BRITISH PRIME minister Gordon Brown has been warned that his agenda for next week’s G20 summit is “too ambitious” and risks alienating voters by ignoring their immediate needs.
Former cabinet minister Stephen Byers confirmed the domestic political pressure on Mr Brown ahead of the G20 and Chancellor Alistair Darling’s budget statement. Writing for the Progress think tank, the former “Blairite” minister said bluntly: “These two events must be successful in answering the most pressing questions about the economy but also in delivering politically for Gordon Brown.”
Fearful that the G20 might result in “a set of high-minded declarations and vague reassurances” damaging to Labour’s general election prospects, Mr Byers described April as a make-or-break month for Mr Brown.
He urged the prime minister to ditch the recent cut in VAT, arguing that this policy had run its course and that the money would be better spent taking low-paid workers out of tax.
While Mr Byers said it was clear Conservative leader David Cameron had not yet “closed the deal” with the electorate, shadow chancellor George Osborne seized on Mr Byers’s admission that the VAT cut had been ineffective.
Mr Brown suffered a second setback, meanwhile, when Bank of England governor Mervyn King played down the prospects for a second spending boost – or fiscal stimulus – for the UK economy in next month’s budget.
Mr King told the treasury select committee of MPs he did not rule out “targeted and selected measures”, say in relation to unemployment or corporate credit. But he said: “I think the fiscal position in the UK is not one where we could say ‘well, why don’t we just engage in another significant round of fiscal expansion’.”
Mr Osborne claimed the interventions of Mr Byers and the governor amounted to “a defining moment” in the political argument over the recession.
“The big debate in British politics . . . has been whether or not the country could afford a debt-funded fiscal stimulus,” he said. “When the Conservatives opposed the VAT cut last autumn, Gordon Brown said we were alone . . . Not only has a former Labour cabinet minister attacked the ineffective VAT cut, but the governor of the Bank of England no less has said Britain cannot afford a further fiscal stimulus. He goes on to say that monetary policy should be the main tool to tackle the recession.”