Labour leadership frontrunner Andy Burnham has insisted he is the "change candidate" as he made a bold bid to outflank David Cameron on Europe.

Admitting that the party should have taken more care of the public finances when in government, Mr Burnham said he had listened to voters on the issue of an in-out EU referendum - and demanded one be held by next year.

Mr Burnham also suggested that Labour in Scotland could become a separate party in the wake of the devastating electoral defeat at the hands of the SNP north of the border.

The comments, in an interview on the BBC's Andrew Marr Show, came as tensions with the unions erupted. The party's leader in Scotland, Jim Murphy, branded Unite boss Len McCluskey the "kiss of death" as he announced his resignation yesterday.

Announcing that shadow work and pensions secretary Rachel Reeves was backing him for the leadership, Mr Burnham denied that he was the "union candidate".

"I am the change candidate because we have got to reach out to those voters who had doubts about us on immigration and economic competence," he said.

"If we are going to rebuild that trust we need to have an honest assessment of the record of the last Labour government on the economy.

"We need to make a break with the past. We need to establish economic competence.

"Rachel Reeves, who is backing my campaign ... will lead work in this area for me about re-establishing our reputation on the economy, having a pro-business approach so that we go into the next election with a very strong policy."

Mr Burnham cautioned that the party may not have reached "ground zero", and things could still get worse.

"I have been watching how public opinion has been changing. There is clearly an appetite for (an EU) referendum," he said.

"That is why I am the change candidate in this election. I have said very clearly and quickly that we need to bring forward that referendum, because the worst of all worlds is a prolonged period of uncertainty and argument.

"I want to make the pro-European case in this referendum. It is clear to me that the British interest is in staying in the EU.

"But I am warning that we will only be able to win that argument if we have a credible package of reforms on immigration.

"The public are asking for this. If we don't deliver it, if David Cameron does not deliver it then we will be sleepwalking to exit from the EU."

Mr Burnham said there was "a case for" Scottish Labour running its affairs completely separately.

"We've had an election that's left the country more divided and fragmented, we've got a Prime Minister who has stoked the separatist cause in his own interest," he said.

"It used to be the Tory and Unionist party but they're now just playing to English nationalism. If anyone is concerned about the break-up of the UK they need a strong Labour Party going forward and I am the person who can speak to all parts of the UK."

Mr Burnham also indicated Mr Murphy had been right to resign. "I've got huge respect for Jim, he's given his all to the Labour Party, but in Scotland we do now need a clean break, we need a process of listening and learning and rebuilding and I believe in this contest I'm the person best placed to do that," he said.

Speaking on BBC Radio 5 Live's Pienaar's Politics, Mr McCluskey said he understood Mr Murphy was "hurting" but his "arrogance" was part of why Labour had failed in Scotland.

"He represented the ideology that has completely alienated (voters) ... not just in the election, not just in the referendum but for years. Since 2008 the SNP have been gaining ground and Scottish Labour have displayed an arrogance that unfortunately led us to where we were at the general election," Mr McCluskey said.

"The majority of my members in Scotland voted SNP. What I predicted would happen with Jim Murphy unfortunately came to pass."

Mr McCluskey issued a warning that Unite's affiliation to Labour could be reconsidered unless it showed it was the "voice of ordinary working people, that they are the voice of organised labour".

"It is up to them. If they don't, if they kind of inject more disillusionment in the party then the pressure will grow from our members to rethink. It is certainly already growing in Scotland," he said.

The Unite boss denied that Mr Burnham was his favoured candidate, and appeared to go further than Mr Cameron on the EU issue by suggesting free movement of labour had to be questioned.

Saying the Left needed to "challenge" Ukip, he said: "That means in my opinion we need to seriously debate the free movement of labour."

On the BBC's Sunday Politics, Mary Creagh joined fellow Labour leadership candidate Mr Burnham and potential contender Tristram Hunt in criticising the Mansion Tax policy that was a centrepiece at the election.

"It alienated a whole bunch of people who said we were against them getting on and doing well," she said.

Tory peer Lord Heseltine said there was an "element of attractiveness" in holding an EU referendum before 2017.

But the former deputy prime minister insisted the important thing was the nature of any arrangement, rather than the timing.

He told Sky News' Murnaghan: "The first priority I would guess for the Prime Minister and Chancellor dealing with this issue is to get a conclusion they believe in.

"From Britain's point of view that must be the right priority.

"If it can be done quicker, that would enable the referendum to be done earlier.

"But the important thing is the nature of the arrangement, not the precise timing."

Michael Dugher, who is managing Mr Burnham's campaign, insisted his man has the "reach" to connect with the corners of the country where Labour did so badly in the election.

The shadow transport secretary told Sky News's Murnaghan: "It's no good stacking up bigger majorities as we did in South Yorkshire, we have got to win on the south coast as well.

"Andy Burnham absolutely understands the scale of the challenge.

"He has made the start of his leadership campaign about the most difficult issues."

Asked about Mr Burnham's call to bring forward the referendum on EU membership, Mr Dugher replied: "The party that promised a referendum won an election, so I actually think the voters have spoken, so therefore the issue is about when do we do that.

"Anyone who thinks we were right and the voters were wrong is going to find it a very long road indeed back to power."

He added that building bridges with the business community was a "big priority" for Mr Burnham and said a delayed period of uncertainty would be bad for British business.

Asked what the Labour leadership hopeful would do about the unions, Mr Dugher said the changed rules mean Mr McCluskey now only has one vote.

Eurosceptic Jacob Rees-Mogg said the "touchstone" for renegotiation ahead of the EU referendum would be the free movement of people.

The Tory MP, who sat on the European Scrutiny Committee in the last parliament, said it was both symbolically important and an issue of "deep concern" for the British people.

He told BBC Radio 4's The World This Weekend: "I think the touchstone for renegotiation will be the free movement of people.

"It is one of the core freedoms of the EU and if the EU is willing to give ground on that, it will show it's willing to consider a fundamental reform rather than just tinkering at the edges.

"So it's symbolically important as well as representing a deep concern of the British people."

Asked about the prospect of the Prime Minister not asking for it, he replied: "In any negotiation, there needs to be a bottom line and if you are one party to that negotiation, a point at which you say 'if I don't get this, I will actually leave'."

Asked if free movement of people should be that bottom line, he said: "I think so, because of its symbolic importance and its showing the EU is serious about being willing to allow the repatriation of powers and that we will not be part of the continuing ratchet."