Brown's Plan to Bolster U.K. Economy May Include Tax Changes

By Gonzalo Vina

Aug. 5 (Bloomberg) -- Prime Minister Gordon Brown's plan to shore up the British economy and reverse a slump in his government's popularity may include tax changes to benefit consumers, Chancellor of the Exchequer Alistair Darling said.

Darling said Brown will unveil proposals after his summer holiday, aiming to win back voters who turned away from the Labour Party. The finance minister left open the possibility of a temporary suspension of a tax on house sales as a way of reviving the property market.

``The prime minister is very focused on what we need to do to recapture people's enthusiasm,'' Darling told BBC Radio 4 today. ``When he gets back from his holiday, he will set out very clearly what he intends to do.''

After 13 months in office, Brown's grip on the ruling Labour Party is faltering after three defeats in special elections in recent weeks and a plunge in his popularity. Lawmakers in his own party including Foreign Secretary David Miliband have called for change, signaling the possibility of a challenge to his leadership.

Brown is working on a package of measures aimed at helping the economy and reengaging with voters through a series of meetings of his Cabinet outside his Downing Street residence in London. Ministers will convene on Sept. 8 in the West Midlands in central England, a government spokesman said yesterday.

Backing for Brown

Darling said he will continue to back Brown as leader and that the government can beat David Cameron's Conservative Party so long as it recaptured the ``enthusiasm and zeal.''

Part of the recovery plan may include measures to spur the housing market after nine consecutive months of price declines. When asked whether he would suspend stamp duty charged on property sales, Darling said he is ``looking at a number of measures'' and declined to discuss specifics.

``I want to look at a range of options to help people out,'' Darling said.

House prices declined the most in almost two decades in July, and consumer confidence fell to a record low as the economy edged closer to a recession. The average value of a home dropped 8.1 percent from a year earlier, Nationwide Building Society said last week.

Darling was less enthusiastic about a one-time tax on energy companies, whose earnings have benefited from record oil prices. Darling said collecting a windfall tax would create practical problems because many companies aren't based in the U.K. He also wants to encourage the companies to boost output.

Windfall Tax

He said he ``understands'' concerns from unions and Labour lawmakers that energy companies will reap further gains from a government system aimed at forcing them to trade permits to pollute.

Darling also rejected suggestions that he change the Bank of England's inflation-fighting mandate by requiring it to encourage growth and employment.

``Its remit is perfectly adequate to allow it to take everything it needs to into account,'' Darling said.

Pressure on Brown, who spent the last week on his summer vacation in the east of England, has increased after losing the mayoralty of London to the Conservatives and three by-election defeats, mostly in traditionally Labour-supporting districts.

Labour's support has deteriorated in the last 10 months, with the latest survey, by BPIX Ltd., showing 47 percent of respondents backing the Conservative opposition compared with 24 percent for Brown's party. BPIX surveyed 2,194 adults from July 31 to Aug. 2.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net