Leading Article: Despite the temptations, Clarke stays prudent

Isn't it a relief to come down from the cold thin air of moral purity to the material world? In other words, to be back with the real business of politics, which means managing/manipulating the economy in your electoral interest. It was getting a touch crowded up there on the ethical high ground, not to say, at moments, a trifle nauseating. At least yesterday we were reminded, as Kenneth Clarke and Gordon Brown slugged it out, and interest rates slid up a quarter-point, that serious politicians know they should concentrate on battling over our pockets, rather than our consciences.

Those good old-fashioned questions about economic management, taxes and public spending are the ones that voters really care about. But that does not mean political morality is irrelevant. Far from it. Chancellors' decisions on interest rates, and on the distribution of tax and spending, raise all kinds of moral questions. Such as, is the distribution of wealth morally just? Are economic liberties fair? And do our political leaders make their judgements in the interest of protecting their own political skins, or in the interests of the people they govern? Judged by that light, Ken Clarke has behaved with an integrity demonstrably lacking in his predecessors. Of course, clever political strategist that he is, every judgement is weighed against its electoral impact. But he can properly claim to be steering the economy with probity, and doing the right thing for his party. It is his party's broader policy that, in some areas of tax and economic policy, lacks moral correctness.

Cutting taxes and boosting spending just before an election when the public purse is empty, is not ethical behaviour. Turning a blind eye to inflationary pressures, wise always to the negative impact of an interest rate increase before an election, Mr Clarke's predecessors failed to stop a boom (and its subsequent bust) in time. That, in fact, is not just bad economic management - it is immoral economic management. Failing economies hurt people: bankruptcies hurt, unemployment hurts, house repossessions hurt.

Mr Clarke, by contrast, has resisted the beguiling efforts of siren voices in his own party, which have been calling for low interest rates as well as low taxes to cheer up the voters. He could have got away with delaying rate increases until after the election, since inflationary pressures are not yet hitting us in the face. Yet he struck yesterday with a small rise to signal he is serious about inflation, and to avoid raising rates in future. Good for the economy, good for him, and actually probably rather good for the Tories, because Mr Clarke has calculated that a picture of upstanding propriety is going to be more effective for the Conservatives this time round than bribery, not least because voters may have got wise.

Gloom-mongers will warn that Ken Clarke could still throw all the good work away with unaffordable tax cuts in the next few months. That is certainly possible, but unlikely. We have been here before. With every prudent flicker of Mr Clarke's eyelashes we have qualified our praise with the fear that he might be about to break out in a rash of irresponsibility instead. He hasn't. And the chances are he won't in the Budget either. Mr Clarke has decided to define himself as the Grand Master of Prudential Economic Judgement, managing the economy in everyone's interests.

In consequence, he is looking a heavier weight than any of his surrounding colleagues, including the Prime Minister, because he not only has a strategy (most of them can't make up their mind on one) - it is also clear, well communicated and, like as not, right. But let's be careful not to deify the man. He hasn't made any great political sacrifice to achieve this record. Quite the contrary. Ken Clarke, the astute politician, has realised that the reason voters are not flocking back to the Conservatives as the economy grows is not lack of a feelgood factor, but lack of trust. The electorate doesn't have much faith in the Government's public assessment of the economy these days. Promises made on tax cuts turned into post- election tax increases; strong statements on the exchange rate mechanism deteriorated into Black Wednesday.

What of the rest of the Tory economic plot? The Government has avoided the painful task of making the current generation pay its fair share, rather than investing adequately in future generations. Whether it be insufficient spending on education to boost the potential of the economy, or failing to make the present workforce save enough for their retirement and long-term care, short-term priorities today are storing up problems tomorrow.

Meanwhile, dubious values underlie the kinds of tax-cutting that Mr Clarke reaffirmed his commitment to yesterday. The Conservatives want to abolish capital gains tax: in our unequal society, they want to make sure that the people who have lots of wealth keep even more of it. And the Tory ambition of eliminating inheritance tax is simply not compatible with the ambition for a classless society - indeed, it is a Tory hypocrisy.

Gordon Brown's elucidation of Labour's tax priorities in the debate yesterday set out a different set of values. By cutting VAT on fuel (supposedly to help cold pensioners) and asserting a long-term aspiration to introduce a new 15p rate for the low paid, Labour is aiming its tax cuts at the poor. The ethical symbolism is clear, even if in practice, as with cutting VAT on fuel, the policies are questionable in their effectiveness at achieving their object. The question for Gordon Brown will be whether, in a future government, he can stick with those objectives. Lucky chancellors like Mr Clarke find that the sensible political approach is also the proper economic policy; good ones time the move right. So far he has been lucky, and his timing yesterday was right. But we'll really know what he is worth when he sits down on Budget day in a few weeks' time.