Rebecca Long-Bailey calls on Labor to abandon their cautious approach to the economy | Rebecca Long Bailey

Former Labor leadership candidate Rebecca Long-Bailey has called on Labor to abandon its cautious approach to the economy and fight the upcoming election on a radical manifesto including state ownership and a contract of standard of living between the government and the public.

In his first major economic policy intervention since the 2020 leadership race won by Sir Keir Starmer, Long-Bailey said Labor would need transformative policies if they were to win the next election.

Long-Bailey, who as shadow business secretary was one of the leading figures in Jeremy Corbyn’s team, said his proposed contract would provide a decent standard of living defined for all citizens, ensuring that costs housing, food and fuel bills were affordable.

A cabinet-level living standards minister to the treasury with the same status as the chief secretary would ensure the contract was issued and legally enforced, she said.

Starmer, who earlier this year said the ‘slate has been wiped clean’ since the 2019 election, will deliver a speech on the economy in Liverpool on Monday.

Speaking to the Guardian, Long-Bailey said she understood the difficulties of announcing policies too long before a general election, as it gave Labor opponents the opportunity to steal policies or drill into them. But she added: “You can’t fatten a pig on market day.”

The fiscal responsibility incurred by Starmer and Shadow Chancellor Rachel Reeves was necessary but not sufficient on its own to regain voters’ trust.

In recent months, Labor has opened up a lead in opinion polls and is currently more reliable in dealing with the UK’s cost of living crisis. Long-Bailey warned that it probably won’t last.

“It is naive to think that Labor can maintain a lead in the polls without radical and transformational policies,” she said.

She dismissed the idea that Labor lost the last general election because their economic policies discouraged voters. “There were a whole host of reasons why we didn’t do well, but support for public ownership wasn’t one of them. Everything indicates that our plans to nationalize the Royal Mail, rail and water have been very popular.

Amid fears on the party’s left that Starmer is considering abandoning plans to nationalize public services, Long-Bailey said state ownership was more popular than ever, with voters seeking to end the “big privatization scam”.

She added: “We are living through the worst cost of living crisis in decades, with household fuel and water bills soaring, while rail fares continue to rise.

‘It is essential that the Labor Party stays on the side of public opinion here and that we go into the next election with our existing policies on public ownership.’

Long-Bailey said his deal would include changing companies law so directors have a legal duty to employees as well as shareholders, and ring-fencing a portion of profits for pay raises. The package would aim to restructure the UK economy to restore balance towards workers.