Labour rift opens over economic policy: Smith and Brown urged to aim at full employment and to adopt alternative economic policy including devaluation of the pound

A GULF between the Labour frontbench economic team and rank and file MPs threatened to open up yesterday as a backbench member berated the leadership for adopting monetary policies barely distinguishable from those of the Government.

The outspoken attack by Brian Sedgemore, a member of the Commons select committee on the Treasury, was accompanied by a call to John Smith, the Labour leader, and Gordon Brown, shadow chancellor, to press for a 12 per cent devaluation of the pound within the European exchange rate mechanism.

A speech aimed at the respective jugulars of Mr Smith and Mr Brown to party members in Mr Sedgemore's Hackney South & Shoreditch constituency last night contained the thinly- veiled threat of an open backbench rebellion if the leadership fails to adopt an alternative economic policy and revive the commitment to the concept of full employment.

Mr Sedgemore, an ardent pro- European, told the Independent he believed the speech reflected the views of the bulk of Labour MPs. 'The backbench has suffered in silence,' he said. 'We have become so respectable and have shut up about these issues because we wanted to win the election.'

Deriding the Labour front bench's 'unexceptional' proposals to regenerate the housing market, training and investment as no consolation for its 'blunted' critical faculties on macro-economic policy - issues such as exchange and interest rates - Mr Sedgemore told his audience: 'Why should devaluation be a word that dares not speak its name for Labour?

'The Tories in the midst of their own creation are not being put under real pressure.'

Mr Sedgemore said devaluation would not provide a complete economic cure but was a necessary step on the road to economic recovery. Neil Kinnock's idea of a realignment of all currencies within the ERM would be blocked by the Germans. There would also be opposition from other EC countries to the proposal by Robin Cook, shadow trade and industry secretary, for a co- ordinated reduction in interest rates.

Of the Labour front bench, only Bryan Gould, national heritage spokesman and unsuccessful contender for the leadership and deputy leadership, has broken the line by effectively urging devaluation, although he has also hinted that Labour calls for 'co-ordinated' action across Europe on interest rates are code for the same thing.

Mr Sedgemore urged Labour to come up front yesterday and argue for the pound to be set at DM2.50 to 2.60, accompanied by entry to the ERM narrow band to show Britain was serious about staying in the mechanism.

'Since it was the Government that took Britain into the ERM at the wrong rate (DM2.95) it is difficult to see why Labour should wish, at the expense of the British, to defend so doggedly this Tory mistake,' he said. 'This Tory mistake is helping to create unemployment and reduce output and prosperity in Britain.

'Labour should also be pointing out that by leaving the currency overvalued in the ERM the Tories have provided anti-Europeans with a powerful weapon.'

Turning his fire to modern Labour-media relations, Mr Sedgemore claimed: 'Not so long ago a senior Labour back-room adviser told the press in a contemptibly patronising statement that Labour would not talk about the future of the ERM because this subject was too difficult for the public to understand. Instead it seemed that Labour politicians were to be asked to look to their next sound bite, their next press release, and their next predictable outburst of impressionable outrage as the Government once again got it wrong.

'Let the day of the sound bite be over: may our front bench economic team now get down to real work and come up with practical and radical solutions to difficult problems,' he said.

Mr Sedgemore said no political party in Britain was committed to policies that could bring about a return to full employment or anything approaching it. It would remain an aspiration unless Labour's treasury team could be convinced of the need for changes in policies on exchange and interest rates, in fiscal and interventionist policies and in policies related to Labour's 'current adoration' of the working of free markets.

(Photograph omitted)

Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
i100This Instagram photo does not prove Russian army is in Ukraine
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
Morrissey pictured in 2013
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Robyn Lawley
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

VB.Net Developer - £40k - Surrey - WANTED ASAP

£35000 - £40000 per annum + competitive: Progressive Recruitment: .Mid Level V...

Digitakl Business Analyst, Slough

£40000 - £45000 per annum + Competitive Benefits: Progressive Recruitment: Dig...

Mechanical Estimator: Nuclear Energy - Sellafield

£40000 - £50000 per annum + Car, Medical, Fuel + More!: Progressive Recruitmen...

Dynamics NAV Techno-Functional Consultant

£50000 - £60000 per annum + benefits: Progressive Recruitment: An absolutely o...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine