Enlarge imageBy Sophie Walker and Fiona Shaikh
LONDON (Reuters) - Prime Minister Gordon Brown fought back on Monday after his worst week in office and a bruising in the polls by setting out his vision of an enduring and stable British economy.
With his popularity sinking, Brown pledged to focus on the long term: speeding up infrastructure projects, perhaps building new nuclear power plants, expanding airports and shaking-up the welfare system to get those on benefits back to work.
"We will continue to take all necessary measures to ensure that in future we maintain our hard won stability. We will take no risks," Brown told business leaders in a speech in London.
"Responsible government demands that stability will be our first priority -- yesterday, today and tomorrow," he told the Confederation of British Industry’s conference.
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He also said the government was listening to firms’ worries about proposed changes to the way companies are taxed, raising expectations the government may offer some concessions to entrepreneurs and small businesses.
Chancellor Alistair Darling’s plans to cut capital gains tax from 40 to 18 percent but at the same time scrap allowances for long-term investment have provoked anger among business groups.
"I do appreciate the concerns that you are expressing," Brown said in a question and answer session.
"That is why the chancellor is involved in a process of discussion about the implementation of the proposal to change the regime."
Brown pointed out that even if the changes were adopted in their current form, Britain’s capital gains tax rate would still be the lowest of any of the major industrialised nations.
Two months ago, Brown’s Labour Party enjoyed a 12 percentage point lead over the Conservatives and the new prime minister even considered calling an early election to reinforce his mandate after taking over from Tony Blair in June.
But the honeymoon period has ended in the face of perceived dithering over the timing of an election, Britain’s first bank run in more than a century, tax-cut pledges by the opposition and news last week the government had lost two computer discs containing personal details of half the nation in the post.
Brown said taxpayers would be protected by Monday’s announcement of a preferred buyer for mortgage lender Northern Rock, which in September was forced to seek massive loans from the country’s central bank after a credit crunch.
SKILLS TO WORK
Accused by critics in recent days of lacking a substantive vision to drive his Labour Party forward, Brown said a new paradigm was needed which focussed on training people because unskilled work was not an option in a globalised economy.
"Rights and responsibilities will be at the heart of our approach. We’ll intensify compulsion while at same time offering new incentives," he said, outlining plans to compel the unemployed to seek skills and jobs.
Unemployment in Britain remains historically very low but experts say this disguises large numbers of people who are deemed too sick to work and thus claim incapacity benefit.
Brown said he would introduce a new regime for incapacity benefit which "will mean work for those who can, education or training for those with no skills, and treatment for those who need medical help including for mental health problems."
With a sharp economic slowdown predicted for next year, Brown said no country could escape the ups and downs of the global cycle but Britain should be able to escape most of the storm and it was important to invest in the long term.
He signalled his support for nuclear power as a weapon against climate change and building a third runway at London’s busy Heathrow Airport -- saying Britain as a world financial centre must be accessible from around the world.
(Additional reporting by Adrian Croft, Matt Falloon.)
