Newspaper article The Journal (Newcastle, England)

Breaks Going against Brown

Newspaper article The Journal (Newcastle, England)

Breaks Going against Brown

Article excerpt


AT the start of the year, I wrote that Gordon Brown's chances of political survival up to the next general election would ultimately depend on whether his economic rescue package showed any signs of working.

There will be those who claim the fabled "green shoots of recovery" are already appearing - in the London housing market for instance.

But it will take more than a few satisfied estate agents to convince the rest of us that the economic downturn is bottoming out and that the good times are just around the corner again.

After all, there remains considerable doubt even among some of Mr Brown's natural allies as to whether his remedies for the country's economic ills are even the right ones.

Mr Brown would like to believe there is a broad national and international consensus for the "fiscal stimulus" measures he has been advocating, and which he continues to claim are being copied the world over.

Unfortunately for him, this is very far from being the case as events this week have only served to emphasise.

If it was just the Tories who doubted the efficacy of his proposed solutions, Mr Brown would have less cause to worry - but some of the opposition has been coming from people who might have been expected to show him more support.

Most notably, it has come from the Governor of the Bank of England, Mervyn King, and his former Labour cabinet colleague, North Tyneside MP Stephen Byers.

Mr Byers may normally be a mild-mannered sort of chap, but his comments ahead of the Prime Minister's world tour this week to drum up support for his measures ahead of next week's G20 summit could not have been more wounding.

He claimed the proposed summit agenda was too ambitious and also called for the withdrawal of the 2.5% pre-Christmas cut in VAT, the centrepiece of Brown's domestic economic stimulus.

"The 2.5% cut in VAT may appear modest but it comes at significant cost. On its own figures, it will cost the Treasury pounds 8.6bn between April and the end of the year," he wrote.

He suggested this money would have been better spent on raising personal income tax allowances in the Budget by pounds 1,520, taking around pounds 1.7m low-paid workers out of tax altogether.

More damaging still was Mr Byers' claim that Mr Brown's attempts to get international agreement on an economic rescue package at the G20 summit will fail, with serious consequences for Labour.

He said the next month would prove "make or break time" for the Prime Minister, with the outcome of both the summit and the Budget likely to be decisive to his chances of re-election.

Although this will have been regarded in Downing Street as deeply unhelpful, Mr Byers is correct in his analysis of the Government's position. It shows that the supposedly "settled will" of the Labour Party, that Mr Brown should lead the party into next election come what may, is not necessarily as settled as all that. …

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