Tax rises 'would be madness'

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Indy Politics
(First Edition)

RAISING TAXES while Britain is still in the midst of recession would be economic madness, John Smith, the Labour leader, said yesterday, writes Patricia Wynn Davies.

Extending VAT or freezing personal allowances to reduce the Government's fiscal deficit would be 'economic madness at the very moment the British economy is struggling to revive and millions of families are still struggling to make ends meet', Mr Smith said.

Speaking at a conference in Paris, Mr Smith went on to articulate 'the highest possible level of employment' as a cornerstone of his economic policy. In aiming 'once again' for full employment - an objective some Labour supporters fear has been abandoned - he said it was 'more important than ever that governments assume greater responsibility for encourage investment in people'.

He echoed other Opposition MPs when he said inflation had only been suppressed, not cured, as yesterday's inflation figures showed a six-year low of 2.6 per cent last month. Gordon Brown, shadow Chancellor, said that while headline inflation had fallen because of the recession, the underlying rate had risen.

Paul Tyler, the Liberal Democrats' economics spokesman, said the first rise in the underlying figure since March last year showed that inflation was set to rise again, while the Government had not 'a fig leaf of a policy for dealing with it'.