Britain's ailing Labour takes aim at bankers

BRIGHTON, England Mon Sep 28, 2009 11:56am EDT

Britain's Chancellor of the Exchequer Alistair Darling delivers his keynote speech at the Labour Party conference in Brighton, southern England September 28, 2009. REUTERS/Toby Melville

Britain's Chancellor of the Exchequer Alistair Darling delivers his keynote speech at the Labour Party conference in Brighton, southern England September 28, 2009.

Credit: Reuters/Toby Melville

BRIGHTON, England (Reuters) - Britain's Labor Party, trailing in opinion polls ahead of an election next year, promised Monday to clamp down on bank bonuses and said it had the right policies to overcome recession.

In a rallying call to center-left Labour's annual conference in Brighton, southern England, finance minister Alistair Darling was expected to tell delegates that banks' "greed and recklessness" would never again be allowed to endanger millions of jobs.

After 12 years in power, center-left Labor is fighting for its political life with almost all polls showing it is on course for a stinging defeat in an election due within nine months.

Prime Minister Gordon Brown, who has struggled to win over the public since replacing Tony Blair in 2007, is stressing his leading role in responding to the global financial crisis as he seeks to turn around his dire poll ratings.

However, a poll in the Independent newspaper said that Labor would perform better under any of eight alternative leaders. It put Labor 15 points behind the center-right Conservatives.

Darling and business minister Peter Mandelson will argue Labor has been right to pump money into the economy to fight the worst recession since World War Two and that the Conservatives would cut spending indiscriminately, jeopardizing a recovery.

Mandelson told Sky News the election was still wide open and that public support for the Conservatives and their leader David Cameron was shallow.

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Darling will promise tough regulation on financial pay in the next few months that will include deferring bonus payments over time and making them subject to clawback but will call on the banks to take action themselves.

He spoke to French finance minister Christine Lagarde this weekend, according to an aide, and she is expected to make a similar plea to her own banks. Acting now would stop banks from having to pay out annual bonuses this year.

The cost of the worst recession in decades has sent public debt soaring and Britain's budget deficit is expected to top 12 percent of GDP, making public spending and how to curb it a key electoral battleground in a contest most likely next May.

After months of shying away from using the word "cuts" about government spending, Brown signaled he would bring in laws that would make bringing down the deficit legally binding.

Both Labor and the opposition Conservatives, however, have offered precious little detail on how the budget deficit may be reined in.

Aides say Labour's plans and how the new legislation would work would be clearer at the time of the pre-budget report, which is usually delivered in November.

The next government must spell out how it will return the budget to balance by 2015, two years earlier than planned by the current Labor administration, business lobby the CBI said on Monday.

(Editing by Dominic Evans)

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