Labour unveils its economic blueprint

DIANE COYLE

Economics Correspondent

The Labour Party yesterday launched a flotilla of policies intended to boost the country's economic potential, starting with sweeping reforms to the Treasury. The party reaffirmed its commitment to the goal of full employment and to restoring a minimum wage, although not in the form trade unions would prefer.

The Labour leader, Tony Blair, launching the new economic policy document at a conference in London, said Britain was suffering from chronic under- investment in its people and equipment. Gordon Brown, the shadow Chancellor, repeated his "iron resolve" to run sound public finances and a stable monetary policy, but said a Labour government would also introduce a "medium- term growth strategy".

Mr Brown said the strategy would aim to increase savings and investment. Wages would have to rise by less than productivity. Labour would seek a national consensus on how to meet the economic challenges ahead.

The strategy's name is a deliberate echo of the present government's medium-term financial strategy, and its implementation would be the Treasury's responsibility. Mr Brown said the Treasury must stop obstructing measures designed to make the economy more dynamic.

The annual Budget process would become less secretive and Budget submissions would be invited from outside the Treasury. There would be "no taxation without justification", Mr Brown said, promising that taxpayers would be sent a user-friendly explanation of how the tax system was working.

The document, A New Economic Future for Britain, says Labour is committed to the goal of full employment. Among the specific policies proposed to achieve it are the release of local authority capital receipts for a home-building programme, a pounds 75-a-week subsidy for employers taking on anybody unemployed for more than two years, and expanded nursery and childcare provision to help mothers return to work.

Harriet Harman, the shadow Employment Secretary, said Labour would introduce a minimum wage, but instead of imposing a minimum equal to half median male earnings - about pounds 4 an hour, the level still favoured by unions - a low pay commission consisting of employers and unions would consult on its form after the election.

Labour would sign the European Union's social chapter. Mr Blair said it was folly for Britain to have a negative attitude to Europe. Labour favours international economic co-operation - "a sharing of sovereignity" - to promote growth and jobs.

Detailed proposals on training are still under review, but there would be a unified system of education and vocational training for 16- to 19- year-olds. Labour would also establish a University of Industry, in partnership with the private sector, with the aim of upgrading the skills of the workforce.

Other policies laid out in yesterday's sweeping document included the merger of the Office of Fair Trading and the Monopolies and Mergers Commission into a new Competition and Consumer Standards Office. This would have powers to prohibit some kinds of anti-competitive practice and to fine miscreants. Consumer interests would also be enhanced by ending self-regulation of the financial services industry.

The regulatory regime for the privatised utilities would be reformed as a matter of urgency. One possibility would be automatic price cuts whenever their profits exceeded a certain "normal" level.