Ex-policy chief blunts Blair's counter-attack

JOHN RENTOUL

Political Correspondent

Tony Blair, the Labour leader, launched a fierce counter-attack against Conservative charges of hypocrisy yesterday, as the party's former policy director issued a call for Labour to be more open about the need for more public borrowing.

Speaking to a meeting of party members for the first time since the row over Harriet Harman's decision to send her son to a selective school, Mr Blair took on the Tory taunt that Labour "says one thing and does another".

Referring to the Tory record on tax, crime, the health service and home ownership, he said: "They say one thing before an election - and they do another afterwards."

But his attack was blunted by a prediction from Roland Wales, who resigned as Labour director of policy just before Christmas, that, "sooner rather than later", a Labour government would have to "explain its case for higher borrowing".

Mr Wales's article in today's New Statesman was given added prominence when it was rubbished by a Labour spokesman. "He had no input whatsoever into policy-making and, even if he wanted them to be, his views were not taken seriously," the spokesman said.

Mr Wales, a former high- flying Bank of England official, hired by the former Labour leader, the late John Smith, writes: "Voters want more and better jobs, better schools and better health and housing. Awaiting the fruits of growth is unlikely to be enough; a Labour chancellor will have to find the funds to start making good the chronic public sector-investment gap, while calming the fears of the markets."

Mr Wales told the Independent yesterday: "People should be aware of the size of the task in order to massage down expectations."

Denying that his article was disloyal, he said: "It was designed to say that we have the potential to move towards a more sensible approach to public borrowing, but haven't yet devised proper controls." He advocates excluding public corporations - such as the Post Office and railways - from public-sector borrowing.

Mr Wales did not give reasons for leaving his job, although Labour policy is increasingly determined in Mr Blair's office, under his head of policy, David Miliband. Mr Wales was replaced last month, after a fierce struggle between the Labour leader and his deputy John Prescott, by Matthew Taylor, Mr Blair's favoured candidate.

Mr Blair, meanwhile, speaking in Brentford, west London, warned the Tories against fighting a dirty campaign. "Do the Tories really want to be judged on which party has the biggest liars or the biggest hypocrites? They would be wise not to.

"They made their promises. They broke them. And behind every one broken promise lie thousands, millions of wrecked lives. The people who dreamt of owning their own home, then watched as it was repossessed. The people who felt safe in their job, then helpless as it was taken away from them."

He portrayed a "nightmare" scenario of a fifth Tory term: "Will you be paying to see a doctor? Will your child be taught in a class of 100? Will you all be trapped in negative equity? Will you all need private security for your street, your home, your office?"