Give workers a voice in top bosses’ pay says Miliband

He demanded a staff member sit on remuneration committees deciding how much executives of big firms should receive.

Speaking to the Social Market Foundation in London, he said: “This simple reform would help forge a new compact between workers and employers, building trust that salaries at the top are deserved, that long-term decisions are being made.”

He said the move would spark “a revolution in transparency about pay for those at the top so shareholders and others can come to view about what is justified”.

Criticising regulations which “led to a distribution of rewards increasingly skewed between those at the top and the rest”, he said: “That inequality did not just have bad consequences for our society; it had real consequences for our economy as well.

“The struggle to maintain living standards for people became too dependent on higher levels of personal debt.

“A better, more responsible, capitalism would mean the taxpayer does not have to pay the price for financial failure by bailing out the banks or paying the welfare costs of spiralling unemployment.”

Mr Miliband called for a longer-term approach from shareholders, urging them to abandon their hunger for short-term dividends.

He said politicians needed to examine whether shareholders should have equal voting rights as soon as they bought into companies and whether the tax system could be used to discourage quick profits at the expense of a firm’s long-term health.

“The short-term approach to finance has held back investment for years,” he claimed.

“In the new economy we need to see a finance sector, the success of which isn’t measured simply by short-term profits made and taxes paid, but by whether those profits are sustained by fulfilling its role as the beating heart of the economy.”

And he returned to his “producers versus predators” theme, saying tighter laws may be needed to tackle firms which “let down” industry and the nation.

He said: “The old view that we should let predatory behaviour continue unchecked has let down our country and business.

“Vested interests – predators that do long term damage – are bad for our business and our economy.

“They raise prices, exploit consumers and lead to inefficiency.

“Government has a responsibility, on hard-headed economic grounds, to use its power to break up vested interests.

“This will sometimes require regulation, sometimes require the strengthening of markets.”

The leader of the UK’s biggest business group yesterday warned that the economy was in the “last chance saloon” unless the decline in jobs and growth was reversed.

John Cridland, director general of the CBI, said Government action was needed to boost investment, help firms trade overseas and improve the business environment.