Ed Miliband hit back at a senior trade union leader today - saying he was “wrong” to oppose a public sector pay freeze and insisting Labour under his leadership would be “the party of the private sector” as much as the public.
The Labour leader sought to use the row with Len McCluskey - general secretary of Labour's biggest union donor Unite - to show that the movement is not “pulling our strings”.
He issued a strongly-worded put-down as the party gathered for its autumn conference in Manchester, two years on from Mr Miliband's surprise leadership election victory in the city with the help of union votes.
Mr McCluskey used an eve-of-conference interview with the Sunday Times to set out his plans to “kick the New Labour cuckoos out of our nest” and win back the party for the trade union movement.
And he warned that his members were “furious” with the Labour leadership's “crazy” policy of supporting pay restraint.
Mr Miliband, who is battling to improve personal poll ratings and shake off his “Red Ed” tag, told BBC1's Andrew Marr Show: “It's not going very well for him is it?
“You can't say at one and the same time that Len McCluskey is saying 'you're wrong on pay restraint' and then say we're giving in to him and he is pulling our strings.”
Asked about the pay freeze, he said: “He is entitled to his view but he is wrong.
“We've got the right policy to say we put jobs in the public sector ahead of pay rises. That's what we said we would do this parliament. It is a difficult decision but it is the way to keep jobs in the public sector.
“But there is a bigger message also about the Labour Party that I lead - I am not for pushing people out of the Labour Party. I want more people in the Labour Party.
“There is no future for this party as one sectional interest of society. We must be the party of the private sector just as much as the party of the public sector.”
Mr McCluskey told the newspaper: “We should only be supporting those constituencies where their vision of the type of future that we want is in line with ours.”
The union was on course to persuade 5,000 trade unionists to join the party by the end of the year to increase pressure within constituency parties to select “union-friendly” candidates for the 2015 general election, he said.
On pay restraint, he said: “I am deeply disappointed because they have got it wrong.”
“They have found themselves trapped as they try to demonstrate to the media and the chattering classes that they have intellectual credibility in their economic thinking.”
Mr Miliband said Labour would reverse the coalition's cut in the top rate of tax from 50p to 45p “if there was an election tomorrow”.
“Next April David Cameron will be writing a cheque to each and every millionaire in Britain for £40,000,” he said.
“If I was in government tomorrow one change I would make in relation to the better off - first change in a Labour budget - we wouldn't be cutting the top rate of income tax from 50 to 45p.
“If there was an election tomorrow that is what we would do.”
The Labour leader said borrowing was going up under the coalition and the money was being used to “keep people idle”.
He told the programme: “Yes, there would be cuts if we were in government but if you make the pace of those cuts slower, if you take less money out of the economy now it would be better for the economy, better for growth.”
He added: “Two and a half years ago the jury was out, the jury can now return its verdict because it hasn't worked, what this Government has done.
“The borrowing in the first five months of this year is 20% higher than it was last year.”
Mr Miliband said a tax on bankers' bonuses would raised £2 billion, which could be used for housing and jobs for young people.
“Our answer is not, as this Government is doing, borrowing to keep people idle. Let's get people back to work.”
Mr Miliband promised that shadow chancellor Ed Balls would be “iron” in his resistance to irresponsible spending commitments
“There will be tough decisions that we'll have to make as a government,” he said.
Under him, a Labour government would be “different from the last and previous Labour government” because “we are not going to have lots of money to spend”.
There would be “tough settlements right across our public services”, he warned.
The Opposition leader said: “What we are going to see from the Labour Party this week, talking about how we can change the way the energy companies work, how we can change the pension system so people get a fairer deal, how we can change the banks ... that is all about how in tough fiscal times, when there isn't money around, Labour can make a difference.
“We are not going to spend money that we don't have, of course we're not. One of the things about Ed is that he is going to be iron in saying you cannot make commitments, both he and I are absolutely clear about this, you cannot make commitments unless we have an absolutely clear idea where the money is coming from.”
Setting out the “predistribution” economic theory, Mr Miliband said it was about “higher pay over time” - potentially including for public servants.
He said: “Of course it's about higher pay over time ... it could be in the public sector.”
Mr Miliband has given banks an ultimatum that they need to have successfully separated their investment arms from their retail operations before a Labour government comes to power or face a new law to force their break-up.
“What I want is a country where a small business or an individual going into their High Street bank knows that bank is working for them not gambling their money on the international markets,” he said.
The Vickers Commission's banking reforms had been “watered down” over a separation, he said, and could require new laws to enforce the split.
Mr Miliband said: “It's a very clear message I have for the banks: either they sort it out themselves so that once and for all the High Street bank is not an arm of the casino operation, or the next Labour government will, by law, split those banks up so that once again we return to the best traditions of British banking.”
The Labour leader dismissed concerns that banks would relocate abroad to avoid a split.
Mr Miliband also insisted that Labour would repeal the Government's health reform legislation, although he insisted the NHS would not be forced to go through another major reorganisation.
Labour faced Tory claims of “complete chaos” over NHS policy yesterday after the party was forced to clarify remarks by Mr Miliband over Labour's pledge to repeal controversial legislation.
