Gordon Brown's G20 Doomed to Fail, Says Stephen Byers

Gordon Brown's handling of the G20 summit and the fight against the recession comes under heavyweight attack from within his own party today, when former cabinet minister Stephen Byers claims the summit agenda is too ambitious and that the prime minister is doing too much. He also calls for the withdrawal of the cut in VAT, the centerpiece of Brown's domestic economic stimulus.

Byers's remarks come as Brown prepares for a five-day tour of Europe, America and Latin America designed to drum up support ahead of the G20 summit in London on 2 April.

The former trade and industry secretary claims in an article due to be published today that April will prove to be "make or break time" for the prime minister with both the outcome of the G20 summit and the budget later in the month likely to be decisive to the government's chances of re-election. He says the task for Brown is to prove he is governing, and not just surviving in office, requiring fresh thinking and ideas.

He insists David Cameron has not yet sealed the deal with the electorate, but in his article Byers becomes the first senior labor politician to agree with Tories and the Liberal Democrats that the VAT cut should now be withdrawn.

Byers argues the 2.5 % VAT cut has "run its course both in terms of its overall benefit to the economy and in relation to the political return that comes to the government".

He added: "The 2.5% cut in VAT may appear modest but it comes at significant cost. On its own figures, it will cost the Treasury £8.6bn between April and the end of the year." In his article on the Progress website he suggests the money should instead be spent on raising personal allowances for income tax purposes in 2009-10 by £1,520 to £7,995.

About 1.7 million low-paid workers would be taken out of paying income tax altogether.

He said raising personal allowances is not only right, but would also "change the political landscape by having the broad, popular appeal necessary to bring back together that coalition of support necessary to secure a labor victory".

Byers stresses he supported the VAT cut at the time of pre-budget Report, but has become worried that it has having little political or economic impact.

Equally disturbing for the prime minister, Byers airs backbench concerns that Brown may be attempting to achieve too much at the G20 summit, and as a result will fail, with serious political consequences for labor.

He expresses fear that the summit will appear irrelevant to the average voter. "The difficulty that is now emerging in relation to the G20 is that it is simply too ambitious. An exhaustive agenda has been put forward that tries to do too much.

"Of course there will be a time when we have to consider how we redraw and construct a new international system of financial regulation; promote greater transparency; tackle the abuse of tax havens and support good corporate governance. The question has to be asked as to whether the time to consider these important issues is now."