26/09/2013 05:15 BST | Updated 25/11/2013 05:12 GMT

Lord Mandelson Attacks Ed Miliband For 'Taking Labour Backwards'

Lord Mandelson, Labour's Chair of Election Strategy, hosts a press conference at Labour Party Headquarters in Westminster, central London.

Blairite Labour figures have hit back at Lord Mandelson, after the former cabinet minister criticised Ed Miliband's plan to freeze energy prices until 2017.

The former business secretary, who in 1997 helped mastermind New Labour's triumphant election campaign, said Miliband's pledge could undo the industrial policy he had worked hard to shape under Tony Blair.

He said: "At the business department I tried to move on from the conventional choice in industrial policy between state control and laissez-faire. The industrial activism I developed showed that intervention in the economy - government doing some of the pump priming of important markets, sectors and technologies - was a sensible approach."

But following Miliband's speech at the party's annual conference, he added: "I believe that perceptions of Labour policy are in danger of being taken backwards."

Energy companies were unsurprisingly united in their criticism of the Labour leader's announcement in Brighton, which went down well with the party's grassroots.

But another fellow New Labour architect Alastair Campbell disagreed with Lord Mandelson. The former director of communications said in a tweet: "Peter M wrong re energy policy being shift to left. It is putting consumer first v anti competitive force. More New Deal than old Labour."

And Caroline Flint, the current shadow energy secretary and a staunch Blairite herself, told the BBC: "I know Lord Mandelson has financial interests in energy companies."

Lord Mandelson has also been criticised for his comments given his business consultancy firm, Global Counsel, says it has "expertise" in the energy market.

The firm told the Financial Times: "Our work for energy clients is not in the UK. None of the Big Six that are affected are clients."

Iain Wright: Only Labour Have the Courage to Do Something About the Cost of Living

Miliband has already faced a backlash from energy firms but has remained resolute, dismissing as "scare stories" claims Britain could face blackouts if Labour enforces a freeze on gas and electricity prices.

He has compared the energy companies to banks resisting regulation ahead of the 2008 crash and has written to the "Big Six" companies warning that they would face a consumer backlash if they fought his plans for a 20-month freeze following the next general election in May 2015.

His surprise announcement at the Labour conference in Brighton on Tuesday was greeted with horror by energy suppliers, with predictions that firms deprived of the power to set their own prices would be in danger of "economic ruin".

Shares in Centrica - British Gas's holding company - fell by 5.3% in trading over the course of yesterday, while shares in Swalec owner SSE fell 5.8%.

Centrica chairman Sir Roger Carr said: "We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on."

And Angela Knight, chief executive of trade body Energy UK, said that while the price freeze was "superficially attractive", it would "also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone".

After a week in which Miliband unveiled plans for a hike in corporation tax, compulsory purchase of land being hoarded by developers and new requirements for employers to take on apprentices, Conservatives said that the Labour leader had revealed himself to be "Red Ed".

And CBI director-general John Cridland said the conference had delivered "a real setback for Labour's pro-enterprise credentials".

"I think business as a whole will say we look to the Labour Party to speak for all business, not to beat us up and then say it's speaking for small business, not large business. Speak for all business, Ed, and do it in a way which takes businesses with you.

"Government is there to set minimum standards. You begin interfering price and property and wages, as well as in tax, and you put business taxes up, how do you expect that to have a positive impact on wealth creation, job creation and more jobs on the high street?"

But Miliband said that the action on energy prices was at the heart of the message about the "cost of living crisis" that he will take into the 2015 election

"What you've seen from Labour this week is a party standing up for ordinary families, not for the privileged few," he said.