British Labour's carrot and stick plan for business

A future British Labour government would punish "bad" businesses through the tax and regulatory systems and reward "good" firms, Ed Miliband was to announce today.

Offering a "new bargain with a different set of values", the Labour leader will tear up the political consensus since the Thatcher era under which Conservative and Labour governments have normally kept off the backs of business.

At Labour's conference in Liverpool, Miliband will declare: "Let me tell you what the 21st century choice is: Are you on the side of the wealth creators or the asset strippers? For years as a country we have been neutral in that battle. They've been taxed the same. Regulated the same. Treated the same. Celebrated the same. They won't be by me."

Although he will insist that Labour will remain pro-business, his words will alarm some business leaders and will be seen as a departure from New Labour. But he is convinced the country's mood has changed after the behaviour of bankers. He is ready to challenge "fast buck" capitalism that rewards greed and short-term outlooks and will speak of a "quiet crisis" suffered by millions of victims of a failed system.

He will start to map out the dividing lines between the parties ahead of the next election. He believes the country needs "not a different set of managers but a new way of doing things".

While Labour pledges to change an economy and society which often do not reward "the right people with the right values", Miliband will paint the Tories as being on the side of the current system - and acting as if chief executives and other senior figures are the only people who create wealth. "The small businesses that are the lifeblood of our economy are the wealth creators," he will say. "The scientists and innovators are our wealth creators. And the young apprentices are the wealth creators."

Labour would bring in incentives for firms to provide long-term value and investment. Those winning government contracts would have to offer apprenticeships. This "something for something" approach would be replicated in the welfare and education systems, Miliband will say.

A Labour government would change the public housing allocation rules so councils must take account of whether applicants are in work, doing voluntary work, are good neighbours and look after their property. Final decisions on how to operate the "points system" will be left to local authorities.

Forewarning "tough decisions" on welfare, Miliband will say: "The hard truth is that, even after reforms of recent years, we still have a system where reward for work is not hard enough, where benefits are too easy to come by for those who abuse the system and don't work for those who do the right thing."

- INDEPENDENT