Parliament & Politics: Smith puts Labour on alert over spending: Tax campaign 'must not be undermined'

JOHN SMITH, the Labour leader, last night ordered the Shadow Cabinet not to undermine its campaign on the Government's tax policy by making random spending pledges it could not defend.

The Opposition leader's call for self discipline came in a tough homily at last night's weekly meeting of the Shadow Cabinet at which he told his colleagues that the campaign against the Tories on tax had at last 'taken off'.

His remarks came after the Tories had sought to turn the tables on Labour by listing a series of spending commitments which they claimed sabotaged their own attack on the tax increases last year.

Sir Norman Fowler, the party chairman, claimed that Labour policies - such as equalising the state pension, which would cost pounds 3bn, and introducing a national minimum wage, which he said would cost the public sector pounds 1.5bn, meant that the Opposition had scored a 'significant own goal'.

As a series of Cabinet ministers lined up to challenge their Labour counterparts on past spending pledges, Sir Norman said voters would be faced with a 'stark alternative: high spending Labour, inevitably leading to much higher taxes. Or a Conservative government that is cutting spending by pounds 10bn over the next three years.'

The Tory charges were rejected in an interview on the Today programme on BBC Radio 4 yesterday by Gordon Brown, the shadow Chancellor, who said: 'These commitments or so-called commitments do not exist.'

He insisted: 'We will spend only what we can afford to spend. We will spend only when growth allows us to do so and we will spend as resources allow. There are no manifesto commitments at this stage.'

That message was emphatically reinforced at last night's Shadow Cabinet meeting by Mr Smith. He congratulated the party's Treasury team for an attack on the Tories' claim to be the party of low tax, which he said had now been pursued since March 1993, adding: 'It has now taken off.'

He told his colleagues that the Tories' retaliation was an 'inadequate and rushed attack which was a serious practical error' and added: 'By playing their hand too early they have revealed the weakness of their ammunition and their case.'

The Labour leader added, according to sources present at the meeting, that his team must be 'permanently vigilant' to ensure that the Government was not given the opportunity or ammunition to make a counterattack.

Mr Smith's reminder came as it was disclosed that John Major will use a set piece speech tomorrow in a fresh effort to retake the economic high ground in the wake of a four-day onslaught on the Government's tax policy by Opposition leaders.

He plans to speak during a northern tour on what he has done - and will do during 1994 - about Britain's international competitiveness. Sources close to the Prime Minister dismissed suggestions that the speech would be a relaunch of the Government's 'back to basics' theme but acknowledged that he would be making it clear that industrial and economic competitiveness was one of the key 'basics' which the Government would be addressing as a priority in the coming year.

In his second unsolicited and supportive intervention in 24 hours, Norman Lamont, the former Chancellor, defended the tax hikes, saying: 'The first requirement of the Government must be to lower borrowing and to make sure that we can therefore keep interest rates down and get the economy moving again.'

And in terms which may disappoint some of his fellow right-wingers on the Tory backbenches he added: 'As we take account of falling tax revenues we have put up tax rates to get more revenue in. That will be true for some time.'