Keir Starmer appealed to the Labour left to back his bid for the leadership on Saturday as he denounced the “free-market model” as a failure and backed higher taxes on the wealthiest to pay for better public services.

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Starmer’s bid for the support of Labour members who previously backed Jeremy Corbyn came amid signs of splits in the grassroots organisation Momentum, after it said it would recommend Rebecca Long-Bailey as leader and Angela Rayner as deputy in an internal ballot.

Speaking in Manchester, Starmer said the party should unite, and “trash” neither the last Labour government nor “the last four years” under Corbyn. But – although describing the 2019 manifesto as “overloaded” – he made clear he would also back a distinctly leftwing economic agenda with the aim of reducing inequality and increasing social justice.

“We have to be bold enough to say the free-market model doesn’t produce, doesn’t work ... the trickle-down effect didn’t happen,” Starmer told a meeting at the Mechanics’ Institute where the TUC was formed in 1868.

“We have to rebuild an economic model that reduces inequality and protects working people.”

Speaking to the Observer, Starmer said that while he accepted that the UK would be leaving the EU at the end of January it was essential that it kept as close a relationship as possible with the European single market and customs union.

Facebook Twitter Pinterest Rebecca Long-Bailey. Photograph: Chris McAndrew/UK Parliament

“We are leaving the EU but I do not, however, accept that the fight for a close economic relationship with the EU is over. On the contrary, I think it is more important than ever. And therefore the argument for a customs union and single market alignment is as powerful now as it was before the election.”

On Monday Starmer, Long-Bailey, Lisa Nandy and Jess Phillips will all go through to the next stage of the contest having gained the necessary backing of at least 22 MPs or MEPs. With 68, Starmer has more than double the tally of any of the other candidates. Emily Thornberry and Clive Lewis were still battling to secure the necessary nominations last night.

After a meeting of Momentum’s elected steering group, the organisation decided on Saturday to recommend support for Long-Bailey in its own ballot of members, arguing that she was “the only viable left candidate who can build on Labour’s socialist agenda, deepen democracy in the party and unite all of Labour’s heartlands at the next election”. The ballot will consist of two questions and will be sent to members on Monday or on Tuesday and will last 48 hours. The move drew immediate criticism from Laura Parker, a leading Momentum member who resigned as national coordinator after the recent election defeat.

Parker tweeted: “Although I am pleased Momentum’s governing body accepted the principle of balloting its members on the leadership I’m sorry they seem to have decided in advance what the answer is. Members should be able to choose from all Leader & Deputy candidates.”

A Momentum spokesperson said: “We need a new generation of leftwing MPs to lead our party and build on Labour’s popular policy agenda. Our coordinating group believe Rebecca Long-Bailey is the only viable candidate who will build on Labour’s vision for the future, deepen democracy in the party and unite all of our heartlands at the next election.”

Lisa Nandy won backing last night from over 60 Labour figures, including MPs, peers and council leaders. In a statement they said: “Too many people feel that Labour is unwilling or unable to understand their lives. They no longer believed in our ability to deliver radical change or to protect the things that mattered to them. In order to win back the trust of these communities Labour must listen to them.”

Starmer added: “We are in the very early days of what will be a long campaign. I am conscious that there are excellent candidates up against me.”