Brown says made mistakes before elections

Prime Minister Gordon Brown acknowledged he had made mistakes on Wednesday, the eve of his first major test at the ballot box.

Brown's popularity has crumbled over the past six months after the fallout of the credit crunch damaged his reputation for economic competence built over 10 years as chancellor.

The Labour Party is expected to suffer at elections for some 4,000 seats on 160 English and Welsh councils on Thursday when even the high-profile position of London mayor could go to the Conservative Party.

A poor showing will increase speculation about a possible challenger for the Labour leadership less than a year after Brown took over from Tony Blair.

Economic news on the eve of the elections painted a grim backdrop for Brown. House prices showed a year-on-year fall this month for the first time in 12 years.

The consumer mood is the bleakest since the 1992 slump when the then-Conservative government lost its reputation for economic competence, two separate surveys showed.

"My aim and my priority is that we can lead the people in Britain through this economic problem and do so by taking the right decisions to get liquidity to the banks, to make sure that the housing market starts moving again," he told BBC radio.

A Bank of England policymaker said on Tuesday there was a real danger of the British economy following the United States into recession and house prices falling by more than 30 percent, political dynamite in a nation where two-thirds own their homes.

MAKING MISTAKES

Unusually, the prime minister struck a note of contrition and said he had made some mistakes over the abolition of a 10 percent tax band that had been designed to help the poor.

Anger over the change sparked a rebellion in his own party, undermining his authority and forcing him to make concessions last week in the form of handouts for people who lost out.

"We made two mistakes," Brown said.

"We didn't cover as well as we should have that group of low paid workers and low income people who don't get the working tax credit, and we weren't able to help the 60- to 64-year-olds who don't get the pensioners' tax allowance."

The row over the 10 percent tax rate could hit Labour in its stronghold urban areas although the party did disastrously in local elections in 2004 under Blair, which will make it difficult for them to do much worse.

Labour went on to win a third successive term in a national election in 2005. Voter turnout at council elections is typically about 30 percent, half that at a parliamentary poll.

Brown does not have to call a national election until 2010 and is hoping for an economic rebound by then. He is also expected to announce a raft of measures over the next few months to show Labour still has drive after 11 years in power.

The Conservatives are well ahead in the polls after an initial bounce following Brown's accession to the top job evaporated after he was perceived to dither over calling an early election and forced to nationalise a failing bank.