Blair ditches Keynes

TONY BLAIR will ceremoniously ditch Labour's traditional 'tax, spend and borrow' image this week, in a fundamental re-positioning of his party's economic strategy.

The Labour leader's move to pre-empt the Conservatives as the party of prudent public spending is designed to repeat Labour's successful campaign to persuade voters that the Government cannot be trusted on its tax promises.

The first move in a hectic round of political activity in the run-up to Labour's conference came last night when Shadow Chancellor, Gordon Brown, hinted at 'no new taxes' and attacked the Tories' record on government expenditure.

Speaking in East Lothian, he described Labour as 'the true party of economic competence' which would 'redirect existing resources' to public services.

Mr Brown pointed out that despite the Conservative's promise to reduce public expenditure to less that 40 per cent of national income, it has actually remained the same as it was in 1979 at 44 per cent. As national income has increased, this represents an extra pounds 73bn in cash terms.

Labour leaders will follow up this opening salvo on Tuesday by telling a conference of businessmen and academics convened in London's National Film Theatre that the party has turned its back on Keynesian economics and 'the old ways of corporatism'.

The conference, entitled New Policies for a Global Economy, is regarded as a turning-point for Labour on economic policy. 'We will be ditching the old tax, spend and borrow image,' said a senior party insider. Mr Blair will tell the conference that Labour has exploded the myth that the Tories can be trusted with the economy and has a unique opportunity to present the electorate with a positive and distinctive economic agenda. He will argue that the Opposition is the only party capable of operating successfully a 'modern, dynamic, market economy'.

The Labour leader hopes by turning the tables on the Tories on public spending, he can win over voters who fear that a Labour Government would embark on massive public expenditure to reduce unemployment. His 'Prosperity Programme for Britain' will link tax to spending, promising that a Blair administration 'will not spend what we cannot afford to spend'. Shadow Cabinet members will be told to keep the lid on spending promises.

Labour's new caution on the economy will this week be supported by a pamphlet, Any Southern Comfort, from one of the party's leading backbenchers, Giles Radice, and Stephen Pollard, research officer of the Fabian Society, based on research among 'floating' voters in the South and the Midlands.

Any Southern Comfort argues that the party is still 'on probation', and says it must show its economic competence and convince voters that a Labour Government would not wreck the economy through high spending and taxation.

As well as advocating caution on the economy, the pamphlet argues that waverers are still sceptical about Labour's policies on crime, education, employment and health. Mr Blair also needs to convince voters that they can trust the party, the pamphlet says.

The Shadow Chancellor began the offensive with a speech in Prestonpans last night, saying: 'Labour is now the true party of economic competence and economic opportunity on Britain. The Tories have become the party of 'tax and spend' to pay for their economic failure in this country.'

He pointed out that the second stage of the 'Tory tax assault' will bring seven more tax increases between now and April, increasing taxes from 34 per cent under Labour to 38 per cent under John Major.

The real divide at the next election would be between a party that 'through dogma, experimentation, opting-out, privatisation and waste has mismanaged the public accounts', and Labour which would 'redirect existing resources to caring services', he said.

Labour and the Bible, Page 8