Blair appeals to City over taxes

COLIN BROWN

Tax rates under a Labour government must be low enough to attract international investment, Tony Blair last night told US business leaders in his most explicit appeal to the City to trust Labour over the economy.

The Labour leader began his three-day tour by telling international financiers that Labour's days as a tax and spend party were over.

New Labour accepted that tax rates must be competitive to help attract international business investment, he said. His remarks will be seen as a fresh attempt to reassure voters that Labour will not reintroduce punitive rates for high earners. But he also risks causing dismay among some traditional Labour supporters. Mr Blair assured the businessmen that he was a "passionate free marketeer" and an "unashamed anti-protectionist".

He said: "New Labour is real. Labour has changed fundamentally since the last time it was in government." The party was now moderate, realistic and committed to macro-economic stability. Although there would be real change in training, skills, education and welfare reform, there would be elements of continuity and most of the trade union reforms of the 1980s would stay.

He promised the businessmen that a Labour government would take a more positive attitude to Europe than John Major's administration, and it was partly on Britain's strength in Europe that the US-UK relationship depended.

Among those Mr Blair was meeting is George Soros, the financier whose speculation on sterling helped to force Britain out of the European Exchange Rate Mechanism. He will address the American Chamber of Commerce in New York today, and will also meet President Clinton at the White House, before flying home at the weekend.

Lord Healey, the former Labour deputy leader, yesterday said the meeting would be on a much better footing than an earlier encounter between Neil Kinnock and President Ronald Reagan. Lord Healey said Mr Reagan had "lost his marbles". The President not only mistook Lord Healey for the British Ambassador, he also mistook Colin Powell for the janitor.