Clarke resists calls for an early poll

Better economic news, beef jingoism and a change in the national mood over the summer are encouraging some Tories to talk about a tax-cutting Budget and a snap election later this year.

With further possible defections in the Commons and uncertainty over Northern Ireland, John Major may yet be forced to go early. But a Gallup poll today shows that the "beef factor" is not helping the Tories. The gap with Labour has widened by 3.5 per cent.

Tentative plans have been laid for a quick manifesto and a sudden campaign. But with the Government so far behind in the polls, the Cabinet is largely hostile.

Kenneth Clarke, as a strong advocate of a late election, will be in a relaxed mood when he gathers his Treasury team today to discuss strategy for the Budget. And, with the cutin interest rates and evidence of consumer recovery, he has some reason for self-congratulation.

On BBC radio yesterday, he said: "What is going to win this election is that we are running a good market economy. Handing this lot on to Gordon Brown would be the silliest mistake the British public can make." But Tory backbenchers do not share his optimism.

While the Chancellor plans for a "steady as she goes" Budget, many are growing increasingly agitated. They believe his red Budget box is their last hope of winning the election, and fear that when he flips it open to a waiting world this autumn, it will be empty.

Their worst fears were compounded by the Treasury's discovery that its forecast for VAT receipts were pounds 6bn off the mark. And last week the the OECD reported that growth is likely to be about 2 per cent, 1 per cent less than forecast.

This may have been responsible for the Chancellor's decision to snip interest rates by a quarter per cent yesterday. That is feeding through into lower mortgage rates and higher consumer spending. If the recovery continues, the "feelgood factor" may be rediscovered by polling day.

After all, says Mr Clarke, before the 1992 election, base rates were around 10 per cent, housing prices were slumping, and retail sales were more depressed, and Major still pulled it off. All he needs is his trusty soap box.

But many MPs also fear the beef crisis has shown John Major's Government is accident- prone and may not survive the winter without other unexpected mishaps to his majority.

But Mr Major is determined to go on until May next year. He has stout backing for the "play it long" policy of Brian Mawhinney, the party chairman, and the Chancellor, and probably the whole Cabinet. But there is a Doomsday scenario being talked about by the Thatcherites. They are in fatalistic mood: if they are going to lose, why not go out with a bang by cutting taxes by 3p in the pound?

That would leave Mr Brown to clear up the mess, and every chance that a Blair government with a tiny majority could be out of office in 18 months. The danger, they fear, is that by being prudent, the Chancellor will hand Mr Blair the golden scenario of sustainable growth, with which he could go back to the country.