Clarke to resist Tory clamour for tax cuts

BY COLIN BROWN

Chief Political Correspondent

Kenneth Clarke will resist growing right-wing pressure for a commitment to tax cuts spread over three years as new divisions emerged yesterday among the Tory leadership.

The call for a reduction in taxation to be announced in advance of future Budgets appeared to get the backing of the party chairman Jeremy Hanley, but Michael Portillo, the Secretary of State for Employment, pointedly refused to give his support.

The rolling programme of tax cuts, aimed at convincing the electorate the Tories can deliver, will be pressed on the Chancellor tomorrow by the Tory backbench finance committee. The MPs see tax cuts as the trump card needed to win over growing cynicism among voters.

It will gain no sympathy from Mr Clarke, and Mr Portillo refused to give it his support in spite of being repeatedly asked to do so on LWT yesterday. Pressed by Jonathan Dimbleby on whether he agreed with Mr Hanley, Mr Portillo said: "Look, I don't know ... These matters are settled in a Budget - and a Budget is a matter which is devised by the Chancellor in consultation with the Prime Minister."

Mr Clarke will be urged by senior backbench Tory MPs to cut up to £10bn from public expenditure to make progress on the commitment to cut 5p off the standard rate of income tax of 25p in the pound. Tory strategists said it would leave Tony Blair with the dilemma of adopting Tory tax cuts, or going to the election pledged to reverse them.

Gordon Brown, the shadow Chancellor, said it was "hypocritical" to be dangling the carrot of tax cuts, when taxes were increased from 1 April at a cost of an extra £1.10 per week for the average family

He said: "Is it any wonder that Mr Portillo admits the Government is in crisis when the chairman of the party is promoting three tax cuts, Michael Portillo refuses to back him and the Chancellor remains silent?"

The "new agenda" announced by John Major ahead of his departure to the US, where he will meet President Clinton, was seen as an attempt to head off a leadership challenge.

Mr Portillo yesterday ruled himself out of any contest for the leadership and warned plotters on the Tory right that a challenge to the Prime Minister would risk the credibility of the party. He said: "I have absolute confidence in [John Major]. I believe he will continue to be the leader until the next election and will lead us into the next election. I think that would be, I am sure that would be, the view of every single member of the Cabinet. He has our complete support."

However, Mr Portillo refused to rule himself out for the leadership if Mr Major were to stand down.

Some right-wingers were plotting to bring Mr Major down by sending a delegation to tell him he had lost the confidence of the party after the elections. Teresa Gorman, one of the nine whipless Tory MPs, said the group wanted the whip to be restored before the local elections. "We [whipless Tories] are going to get the blame if the elections go wrong."

Mr Portillo conceded the local election results would be "bad" for the Tories. Senior Conservative sources have told the Independent that the party is planning to regain the initiative after local election defeats, by using the annual party conference in October as a launch-pad for the election, as it did in 1986 with the "next step forward" agenda.

A leading Euro-sceptic in the Cabinet, Mr Portillo raised eyebrows among colleagues by saying the Tories would have to clarify their stance on the single European currency in the election manifesto.

Mr Clarke has been fighting to keep open the option of joining the single European currency and will resist any attempt to close it, or to opt for a referendum.

Conservative aides said the "new agenda" (see above) outlined by Mr Major was a "new phase not a new face" for the party. A truer description may have been a face-lift. The old face of the Tory party, which has begun to sag after 16 years in office, is being given a nip and tuck by the spin doctors. Tory aides said they wanted to get across the message that the party was "bubbling with ideas" and issued a list of 25 "policy developments" in the Prime Minister's speech."We are not reinventing our values," said a senior party source

It looks, however, as though they may be "reinventing" old policies. Setting aside some of the items, which are no more than "apple-pie" objectives to improve services to industry, small business, improving training and cut red tape, the Prime Minister's list boiled down to 16 policy pronouncements. Only one is new.