Cooper maintains Labour did not overspend

Ms Cooper, who was Treasury chief secretary when the crisis struck in 2008, acknowledged the party did not always spend public money “wisely” during its time in office.

However, in her first major interview since declaring her intention to run in the contest to succeed Ed Miliband, she insisted that overall spending levels were supported by all the political parties at the time.

“The deficit at the time was something like 0.6 per cent (of GDP) - the current deficit. All the political parties at the time were all supporting the spending plans and that was all due to come down,” she told BBC Radio 4’s The World At One.

“There has been a focus on that as if that was the economic issue. The real economic issue of the time was that we had banks who were involved in huge private lending, that nobody had spotted the scale of private sector debt that had been growing up that was unsecured, the links between the financial sector all over the world, particularly into the housing market crisis in America.

“Should the Labour government have done much more to deal with that? Yes, absolutely. Should we have had much stronger regulation of the banks? Yes, absolutely.”

Ms Cooper’s comments - which broadly echo the line taken by the party during the general election campaign - are in sharp contrast with fellow leadership contender Liz Kendall who has said spending was too high in the run-up to the crash.

Ms Cooper, the shadow home secretary, is the fourth candidate to throw her hat into the ring in the leadership contest alongside Ms Kendall, shadow business secretary Chuka Umunna and shadow health secretary Andy Burnham.