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UK PM Cameron Says Budget Had Mistakes

06/03/2012 | 09:45pm US/Eastern

LONDON (Dow Jones)-U.K. Prime Minister David Cameron said there were some policy mistakes in the coalition government's annual budget announced in March that had to be corrected, but nobody thinks his government lacks resolve and strength.

Last week the government took the highly unusual decision to reverse three controversial budget tax measures involving charities, hot-baked goods, and parked mobile homes, prompting criticism that it is buckling under popular pressure and unable to stick to its economic policy.

Although the policy u-turns will have a negligible effect on the government's coffers and its tough austerity plan, observers say they reflect badly on the coalition's credibility and are particularly damaging to the reputation of the treasury chief, Chancellor of the Exchequer George Osborne.

The policy reversals were also announced while parliament was in recess and the British media was focused on an inquiry by Brian Leveson--a government-appointed judge who is examining media practices testimony at a judge-led inquiry into U.K. press practices--giving the perception the government was trying to bury bad news.

Cameron said that when a government has got something wrong it faces a choice of whether to plough on regardless or listen to criticism and make the appropriate changes--and it was right to choose the latter.

"We have taken difficult decisions on the deficit...difficult decisions of public-sector pay, reforming public-sector pensions, standing up to public-sector strikes--nobody thinks this government lacks resolve, strength and grit. It has all of those things, and it also has the courage to say look if we have got something wrong let's change it, let's not keep ploughing into the brick wall," he said in a recorded interview with BBC television that was aired Sunday.

Cameron also again defended his culture minister, Jeremy Hunt, saying he acted fairly and wisely while overseeing the regulatory process of News Corp.'s (NWS, NWS.AU, NWSA) bid for control of British Sky Broadcasting Group PLC (>> British Sky Broadcasting Group plc) last year.

The opposition Labour party has repeatedly called for Hunt to resign after evidence surfaced during the Leveson inquiry that indicated the minister was favorable to the bid. Hunt said last week he was sympathetic to the bid, before he was assigned to oversee regulatory administration of the deal, but he had set aside those sympathies and had acted impartially during the process.

On Thursday, Cameron said he wouldn't be referring Hunt to be investigated for breaching the ministerial code of conduct, saying he acted properly while he was responsible for the BSkyB bid.

Asked whether Hunt would still be in his job at Christmas, Cameron said the culture minister had a very important job to do.

"We're about to welcome the world to the Olympics and I think the preparations which he Department for Culture, Media and Sport have overseen have been very, very good but there is still vital work to do...to make sure those games are a success and Jeremy Hunt is the right person to do that," he said.

News Corp.'s bid to take full control of BSkyB collapsed in July after revelations of phone hacking at News Corp.'s U.K. tabloid, The News of the World. Opponents of the BSkyB bid had said it would put too much control of the media in the hands of the Murdoch family company.

News Corp. owns a 39.1% stake in BSkyB. It also owns Dow Jones Newswires, publisher of this newswire, and The Wall Street Journal.

-By Nicholas Winning, Dow Jones Newswires; +44 207 842 9498; nick.winning@dowjones.com

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