Pamphlet published by Progress warns the party to be upfront and specific about pain it might need to inflict
Labour has to start setting out now the tough choices it will make in government on spending and public services, or risk the rapid collapse in support, the Labour pressure group Progress is warning.
A pamphlet published by Progress called the Purple Papers says: "Having a quiet life in opposition means having a miserable life in office. The best inoculation against such an eventuality is to decide, as a party, what risks we are ready to take and what fights we are willing to have. Clarity of approach will strengthen the hand of every Labour minister who tries to improve our public services."
The authors bluntly tell the party "an incoming government will inherit stubbornly high unemployment, a welfare system commanding little public confidence and the need for further spending cuts and tax rises to straighten out the public finances.
"There is a question for every Labour member now: whether, how much, and of which of the people we like are we willing to ask something difficult or painful?
"Build a consensus for a decision, and the next Labour chancellor might be able to take it and survive the inevitable political pain of that choice's downsides. Leave the argument until you arrive in government and they – and we – might not".
The warning to the party to be upfront and specific about the pain a Labour government might inflict is not likely to be welcome to all party strategists, some of whom believe the party can win the next election largely by criticising the government's austerity programme.
They believe living standards will remain squeezed even if the economy is growing in 2014.
Progress argues that recent examples in France and Denmark show how badly a centre-left party can fall if it is elected without being blunt with the electorate about the pain ahead.
In a bid to jolt the party, they give examples of the kind of tough choices the party should be considering now.
They float proposals for freezing the £19bn spent on child tax credit so more is spent on childcare, which currently has an annual budget of £7bn. They also suggest a two-year freeze on child benefit to improve early years provision.
Other ways of improving childcare include reducing universal benefits for high-income pensioners; restricting pension tax relief to the basic rate of 20%; and introducing a "mansion tax" or reforming local taxation.
It points out free travel for the over-60s costs about £1bn a year, while curtailing eligibility from 60 to 65 would save £60m. If better off pensioners were to forgo winter fuel payments, free TV licences and free bus travel, savings of £1.4bn a year would be generated.
Trying to spell out the scale of the fiscal challenge, they point out. "By 2015, for 13 years in a row, the British state will have spent more than it raised in taxes, leaving it with interest payments on the UK's debt of £60bn a year, twice the size of the tax credit budget."
They warn interest payments will continue to rise unless government takes determined action. The authors propose Labour's objective on welfare should be "welfare that is more generous but more temporary".
• This article was amended on 25 October 2012. The original said that Progress cited examples in France and Finland. This has been corrected