British Labour's New Leader Takes Party on the Offensive

BRITAIN's opposition Labour Party, under its new leader John Smith, is trying to put four successive general election defeats behind it and attack John Major's Tory government at its weakest point: the languishing domestic economy.

The latest opinion polls suggest that Scots-born Mr. Smith, who succeeded Neil Kinnock as Labour leader last month, is having some success. For the first time since April 9, when Mr. Major's Conservatives soundly trounced the opposition party in nationwide voting, the respected Mori poll Sunday reported Labour ahead of the government.

The Mori poll gave Labour 43 percent over the Conservatives' 39 percent. The same poll showed a sharp rise in the number of people who expected the economy to worsen. The figure rose from 31 percent to 39 percent.

The Mori sounding indicated also that impressive numbers of Britons liked Smith's low-key leadership style and welcomed the appointment of Margaret Beckett as Labour's deputy leader, the first woman to hold that post in her party's history.

Smith, a skilled debater who comes from the center of his party, has decided to use Labour's rising popularity to boost a summer offensive against the Major government.

In the run-up to the opposition party's autumn conference, Smith and Mrs. Beckett will spearhead an assault on the Major government's failure to reinvigorate an economy that top industrial leaders said last Thursday was still in deep recession.

The business leaders called for the realignment of Britain's pound sterling in the European exchange rate mechanism (ERM). Realignment would be the equivalent of devaluation of the pound. For the government to order such a move would be widely seen in the European Community as a sign of economic weakness. Britain is current chairman of the EC Council of Ministers.

Calls for a change in the value of sterling in relation to other European currencies came from Brian Pearse, chief executive of Midland Bank, and Sir Denys Henderson, chairman of Imperial Chemical Industries (ICI). They were swiftly rejected by a Treasury spokesman who said realignment was "not on the government's agenda."

After a July 29 meeting of Labour's new "shadow" cabinet, which includes five women and blends right- and left-wing members, Smith said: "We will be an attacking opposition, constantly calling the government to account for both their actions and their inactivity."

HE next day, in a striking echo of the Labour leader's language, Prof. Douglas McWilliams, economic adviser to the Confederation of British Industry (CBI), said members of his organization, which represents the bulk of British industry, were increasingly worried that the government was "not doing enough to influence the economy."

Earlier in the week the organization published a report on the state of the economy showing that manufacturing output had fallen by 0.6 percent in the second quarter of the year and was likely to drop by nearly 1 percent in the third quarter.

Norman Lamont, chancellor of the exchequer, conceded that the figures were worrying, but stuck to his view that the recession was bottoming out and that the economy was on the way to recovery.

During the April general election campaign, Mr. Lamont claimed that a Conservative victory would "ignite a recovery." Gordon Brown, Labour's "shadow" chancellor, last week accused the government of breach of promise on that point.

Mr. Brown has proposed a meeting of European finance ministers to consider collective action to kick-start the British and other EC economies.

The long delay in the appearance of evidence of an economic turnaround is Smith's strongest card as he sets out to assail the government.

A senior Labour source last weekend said Smith, Beckett, and Brown would accuse the prime minister of failing to read economic indicators correctly during the election campaign.

Exploiting the government's continuing economic embarrassment will not be easy for Smith and his team, however. Labour does not favor realignment of sterling in the ERM and so cannot claim to be in sync with the government's CBI critics.

Smith, who was "shadow" chancellor before the April general election, seems more likely to let those critics make the running in questioning Major's approach to the economy.

This weekend senior Conservative Party parliamentarians began adding their voices to what appears to be a rising chorus of concern about the failure of government policy to boost production and reduce unemployment that has affected close to 3 million.

John Carlisle, an influential Conservative backbench figure, said he was "worried" about the failure of the economy to respond.

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