LABOUR'S relationship with business has taken another hit after its proposal to give workers the first option to buy any company up for sale was denounced as "barking mad" by a leading City figure.

Jon Moulton, the British venture capitalist, who of late was embroiled in the row over the collapse of City Link, used the colourful expression, insisting the party's policy was "not thought through".

Richard Bailey, a director of NM Rothschild investment bank who also chairs Capital for Colleagues, which funds employee buyouts, was also unimpressed, saying Labour's plan was "half-baked", noting: "Once you introduce compulsion you are in a mess. It is another example they don't understand business."

Earlier this week, a row broke out over Labour's relationship with business when Stefano Pessina, the acting chief executive of Walgreens Boots Alliance, suggested a government led by Ed Miliband would be a "catastrophe".

Labour's fightback was not helped when Ed Balls, the Shadow Chancellor, could not remember the name of a business supporter, describing him as "Bill somebody", which David Cameron later used to mock the Opposition, telling MPs this was not a person but Labour's policy.

Sir Charles Dunstone, co-founder of Carphone Warehouse, who once signed a letter supporting Labour when Tony Blair was leader, said he was "frightened" by the idea of the party taking power, complaining the business community felt "isolated" by Labour's lurch to the left.

But Lord Levy, Mr Blair's former chief fundraiser, sought to rally behind Mr Miliband, insisting he did not believe Labour was ignoring the concerns of business.

"I do not give up on Ed Miliband and the Labour Party now working with business because I do believe they will work with business," he said, adding: "I would be much more fearful running a large corporation of the Tory Party getting out of Europe and having a referendum on Europe than I would on some of the comments that have been made by Labour."

Meantime in an interview with the FT, the Labour leader stressed the election was his party's to win and, commenting on his increasingly torrid time at the hands of the Tory-supporting press, said: "If we were miles behind in the opinion polls they wouldn't be doing it. It's because they fear I'm going to win."

Elsewhere, it was suggested Labour grandees Lord Mandelson and Alastair Campbell contacted former minister Alan Johnson last November amid rumours about a possible plot to replace Mr Miliband as leader.

But the ex-Business Secretary denied he had encouraged Mr Johnson to challenge Mr Miliband, saying: "As he is a good friend of mine, we talked about the press frenzy going on at the time and he said it was all nonsense. End of conversation, end of story."

A spokesman for Mr Campbell added: "When the frenzy was going on and people were saying Alan was going for it, he called and asked him if it was true. He was emphatic he was not and that was that."