Brown appeals for sensible wage claims

GORDON BROWN delivered a sharp warning to his own party yesterday that the economy's bounce back from next year's sharp downturn would depend on keeping public-sector wages under control.

At a meeting of the Parliamentary Labour Party, the Chancellor told MPs it was important that people were "sensible" in the forthcoming public- sector pay round.

Later, during Prime Minister's Question Time Mr Brown's "fantasy forecasts" were angrily attacked by the Conservative leader, William Hague, who thrust a paper of independent analysts' predictions across the dispatch box at Tony Blair.

Mr Hague told the Prime Minister: "Wasn't yesterday a massive missed opportunity to reverse the blunders of the last 18 months and do something to save people's jobs and businesses?"

But Mr Blair replied that there was "no denial of short-term difficulty and no diversion from long-term strength". He went on to insist that yesterday's statement laid the foundations for Britain to "hold firm to the course of economic stability" during the current world economic downturn.

He said the best course for the Government was to stick to Bank of England independence, the extra pounds 40bn spending on health and education, the extra spending on infrastructure, and to continue with the New Deal for the jobless and the working families tax credit. "The worst thing we could do is to follow the Conservative policies of slashing public spending and reversing Bank of England independence," he said.

But the Tory leader blamed the downturn in growth on the 17 tax rises from the Chancellor since the general election and the Government's failure to tackle welfare spending.

Mr Brown and the shadow Chancellor, Francis Maude, continued the heated exchanges over the Government's handling of the present economic downturn during an opposition-led debate on the economy.

Insisting that his policies would lead to long-term economic stability, Mr Brown repeatedly challenged Mr Maude to spell out the Tories' position on the independence of the Bank of England, the New Deal and the working families tax credit.

In his strongest opposition to the Monetary Policy Committee so far, Mr Maude told the Chancellor: "The Bank cannot be left as it is, it is not working and has got to be sorted out."

Mr Brown also claimed the Tories had dropped their position on increasing the basic state pension in line with inflation but Tory sources made it clear after the debate that their position had not changed since the election.