Shore joins attack on Labour policy 'failure'

MORE SCORN was heaped on Labour's frontbench economic team yesterday as Peter Shore, the left-wing former Cabinet minister, claimed it was failing to promote alternative policies to restore the British economy.

The accusation by Mr Shore, an outspoken critic of European monetary union, follows a similar onslaught by Brian Sedgemore, the MP for Hackney South and Shoreditch, creating an unholy alliance of anti- and pro-EC activists with a common cause against the leadership.

Mr Shore, a member of the Commons select committee on foreign affairs and a lifelong anti- marketeer, said Labour should demand that all European exchange rate mechanism members join in a realignment of currencies to more realistic rates. Failing that, the pound should be allowed to float to a level compatible with substantially lower interest rates.

'Yet what we hear instead from Labour's Treasury team is a point- blank refusal even to question the exchange rate - at the same time as they call for lower interest rates,' he wrote in yesterday's Evening Standard in London. 'I do not reveal any new economic law when I say that this is simply nonsense.'

One theory circulating about Labour's official silence is that a revaluation of currencies could turn out to be inevitable.

The monetary climate will change dramatically in the event of a 'no' vote in the French referendum on the Maastricht treaty next month. The prospect of monetary union would evaporate, the German mark would become even more attractive, forcing other EC countries towards a realignment of currencies.

But Mr Shore said: 'It would be ironic indeed if neither the Government nor the Opposition could bring themselves to support those policies necessary to save the British economy and it were left instead to the people of France saying 'Non' to Maastricht on 20 September.'

Demanding to know what John Smith, the Labour leader, Gordon Brown, shadow Chancellor, and Robin Cook, shadow Secretary of State for Trade and Industry, were 'up to', he said: 'They should be using this crisis to show that Labour, not the Tories, is the party to trust with the economy.'

Mr Shore, the MP for Bethnal Green and Stepney, claimed Mr Brown and Mr Cook appeared to have repudiated, instead of building on, a statement by Mr Smith in early July that ERM members should consider an upward revaluation of the mark against other currencies.

On Wednesday Mr Sedgemore, a member of the Treasury select committee, challenged Mr Smith and Mr Brown to press for a 12 per cent devaluation of the pound within the ERM, accusing them of letting the Government get away with joining the mechanism at too high a rate.

He was unrepentant in a BBC radio interview yesterday, saying: 'What the economy basically needs is lower interest rates, which in themselves would precipitate devaluation and that would give a boost to exporters, a stimulus to home-owners, and then the real economy would improve and the markets would settle and improve.'