Clarke in pledge to cut taxes

A CLEAR pledge to cut taxes once borrowing is under control came yesterday from Kenneth Clarke, in a pre- emptive strike before Labour's key debate on the economy at its party conference on Monday.

The Chancellor moved to reassure his party's grassroots with a promise that taxes would be 'cut once we can sensibly afford to so'. As the Opposition mounted a fresh onslaught on the tax increases in the last two budgets he said it was a 'question of not whether but when' taxes would start falling again.

But Mr Clarke again firmly ruled out cuttting taxes in the next budget or 'before we can sensibly afford to do so'. He added that the 'public will only be impressed by tax cuts if those tax cuts are based on solid economic performance'.

Mr Clarke's letter to Tory constituency chairmen came as Labour sought to exploit today's implementation of the 2.5 per cent insurance premium tax, claiming that growing numbers of people in high-crime areas could abandon escalating home cover.

The Chancellor's move, aimed at placating an increasingly disgruntled grassroots in the run-up to the Conservative conference the week after next, comes in the face of an unremitting Labour campaign to portray the Tories as the 'tax and spend' party.

Mr Clarke's letter said: 'I can promise that tax cuts will come - and it is a question of when not whether - once borrowing is firmly under control.'

Keeping a grip on public spending in turn required a 'realistic approach to public sector pay', he emphasised.

Motions for the Tory conference have left the Chancellor in no doubt of rank and file anxiety over tax increases and the wish of many to see VAT on household fuel pegged at 8 per cent. He has already ruled out tax cuts in this November's Budget.

In implicit recognition that Labour's campaign has borne fruit, Mr Clarke accepted in the letter that the party had to 're-establish' with voters that the Tories would deliver tax cuts when the country could afford it.

Harriet Harman, shadow Chief Secretary to the Treasury, used today's introduction of the new insurance levy to recall Mr Clarke's own admission, in a grilling by a Commons committee last December, that taxation increases in the two 1993 budgets equalled a 7p rise in the basic rate of income tax.

Concluding Labour's week- long 'Tory tax and spend', she told a Westminster news conference that the new tax, in force from today, would add pounds 13.90 to the average family's annual household and car insurance bill, which at pounds 556 was already 20 per cent higher in real terms than five years ago.