UK's Labour Learns Fast: It's the Economy, Bloke

BRITAIN'S opposition Labour Party is setting out to steal one of the key economic policies of the Major government in a bid to win the next general election.

Sensing victory this spring at elections for the European Parliament and local councils in England and Wales, it is calling for massive injections of private-sector cash into schools, hospitals, and other public utilities.

Labour's strategy, which differs radically from its long preference for taxes, is a direct response to attempts by Prime Minister John Major to pursue his own private investment policy.

John Smith, the opposition leader, says the new approach will set the scene for a Labour victory at the general election, which must be held in the next three years and is likely to be decided largely on economic issues.

At the root of the party's strategy is its attempt to escape Labour's image as a party of high taxation. In the April 1992 general election, the Conservatives under Mr. Major were able to win largely by persuading voters that they would not raise taxes, and that Labour would.

This April, however, British taxpayers will be hit by sharp tax increases announced in last year's budget. Mr. Smith and his followers are accusing the government of breaking its tax pledges.

A Labour government would streamline Treasury rules under which private investment is allowed, says John Prescott, Labour's employment spokesman. His advisers calculate that this would persuade leaders of big business that Labour is a friend, not a foe, and that in the future the party's commitment to state-run enterprises will find plenty of room for capitalist initiative.

Smith is having to defend this strategy against left-wing critics in his party who say mobilizing private investment for use in the state sector will give Labour a middle-class, capitalist image and cut it off from its traditional working-class roots.

Mr. Prescott, who played a leading part in writing a policy paper entitled Financing Infrastructure Investment, says ``private finance will help put people back to work.'' He claims that attempts in the past year by Major to attract private investment into the state sector have been ineffective.

``In an economy with more than 3 million out of work there is a desperate need for job creation,'' Prescott says. ``There are plenty of engineering and building companies keen to take on new projects.''

Responding to criticism from Labour backbenchers in the House of Commons who dislike the idea of capitalist interests playing a part in the state sector, Smith told a Feb. 19 party conference that the government would continue to play an active role in administering public utilities.

He charged the Conservatives with ``standing back and doing nothing'' in the public sector, whereas a Labour administration would be ``pro-active.''

Labour party planners have decided that the next general election is likely to be decided on two main issues: what they characterize as the government's fatigue and lack of new ideas after 15 continuous years in office, and the state of the economy.

Smith and Prescott have made it clear that they think the ``fatigue factor'' will be obvious to voters and will hardly need to be underlined, whereas Labour will have to pay close attention to its presentation of economic policy.

One Labour planner described the idea of private investment into the public sector as an ambush for the Conservatives.

In May, local elections will be held in many parts of the country. These will be followed a month later by elections to the European Parliament. Smith and his followers are saying privately that the results of these contests will provide a clear indication of the electorate's mood.

Sir Norman Fowler, the Conservative Party chairman, has been criss-crossing Britain, trying to foster support for the ruling party in the mid-year polls, but most soundings of public opinion show Labour and the smaller Liberal Democratic party well-placed to achieve significant success.

Last year, Major appointed Sir Alistair Morton, chairman of the state enterprise that will run the channel tunnel between Britain and France, to spearhead attempts to boost private investment in the public sector.

Labour says this was necessary because the Major government had failed to convince investors that they could make profits if they plow cash into public utilities. The party's economic policy document says that of 96 public-sector projects in which private funds could be utilized, only 12 are under construction.