Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

Exclusive: Former Labour advisors warn Ed Miliband that his party lacks direction

Mr Miliband allies deny that he is 'anti-big business'

Former senior Labour advisers have rounded on Ed Miliband, warning him that his party has no direction and will not win a general election while it is perceived as “anti-business”.

The warning about Labour’s stance on business was issued by two former Downing Street aides who will host a conference for industry leaders on Thursday, where Mr Miliband will make an important speech. It is part of a week long blitz by Labour designed to reassure the business community that the party is not hostile towards it.

Lord (Roger) Liddle and Patrick Diamond, chairman and vice-chairman respectively of the Policy Network think tank, urged Mr Miliband to abandon his attempt to divide companies into “predators” and “producers”, and to suggest that small firms are virtuous while big companies are not.

Writing on The Independent’s website, they said: “Businesses that act against the public interest should not escape regulatory action. But it is not the job of governments to pick and choose between ‘predators’ and ‘responsible’ capitalists.

"Nor is it sensible to treat smaller firms as inherently more virtuous than larger ones: what matters is setting a stable framework in which making a reasonable profit is compatible with the public interest. Labour will not win elections as an anti-business party. The vast majority of the workforce is employed in the private sector.”

The criticism from Policy Network, which was founded by Lord Mandelson, reflects fears among New Labour figures that Mr Miliband’s stance is widely seen as “anti big business”. Bosses have expressed concern about Labour’s interventionist policies, including its plan to freeze energy prices, reform the banks and cap private sector rents.

Lord Liddle - until recently a Labour frontbench spokesman - and Mr Diamond warned that Labour has been left “utterly disorientated” by the 2008 financial crisis. They said that Mr Miliband is right to try to create a new “progressive capitalism” but should treat business “as part of the solution rather than the problem”.

In another setback for Mr Miliband, his former adviser Lord [Maurice] Glasman said that Labour lacked “a sense of direction”. Writing in the Financial Times, he said: “The problem for Labour is not that it lacks policy but that it lacks a narrative of national renewal.”

Lord Glasman echoed concerns expressed privately by Jon Cruddas, the Shadow Cabinet member in charge of Labour’s policy review, that Mr Miliband did not embrace last month’s blueprint by the IPPR think tank for social justice in an age of austerity.  

Lord Glasman said: “The most original left-wing thought for some years on social welfare reform vanished almost without trace, reduced to a nasty Labour press release on how the party plans to force young people into training.”

The Labour peer suggested that Mr Miliband choose a couple of novels rather than think tank reports as his summer holiday reading. “He needs to tell a story in his speech to the party conference [in September], not about himself, but about the country he wishes to lead to a place where we can make things better,” he said.

Allies of Mr Miliband dismissed the latest criticism from within his own party and denied that Labour was “anti-business”. One said: “The whole point of big reform of both markets and the state is to create the conditions for Britain and business to succeed together.”

A Labour source added: “Maurice has lots of interesting views, which is why Ed put him in the House of Lords. They have not had much contact with each other for the last two and a half years.

"Ed endorsed the principles behind the IPPR report and the review by Lord Adonis on how to reverse a century of centralisation. Maurice seems to have missed this.”