is losing the crucial political battle on the economy despite growing fears that the Coalition Government’s tough deficit-reduction programme is hurting but not working.

In a pamphlet published on the eve of Labour’s annual conference in Liverpool, two Labour figures warn that the party has gone backwards in Mr Miliband’s first year as leader and “lacks credibility on the economy”.

It says: “Voters have even less idea about what Labour stands for now than a year ago, despite the election of a new leader. There is a general sense that New Labour had been abandoned, but very little idea of what this means in practice.” While Mr Miliband, pictured, is seen as decent and not extreme or out of touch, he is not regarded as a potential prime minister.

The pamphlet, Southern Discomfort One Year On, is written by Patrick Diamond, a former aide to Tony Blair and Gordon Brown, and Lord Radice, a former Labour MP.

Their research in the south and the Midlands concludes that Labour’s position is “weak”, particularly among the skilled and white-collar workers of “middle Britain” who helped Margaret Thatcher and Tony Blair win three elections. “The party cannot win without doing much better in the south and Midlands,” says the pamphlet.

It warns that the Conservatives could win the next general election by default even if George Osborne’s strategy fails because Labour has lost voters’ trust on the economy. “While voters still see Labour as caring and fair, they no longer believe the party is capable of running the economy,” it says. “They do not consider Labour understands, respects or rewards those who want to get on.” The authors suggest Labour has not been able to capitalise on the feelings of anxiety and insecurity among Labour voters which have replaced “aspiration” as their main concern.