Tories condemn Smith's record on the economy

LABOUR HAS compounded its problems, and not resolved them, by electing John Smith as its leader, Michael Portillo, the Chief Secretary to the Treasury, said last night.

'It has taken as its leader the man most closely associated with high taxation and the man who has shown the weakest understanding of the main forces which drive a market economy: motivation and reward,' he said in a special 24-page Tory party analysis of The Economics of John Smith.

The pamphlet, carrying a picture of Mr Smith and John Edmonds, general secretary of the GMB general union, together on Bournemouth beach, said that the new Labour leader's attitude to the unions was out of date; that he had overruled Neil Kinnock's efforts to phase in abolition of the National Insurance contributions ceiling; and that his commitment to curbing inflation was open to question.

But the Portillo attack prompted Labour's next generation of leadership candidates, Tony Blair and Gordon Brown, to leap to Mr Smith's defence.

Mr Blair, who is tipped for the home affairs portfolio in Mr Smith's frontbench reshuffle, said: 'There is no surer sign of Labour's ability to win than the extraordinary and panic-stricken reaction of senior Tories.

'Whilst the country faces deep economic and social problems arising out of Tory incompetence in government, when their pre- election promises of economic recovery have proved to be a hollow sham, they concentrate not on solving the problems they have created, but abusing the Opposition and its new leader.

'They fear his intelligence, his commitment to our country, and most of all, they fear the trust in which he's held by the electorate.'

Mr Brown, who is expected to replace Mr Smith as shadow Chancellor later this week, said: 'The negative, highly-personalised Conservative attacks on Labour's new leader - a statesman with the stature of John Smith - do the Conservative Cabinet no credit and show how desperate the Conservatives are already becoming. It is clear that negative campaigning is not just the feature of four weeks of a Conservative election campaign but four years of Conservative government that has itself very little positive to offer.'

Mr Smith, elected by 91.016 per cent to 8.984 per cent of the electoral college for Bryan Gould in London on Saturday, was spending a quiet day, relaxing at his Edinburgh home yesterday.

A low profile was also being taken by Margaret Beckett, elected deputy leader on a first- round vote of 57.303 per cent, to John Precott's 28.129 per cent and Mr Gould's 14.568 per cent.

Mr Smith's first task, it is said, will be to seek to 'mesh' the Shadow Cabinet, the parliamentary party and the party machine into a closer-knit fighting unit, and to that end Labour's policy department is to be restructured.

On Wednesday, Mr Smith will attend his first meeting of the NEC; on Thursday he will receive the results of the Shadow Cabinet elections; and on Friday, he is expected to announce his front-line appointments.

How Labour lost, page 21

(Photograph omitted)