Gould aims to fill Labour 'vacuum' on economic policy

LABOUR'S economic policy was criticised yesterday by Bryan Gould, the former Shadow Cabinet member, when he launched an alternative campaign for full employment.

Mr Gould, who resigned from John Smith's front bench team to oppose the Maastricht treaty, denied he was launching a 'party within a party'. He said there were 'scores' of Labour MPs who supported the forum, including members of the Shadow Cabinet.

'This is a step we have taken in response to widespread unease about the party in what is seen to be a policy vacuum in economic policy,' Mr Gould said.

'We are not setting ourselves up as a party within a party but as a means for providing the Labour Party with a radical economic policy which many of us feel is not being adequately done at present.'

His implicit criticism of Gordon Brown, the Labour spokesman on treasury affairs, will be deeply resented by Shadow Cabinet loyalists who suspect the grumbling is connected with a long-term leadership struggle.

Mr Gould set out his economic alternative in a Commons debate yesterday, which was opened by Lynne Jones, the Labour MP for Birmingham Selly Oak. Ms Jones supported Mr Gould at the press conference to launch the forum with Roger Berry, the Labour MP for Kingswood, Helen Brinton, the Labour candidate at Faversham in Kent, and Bob Harrison, a member of the TGWU and director of the forum.

Mr Gould said full employment must be the most important objective of government policy. 'It isn't beyond our capacity. It is not technically difficult. It is a question of understanding what is the true role of economic policy.

'Full employment would not only be the most potent of all the instruments of social justice and distribution of wealth which a Labour government could bring about, it would also be a sure way, even for the Conservative government, to secure some claim to economic success and economic efficiency.'

Last month, John Smith and Mr Brown both recommitted themselves to the 'aspiration' to full employment and John Major, in a recent Commons reply, said it was the wish of every prime minister.

Mr Gould said Britain had a propensity, stretching back over a century, to hand over control of the economy to bankers. The economy still suffered from a 'fixation' with asset values which had grown up in the days of Empire when Britain, with protected markets, had become asset rich.

In order to escape the bias of short-termism, macro-economic policy had to be re-established, he said. That meant demand management; public spending, managing the exchange rate and setting interest rates had to be judged in the light of the condition of the real economy from week to week.

He suggested that if Labour did not want to borrow or tax to finance the public-sector debt then, in particular circumstances, the public sector might be allowed to to create 'just a little credit' to invest. The private sector raised 'vast sums' of credit for consumption and imports.

'Nobody ever dares to think this because they are terrified of being told that means 'printing money',' he said.

'I don't care what you call it. Call it monetarising debt or under-funding. It may not be appropriate for very long, but I think it is appropriate now.'