Inside Parliament; Chancellor paints a rosy picture of the economy

Clarke's lifeline for Middle England Brown reminds House of bleak times

Two rather different pictures of the British economy were painted in the Commons yesterday. An ebullient Kenneth Clarke predicted 1996 would be the year when Middle England at last felt the benefits of the recovery while his Labour shadow, Gordon Brown, dwelt on new evidence of widespread job insecurity.

Ministers increasingly see the economy as the Conservatives' best electoral asset. The debate was scheduled by the Government in order to highlight the improved prospects and to embarrass the Labour Party over its apparent lack of an alternative strategy.

But though the Chancellor said he was able to paint a "rosy picture" because that was what he expected, the exercise was blunted by Tory Euro- sceptics, abetted by the Opposition, who were miffed by Mr Clarke's latest expression of sympathy for a single currency.

Mr Brown also exposed a degree of amnesia in both the Chancellor and Ian Lang, President of the Board of Trade, over their own words and deeds. Mr Clarke could not name the "better programmes" he claimed would replace the Community Action Programme, set up to help 30,000 long-term jobless and to be axed at the end of this month.

And Mr Lang seemingly could not remember what he had actually said about job insecurity being only in the mind. Challenged by Mr Brown to apologise for the remark, Mr Lang claimed he had not said it, but when asked for the correct quote he stayed mum.

Malcolm Bruce, for the Liberal Democrats, said he believed Mr Clarke was using the debate to trail an interest rate cut. But he warned: "If interest rates are cut later this week it will not be because of the strength of the economy but because of its weakness." Government borrowing was "out of control", he said. "The Chancellor's good intentions only go so far and when the chips are down he runs into the buffers of political opportunism."

Opening the debate, Mr Clarke maintained that the "clear red water" between Labour and modern enterprise economics was as wide as ever. "They would tax and they would spend and they would let inflation rise. In the 1990s there is still no alternative to the enterprise economy we are creating. We haven't created our present prospects in order to hand them over to yesterday's Wilsonian men."

The economy was facing the most favourable circumstances any MP could remember, Mr Clarke said. Conditions for firms to invest had "rarely been better" and because inflation was under control he had been able to reduce interest rates to historically low levels.

He predicted that 1996 would be the year when the ordinary citizen would begin to feel the real benefit of economic recover. "Now Middle England will begin to see in 1996 that our promise of greater prosperity and more jobs without a return to boom and bust is beginning to be delivered."

With mortgage rates at their lowest level for nearly 30 years and house prices, in relation to incomes, at their lowest level for over a decade, there would be "bargains for first time buyers".

Increased consumer spending would be the main source of growth in the economy. His only departures from what Labour's Denis MacShane called a "fantasy" were over the European single currency, unwillingly, and a passing nod to job insecurity.

Mr Brown said the best barometer of the feel-good factor was the decision of 52 Tory MPs to retire at the next election and the attempt by 13 other to quit their marginal seats for a "not yet" marginal seat.