Owen Smith puts economy at centre of his pitch for Labour leadership

Labour leadership hopeful Owen Smith has vowed to address the country's economic problems if he beats Jeremy Corbyn in next month's election, telling voters: "What you won't get from me is some lunatic at the top of the Labour Party." 

In an apparent escalation in the war of words between the Pontypridd MP and Mr Corbyn, Mr Smith ferociously lambasted his rival for suggesting they only needed to win back "some" Conservative voters.

He touted himself as the man to provide a "coherent narrative" that would actively try and win over millions of people who voted for the Tories in last year's general election.

Speaking to party members in Hammersmith, Mr Smith also attempted to shore up his credentials as a radical candidate, quipping that "Jeremy is not the only socialist in the village".

He told the audience: "Jeremy, the biggest thing he said recently that I disagreed with was 'yes, we've got to get some of the people who contemplated voting Tory in the past to vote Labour', rubbish - we've got to get two million people who actively voted Tory 12 months ago to vote Labour in 106 seats.

"What you won't get from me is some lunatic at the top of the Labour Party.

"You will have someone who is trying to forge a coherent narrative about what is wrong with Britain, why we are so unproductive as an economy, why we are not creating more decent jobs.

"It's not right that people are having to hold down two or three jobs to make ends meet - and that's true in Tory areas and Labour and I would fix all of that and make it work."

Mr Smith currently trails the left-wing leader substantially in the polls, with the winner of the leadership contest expected to be announced on September 24.

Ballot papers are starting to get sent out to an estimated 640,000 members and supporters, who will be asked to choose between the pair.

The party has been dogged by talks of a split in the event of Mr Corbyn, who has lost the support of the vast majority of his parliamentary peers, winning again.

A stark warning was issued by his challenger that division could leave the party in the wilderness for "generations".

He said: "If we disappear, either through the general election, or through splitting, either side of that general election, then we will be lost for generations."

He added: "This generation has the biggest choice we've had, in my view, in 20 years, we have a choice if we are going to look into our navels or look up at the skyline - and we should be doing the latter, on behalf of the British people." 

Mr Smith reaffirmed his opposition to beginning the formal procedure of taking Britain out of the EU, even if it meant ostracising the 17 million people who voted for Brexit.

In a move bound to infuriate those who voted leave in last month's referendum, he said that if Labour just won the support of the 48% of people who voted remain, it would still be enough to win a general election and not activate Article 50.

He said: "48% of the people didn't vote to leave (the EU), now if we can secure 48% for a general election, we will be laughing.

"There is a both a rationale for doing it because it's right for working people in this country, there is also an electoral advantage to be won, to be on the right side of this argument.

"I think a lot of people will come to realise that we will be worse off as a result (of Brexit) and if we are up front in leading that charge then we will reap some of the benefits from it."

The former shadow work and pensions secretary, who was again forced to defend his history of working for a large pharmaceutical company during the meeting, later challenged the view that Mr Corbyn's supporters occupied a higher moral ground than his own.

He said: "I'm sick and tired of debate in this party right now that paints some people who support Jeremy as a sort of purest of the pure, principle filled and the rest of us who are saying 'we've got to win Jeremy, and we're worried we're at a lower ebb than we've been since 1982' are somehow sell-outs or people who are willing to trade our principles, compromise them for power - rubbish."

The Welsh MP then gave a light-hearted nod to Matt Lucas's Little Britain character from the Valleys - the "only gay in the village" - when he declared Mr Corbyn was not "the only socialist in the village".

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