Prime Minister David Cameron speaks at the Conservative Party’s annual Spring Forum in central London yesterday.

Reuters/London

British Prime Minister David Cameron yesterday sought to quell talk of a leadership challenge after a run of political setbacks, telling activists of his centre-right Conservative party to concentrate on winning the next national election scheduled to be held in 2015.

Cameron is under pressure from a growing number of party legislators and activists who have broken ranks to say they are unhappy with his policies. The economy is stagnant, heading for a possible third recession in four years, and the Labour opposition holds a 10-point lead in opinion polls.

Interior minister Theresa May provoked media speculation she was aiming for Cameron’s job when she delivered a speech last week that went well beyond her brief.

“Anyone in this party who’s in any doubt who we should be fighting, what we should be debating, where our energies should be focused - I tell you: our battle is with Labour,” Cameron told party members at a rally in central London.

“This is a bunch of self-satisfied Labour socialists who think they can spend your money better than you can, make decisions better than you can and tell you what to do, and we should never, ever let that lot near government again.”

Half-way through a five-year term, many Conservative lawmakers are growing restless, fearful of defeat at the next national election and fed up with ruling in coalition with the smaller centre-left Liberal Democrats.

Hit by the loss of Britain’s top-notch AAA credit rating in February, Conservative spirits were further depressed when the party was beaten into third place in a vote for a parliamentary seat that it needs to win in 2015 to rule alone without a coalition.

Speaking days before a closely watched budget statement, Cameron told activists to hold their nerve, invoking the memory of former Conservative leaders including Winston Churchill and Margaret Thatcher, saying the party was building an “aspiration nation”.

“We always knew we’d face pretty big challenges right now. It’s mid-term ... We are recovering from the deepest recession since records began,” he said.

Perhaps mindful of how deeply the issue divides his party, Cameron made no mention of his support for gay marriage. Last month, half his legislators voted against government plans to extend the right to marry to homosexual couples.

Although Cameron spoke to applause, Conservative commentator Iain Dale said he would have to do more to win over doubters within the party as well as voters across the country.

“When you talk to a Conservative audience ... you need to put a bit of red meat in there to get them going, and he didn’t really do that this morning,” Dale told BBC television.

Labour calls for tax cuts to boost economy

Chancellor of the Exchequer George Osborne should cut payroll taxes in a budget next week to boost a stagnant economy teetering on the edge of its third recession in four years, the opposition Labour party said yesterday.

An emergency tax cut would pay for itself as it would stimulate economic growth, Labour finance spokesman Ed Balls said in a newspaper interview.

“Something must be done now ... you need some fiscal action,” he told the Daily Telegraph.

“If George Osborne announced a temporary cut in the basic rate (of income tax) we would applaud him because we would say, ‘At last he is finally doing something to get some spending power back into the economy.’”

Osborne outlines his budget plans on March 20, under pressure to find ways to kickstart an economy still struggling to recover from the 2008 financial crisis.

But Osborne is expected to resist calls for tax cuts or extra spending and instead stick to his austerity programme to reduce a budget deficit that peaked at more than 11% of GDP.

Conservative Prime Minister David Cameron underlined that message in a speech to party activists in London yesterday.

“Labour say: We need more spending, more borrowing, more debt - and everything will be fine. When will they learn? You can’t borrow your way out of a debt crisis,” Cameron said.

Labour lead the Conservatives in opinion polls but have yet to regain voter’s trust in their ability to run the economy after they were ousted from government in 2010 following the country’s deepest recession in decades.

The Conservative-led coalition blames Labour for the dire state of Britain’s finances they found after the 2010 election. One Labour Treasury minister left a note for his successor saying ‘There’s no money left’.”

But Balls said Labour had not borrowed too much. “The reality was we had a lower level of national debt than America, France, Germany and Japan.

“Clearly and understandably, the Conservative Party wanted to say, ‘Forget the world, public spending in Britain caused the financial crisis.’ I understand the politics of that but I don’t think it bears any relation to the truth.”