Sir Keir Starmer will promise a “better bargain” for the British public in a major speech that will focus on the need for economic growth over spending.

The Labour leader will warn that his government would not be able to “turn on the spending taps” and will instead have to be “ruthless” when it comes to fiscal responsibility.

In a major speech hosted by the Resolution Foundation thinktank, Sir Keir will say the current state of the public finances will place “huge constraints” on what Labour can spend on public services.

“Growth will have to become Labour’s obsession if we are to turn around the economy,” he will say.

It follows a report by the thinktank which found that the UK has experienced 15 years of relative decline, with productivity growth at half the rate seen across other advanced economies, while wages have flatlined, costing the average worker £10,700 a year in lost pay growth.

The Resolution Foundation report also found that living standards of the lowest-income households in the UK are £4,300 lower than their French counterparts.

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Sir Keir will make his speech after an article he wrote in the Daily Telegraph generated controversy for its praise of former Tory prime minister Margaret Thatcher.

The Labour leader said the late Baroness Thatcher brought about “meaningful change” in the UK as she “sought to drag Britain out of its stupor by setting loose our natural entrepreneurialism” during her 11 years in Downing Street.

The remarks have angered some MPs on the left of his party, with one telling Sky News they believed it meant Sir Keir “intends to govern without any real political project of his own”.

“It means meaningful or transformational change is well and truly off the table,” they added.

“He is in effect holding the Tory party’s pint, whilst they get themselves ready to run the country again.”

Sir Keir later sought to clarify his comments, telling the BBC his intention was to compare the “drift” of recent years with the “sense of mission” embodied by previous leaders – including Labour prime ministers Clement Attlee and Sir Tony Blair.

“It doesn’t mean I agree with what she [Thatcher] did, but I don’t think anybody could suggest she didn’t have a driving sense of purpose,” he explained.

Economy ‘biggest issue’ at next election

Speaking to Sky News this morning, Labour’s national campaign coordinator, Pat McFadden, said the economy was going to be the “biggest issue” at the next election “because we’ve got taxes at a very high level”.

“We’ve had growth at a low level. We’ve had stagnating incomes. Public services are creaking. When you add it all up, it’s been a bad bargain for the British people,” he said.

Asked about his views on Baroness Thatcher, Mr McFadden said the word “admire” was “not the word I’d use”.

“I recognise she won [the general election] three times,” he said.

“I would hope if we were going to win elections, we would make change with the same determination but not in the same direction,” he added.

Pressed on what word he would use instead, Mr McFadden added: “She was successful electorally.”

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Starmer to follow Thatcher praise with Churchill reference

In his speech today, Sir Keir will argue that “Britain is going backwards” under Rishi Sunak’s leadership and that the “political consensus” that hard work will be rewarded has “become nothing short of a lie for millions of people” under the Conservatives.

“Taxes are higher than at any time since the war, none of which was true in 2010,” he will say.

And following his praise for Baroness Thatcher, Sir Keir will also put a twist on a famous quote from another Tory prime minister – Winston Churchill.

He is expected to say: “Never before has a British government asked its people to pay so much, for so little.”

“Inflation, debt, taxes; we face huge constraints,” he will add.

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Sir Keir is also expected to say: “This parliament is on track to be the first in modern history where living standards in this country have actually contracted.

“Household income growth is down by 3.1% and Britain is worse off.”

Conservative Party chairman Richard Holden said in response: “The largest ‘constraint’ to growing the economy would be Labour’s £28bn a year borrowing plan, which independent economists warn would see inflation, interest rates and people’s taxes rise.

“It is the same old short-term approach from Labour – borrow more and the British people will pay more.”

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