Ed Milliband’s speech yesterday called for a new ‘bargain’ for Britain, whereby a broken ‘system’ is replaced because it too often rewards “not the right people with the right values, but the wrong people with the wrong values.” This message obviously has resonance, tying together the MPs' expenses scandal, the banking crisis, the summer riots and the phone hacking scandal. It is Ed’s version of Cameron’s call for more responsibility, except Ed (rightly) argues that the latter is very often missing from the ‘top’ as well as the ‘bottom’ of society.

The solution that Ed proposes for our malaise? For government to lead the way in rewarding companies that have the right ‘values’ – those that produce rather than those who act as predators. Government is to change ‘the rules’ so that the former but not the latter get rewarded.

How will this moral reorientation be achieved? There isn’t too much detail here, but he wields one standard policy tool - tax breaks for ‘good’ companies – as well as some new ones; for example, a stipulation that companies that win government contracts provide apprenticeships. Whatever we think of these policies, Ed is right to put morality above technocratic managerialism and in doing so refuses one of the most pernicious tenets of New Labour’s metropolitan liberalism: that wealth is good regardless of its origins.

So far so much rhetorical positioning. But many commentators have pointed out that the biggest danger for Ed here is when his lofty idea to reward ‘good’ companies flounders on the rocks of reality. How on earth are these moral distinctions to be made? We are assured that it will not be by a return to the ‘picking of winners’ that so bedevilled industrial policy in the 1970s. And to be fair to Ed, although it is not easy, government can do more to shape the way companies are motivated to invest for the long-term and contribute to the training and wellbeing of their employees.

But actually, there is a problem here for Ed that goes deeper than how he will reward responsible companies who produce rather than act as predators. It is that Ed Balls’ strategy for growth is to cut VAT and tax the banks more. This is ‘old’ New Labour economics, where the City bankrolls public spending and households rack up debt on consumer spending to drive demand. Is that really going to help us enter a new era of responsibility? If Ed wants things to change ‘fundamentally’, as he insisted on the Today programme this morning, his first order of business should be to instruct his shadow chancellor to develop an economic strategy that does not continue with the fast-buck culture he so desperately wants to leave behind.

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