Labour sought to reposition itself as radical on welfare reform on Sunday as it became anxious about losing ground to the Tories on a critical issue for voters.

Harriet Harman, deputy Labour leader, said it was “not surprising” that struggling families felt “very resentful for people who are not working”.

“You can’t have a situation where people feel they’re getting worse off and feel resentful about people who aren’t working and people who aren’t working who don’t want to work are left off the hook,” she told the BBC’s Andrew Marr show.

Labour advisers confirmed that the party was considering linking benefits to how much has been paid into the welfare state, but cautioned that it would not impose measures that would increase the welfare bill. Ms Harman said one manifestation of this would be for councils to give priority to people on housing lists, according to the contribution they make to their local communities.

The opposition intervention comes after days of clashes between the two main parties on benefit changes that come into force on Monday, including a below inflation rise of 1 per cent rise in working-age benefits and tax credits, as well as caps to housing benefit.

Conservatives decried Labour’s move as a “panic” reaction rather than a credible policy. “It turns out that even Labour’s own advisers think it won’t ever work because it would mean even more spending,” said Grant Shapps, Tory party chairman.

The policy review is part of a push by Labour to become more aligned to public sentiment and counter charges from opponents that Labour is soft on welfare.

A poll in the Sun revealed that eight out of 10 voters supported the £26,000 a year limit on what families can receive on benefits, while nearly seven out of 10 respondents think the system does not work and is in urgent need of reform.

Politicians have also clashed over George Osborne’s suggestion that the actions of Mick Philpott, who killed six of his children in a fire, raised questions about the wider welfare state. The chancellor’s remarks prompted rebukes from both Labour an the Lib Dems, with Ed Balls, shadow chancellor, accusing Mr Osborne of “cynical” exploitation.

Coalition politicians seized on Labour’s ideas as evidence that Labour was “out of touch” with the public. Danny Alexander, Treasury chief secretary, said it was extraordinary that Labour should come forward with proposals “to spend even more money on the welfare system”.

A more contributory welfare state would echo that of Germany, against the universal model of Sweden or Norway and a support-based model in the UK, where taxpayers prop up a minority in need.

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