Smith keeps tax rise option open

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JOHN SMITH, the Labour leader, refused to be drawn yesterday on whether Labour would increase taxes to tackle the pounds 50bn public spending deficit.

Mr Smith also appeared to signal his readiness to reach a compromise with big unions over his plans for greater internal party democracy as he insisted he would press on with his campaign for one member, one vote (Omov) for parliamentary selections, while neglecting to mention elections for party leader.

Pressed on BBC Radio's The World at One over Labour's policies on reducing the deficit and taxation, Mr Smith said: 'The most important thing is to reduce unemployment. That's right at the heart of our difficulties. That is why our public finances are in disorder.'

But he declined to say that Labour would increase direct or indirect taxes to get the deficit down.

'I believe we should look at some taxation changes,' he said. 'We need to get much more fairness into the system by stopping loopholes. We have also proposed a windfall profits tax on the huge profits of privatised utilities.'

Pressed on criticisms of his allegedly remote leadership style, Mr Smith said it was Labour that had campaigned over pit closures, VAT, the undermining of public services and sub-post offices. 'I am used to criticism. Any Labour leader is used to criticism and I don't mind it.'

Asked about reports that John Edmonds, general secretary of the GMB general union and a strident opponent of Omov, plans to use a weekend conference speech to voice concerns about the party's performance, Mr Smith said: 'I am very clear that we have to move towards one member, one vote in the selection of our parliamentary candidates.'

When the issue reached the party's autumn conference he would be 'pressing hard and pressing vigorously for the implementation of one member, one vote in the selection of our candidates . . . This is not a debate about the links between the unions and the Labour Party. It is about the Labour Party having a democratic basis for selecting our candidates. I believe we can get many more trade unionists to come into the official membership scheme . . . which I outlined, which takes account of the political levy already being paid'.

Responding to John Major's speech to the National Conservative Women's Conference yesterday, Mr Smith said the Prime Minister 'still believes all criticism is scaremongering, but it was he who denounced Labour's warnings of VAT increases at the election of scaremongering'.

'The chief scaremonger in Britain is Mr Michael Portillo (Chief Secretary to the Treasury), whom Mr Major has instructed to slash public spending.'