Asked about the shake-up at a public meeting in Manchester Mr Miliband declared at the public session that it would not be “sensible” to “reverse it all back and spend another £3 billion on another bureaucratic top-down reorganisation”.
Mr Miliband told the Andrew Marr Show: “We will repeal their NHS bill. It puts the wrong principles back at the heart of the NHS, it puts the principles of competition, markets and money as the central defining principles of the NHS.”
But he added: “We are going to repeal the bill, we are going to make those changes but of course we have to look at the detail of some of the reforms, some of the changes that have been made because I don't want to just shuffle the deckchairs all over the place again.”
Mr Miliband was dealt a pre-conference blow as polling showed almost two-thirds of Labour supporters (65%) think his brother David would be a better leader for the party.
The survey commissioned by the Tories found almost three-quarters (73%) of those questioned by Populus agreed that Mr Miliband did not have what it takes to be prime minister in tough economic times, and was too weak to be a credible leader (72%).
Some 67% overall said Labour chose the wrong Miliband brother and 51% said they would be more likely to vote Labour if the party had a stronger leader.
Mr Miliband said: “It's quite a complement the Tories produced a poll about me. I think it shows I've got them worried.”
He said people would respect “somebody who has seriousness of purpose and a clarity of ideas”.
Pressed on whether his brother would return to Labour's top team, Mr Miliband said: “He made a decision not to join the shadow cabinet and that continues to be his view, that he wants to be in the frontline but not on the frontbench.”
Asked whether the door was open for him to return, Mr Miliband said: “I think he is a huge asset to the Labour Party but I'm not getting into all that.”
Mr Miliband conceded Labour still had “a huge mountain to climb”.
Contrasting it with the party of the 1980s after it was swept from power by Margaret Thatcher, he said: “This is a party that is a more united party than any other in British politics.
“It hasn't taken leave of its senses or leave of the electorate.
“We are a party on the way back. We have a long way to go but I feel quite confident about our position - knowing there is a huge mountain to climb, but knowing we are scaling it.”
Despite his battle with Mr McCluskey, he insisted that he did not want to cut the party's link to the union movement.
“There will be some people who say: why doesn't Ed Miliband make a splash by breaking the link with trade union members.
“I'll tell you why I'm not going to do that. Think about politics and what people think about politics: detached from the lives of most people.
“At its best, the link with trade union members - and I underline members - gives us a link with people up and down this country who go to work every day, who get up early, who put in all the hours that God sends, who know what life is like at the sharp end.
“I'm not going to break that link but I am going to make the right decisions for the country.”
Shadow home secretary Yvette Cooper, tipped by many as a future leader, played down concerns over Mr Miliband's personal popularity.
“I think Ed is doing a great job,” she told Sky News' Murnaghan programme. “I think it is as a result of the leadership that we have a strong, united party.”
She went on: “It always takes people time to get to know opposition leaders compared to prime ministers, who you of course see every day of the week.”
Ms Cooper pointed out that Mr Miliband had been setting the agenda on issues such as phone hacking.
“I think you cannot separate out the leader from the party. The fact that the Labour Party is doing better now, we are in a much stronger position... is as a result of Ed's leadership. This is as a result of the things that Ed has been talking about.
“Time and again I think Ed is talking about the things that people are worried about across the country, and saying what needs to happen for the future as well.”
Speaking on the BBC's Sunday Politics programme, deputy Labour leader Harriet Harman admitted that “a lot of people do not know who the leader of the Opposition is”.
She said: “This week is a very big opportunity for the public to see Ed Miliband as he is. Having seen, over the last 30 years, a lot of leaders from all different parties up close, I can say without too much psychobabble I think the thing about Ed Miliband is that he is very much in touch with people's concerns. Right away he was raising about the squeeze on living standards and the real fear people have got on living standards.
“He is also very robust. I do not think he will change and just blow with the wind, and do phoney photocalls. He is as he is, while recognising that people do actually need to get to know him better. A lot of people don't know who the leader of the Opposition is, especially only two years into his role.”
Lord Prescott, a former ship steward, told trade unions to “grow up” after Mr McCluskey's attack on New Labour.
He told Murnaghan on Sky News that there were fewer people unemployed and in poverty under Tony Blair's premiership.
“I can't understand people saying 'the Blair era was bad'. Even to Len McCluskey I'd say 'eh, Len, more of your people were in work in the areas where we need them, in public services, in education and in hospitals. think about it again.”
Lord Prescott added: “He fought and won three elections. Tell me another Labour leader who did that? Tell me another one who gave us minimum wage? Tell me another one that got as many people back to work?
“Come on, grow up.”
Paul Kenny, general secretary of the GMB union, launched an attack on the Labour leadership over its public sector pay policy.
He told the BBC: “Ed Balls, he would give an aspirin a headache, wouldn't he?
“Being truthful about it, he comes here and he's not really in touch with the argument.
“He really needs to get closer to what's happening on the ground.”
Mr Balls was heckled during his TUC appearance and Mr Kenny said: “There were questions asked and the answers just weren't there.”
Labour was “losing ground with core supporters by continuing to ignore the fact that millions of people are suffering”.
He added: “Labour has to give them hope, and telling them there's nothing down for them isn't hope.”