Lamont tells PM to keep faith on tax cuts: Former Chancellor has warning for Major and attacks 'leftist' successor

NORMAN LAMONT took a sideswipe yesterday at Kenneth Clarke, his successor as Chancellor, and warned John Major not to lose his nerve in the face of a stiffer test from a new Labour leader.

The former Chancellor told Mr Major to stick to the tax- cutting principles of Thatcherism on which the Tories had won four successive general elections.

While criticising Mr Clarke, Mr Lamont praised Michael Heseltine, President of the Board of Trade, for supporting privatisation of the Post Office and keeping a firm grip on the cost of the welfare state.

He told Mr Major bluntly that he would face a sterner challenge if the Labour Party elected a new leader who was 'more modern, fresher, forward-looking and better able to capture the anti-government vote in the south of England'. The Government would be under pressure to 'search for the middle ground'. But Mr Lamont said: 'My response is that we should fight on the policies that no Labour leader, however modern, can match.'

Setting out an agenda that will appeal strongly to the party right, Mr Lamont said: 'In every area, the Conservative Party must be radical or we will lose momentum.' He called for privatisation of the Post Office and the London Underground; tax cuts; more cuts in public spending on the welfare state through targeting; and cautioned against immediate cuts in interest rates.

His term at the Treasury had laid the foundations for economic recovery but 'economic recovery alone will not generate political recovery'. The Tory party decisively won the argument on tax in the 1979 election, Mr Lamont said. 'Nothing that has happened since then has altered my view that a tax-cutting party will always beat a party promising higher welfare spending.'

Mr Lamont underlined his concern at the left-wing tendencies of Mr Clarke. 'My successor recently talked about strengthening the welfare state. Fortunately, he later clarified this and said he did not favour further expenditure. That is just as well as the Conservative Party does not have the option of being in favour of expanding the welfare state and cutting taxes. The cost of increased welfare spending means higher taxes . . . and if you believe in expanding the welfare state, there is no economic or philosphical justification for cutting taxes.'

Mr Lamont was speaking at a press gallery luncheon at Westminster on the first anniversary of his resignation, when he told Mr Major that he gave the appearance of being 'in office, but not in power'. He refused to be drawn on whether his views on Mr Major remained unchanged, and stressed his loyalty to the Prime Minister. But his speech was seen as a clear signal that Mr Lamont will back Mr Heseltine against Mr Clarke if Mr Major does stand down.

(Photograph omitted)