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Last Updated: Tuesday, 17 April 2007, 12:48 GMT 13:48 UK
Blair defends Brown over economy
Chancellor Gordon Brown
Mr Brown will respond to his critics in the Commons
Tony Blair has defended the economic record of Chancellor Gordon Brown who is under fire as inflation rises above the government's target.

The Bank of England governor was forced to write to the chancellor explaining why inflation jumped to 3.1% in March above the target of 2%.

But Mr Blair said the government's inflation record was "superb".

Mr Brown is also due to face a vote of confidence from MPs later over his decision to scrap pension tax relief.

"Name me a better chancellor since the second world war of this country," Mr Blair said at his monthly press conference in Downing Street.

"He's produced the longest period of economic growth, interest rates half of what they were, two and a half million more jobs, unemployment cut dramatically, massive investment in public services."

Difficulties

He said it was expected that a government in its third term would face "accumulated problems" but dismissed any suggestion that the chancellor had failed.

Whether it is the destruction of the pensions system or the broader performance of the economy, Gordon Brown's reputation for economic competence is unravelling before our eyes
George Osborne
Shadow Chancellor

"This is the first time the governor has had to write such a letter, but he says in the course of the letter that he expects inflation to come back down to around the target later in the year."

The inflation level could have an effect on interest rates.

Mr Blair acknowledged that some families were struggling to make ends meet, and young couples find it difficult to buy a first property.

But compared to a decade ago when interest rates were higher, with homes being repossessed and a recession, today's economy was strong.

Confidence vote

"People work hard today. They work very hard. But, on the other hand, their economy overall is in better shape than it's been for years," he said.

His support for Mr Brown's record comes as the Conservatives are set to call for a vote of no confidence over the chancellor's 1997 decision to scrap tax relief on pension funds.

A recent release of Treasury documents under the Freedom of Information Act led to claims that Mr Brown had ignored the advice of officials when he abolished tax relief on pension funds. The Treasury denies the claim.

Mr Blair said the chancellor was not warned to abandon the policy, but was simply given the arguments for and against it by Treasury officials.

Aging population

He said an aging population and stock market losses of 250bn in 2000 were the larger factors in the current pension crisis - not the abolition of the tax relief which he described as having a "small" impact.

Shadow chancellor George Osborne has called his party's Commons motion a test of whether Mr Brown has the "political courage to apologise" for getting rid of pension tax relief.

"Whether it is the destruction of the pensions system or the broader performance of the economy, Gordon Brown's reputation for economic competence is unravelling before our eyes," he said.

It is highly unusual for opposition parties to call for votes of no confidence on individual ministers.

The Treasury said Mr Brown would be responding to the Tory motion in the Commons.

While Labour's Commons majority should ensure the chancellor comfortably survives the vote, the Conservatives will hope that it focuses attention once again on his handling of the pensions issue.

Documents

The motion is part of an opposition-led debate.

Mr Osborne said: "This is Gordon Brown's chance to explain why he sought to hide the dangers of his reckless raid on pensioners' savings.

"After the revelations about the raid, how can anyone have confidence in his judgement?

"We shall see if the chancellor has the political courage to apologise to the millions of pensioners affected."

It is the first time Mr Osborne and Mr Brown have gone head-to-head in the Commons on the subject of pensions since the row erupted again earlier this month.

Liberal Democrat treasury spokesman Vince Cable said: "This high inflation is likely to cause further interest rate rises which will cause misery for thousands of people in severe debt who have borrowed up to the hilt to secure a mortgage.

"It will be interesting to read the governor's letter to Gordon Brown, to see how many causes of this inflation actually lie at the door of number 11."




VIDEO AND AUDIO NEWS
Tony Blair takes questions in his monthly news briefing



SEE ALSO
Brown facing no-confidence debate
17 Apr 07 |  UK Politics
Brown defends pensions decision
03 Apr 07 |  UK Politics
Treasury pensions row escalates
02 Apr 07 |  UK Politics
Tories call for pensions inquiry
31 Mar 07 |  UK Politics

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