Minister urges Labour fightback

Labour could win a fourth term in office despite recent losses in the local and London elections, James Purnell will say today.

The work and pensions secretary will call on the party to focus on policy and ideology to recover from the "grim weekend" which saw Labour suffer its worst poll losses for 40 years.

He will use a speech to the Fabian Society to say that the public are "spooked" by economic uncertainty.

And he will call on Labour to "get up off the floor", saying: "This is no 1995, the year that Labour got 47 per cent in the polls, the moment the 1997 election became inevitable."

Claiming the government still has the lead on key issues such as child poverty, he will say: "That ideological confidence is the way out of this week's political setback.

"The Tories are paying lip service to our policies because they know their old answers are out of tune. But our challenge is to show that their policies would not achieve the goals they now say they share."

Meanwhile, Purnell used an interview with the Mirror newspaper to set out plans to provide interest free loans to poor families.

He urged banks to provide low earners with Treasury funds to help them with food and fuel bills, and to avoid debt.

The minister claimed that some 160,000 families were borrowing from illegal lenders every year.

"With today's credit crunch this is something we're very worried about," he said.