Clarke pins poll hopes on tax cuts

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Chief Political Correspondent

The return of the feelgood factor was forecast yesterday by Kenneth Clarke on the eve of the 1p-in-the-pound cuts in income-tax taking effect.

Campaigning in the Staffordshire South-East by-election, Mr Clarke said the Conservative candidate, Jimmy James, should be the "first beneficiary of the feelgood factor" from the tax cuts in the Budget which he estimated would benefit average families by pounds 9 a week.

"It's a happy coincidence I am here the day before they get their tax reductions, which for family finances is probably the biggest benefit they have had so far," the Chancellor said. Clearly in a bullish mood, he added: "I enjoy campaigning, particularly when everyone agrees the economy is doing extremely well and is going to get better.

"Businessmen tell me how much better things are. Campaigning this year, we are going to meet people who are benefiting in their family finances."

But his remarks could prove a hostage to fortune on Thursday when Labour's candidate, Brian Jenkins, leader of the local Tamworth Council, is poised to take the seat and reduce John Major's majority to one.

The Chancellor left the Conservatives open to the charge that it is his economic strategy which will be on test in the by-election in which the Tories are defending a majority of 7,192 following the death of former Whip, Sir David Lightbown. The Chancellor said that Tamworth was "the heart of the country. This is where our message is going to get home.

"It is the sort of place that ought to vote Conservative - you only need to look at Tamworth to see," he said.

The local Chamber of Commerce, in its quarterly report, said three in five firms were reporting an increase in order book levels with more than half of the firms saying growth was set to continue.

Mr Clarke said: "The general election could be as far away as next May. We have a long period in which the economy will continue to revive. I think Jimmy James in Tamworth should be the beneficiary of the feelgood factor coming back into the Midlands."

But there was evidence around the Ankerside shopping centre he visited that the recovery is patchy.

He went to a jeans shop where he was told by Dawn Sedgwick, the manangeress, that business was "stable".

"He said we were in blue so we must be voting Tory. I am voting Labour," she said.

Katherine Brown, owner of Ragtime, a children's clothes shop, said: "The real economy is lower now than it was during the recession. The public have no confidence to spend."

She said the National Lottery was partly to blame. "We get midweek shoppers - the buggy-squad - who used to come out to pick up an outfit for pounds 4.99. Now they buy scratch cards."

As the Chancellor toured the shopping centre, he encountered all the Government's problems - an anti-European housewife, a pensioner complaining about the lack of government help and a man who challenged Mr Clarke to admit taxes had gone up under the Tories. Mr Clarke was also embarrassed by his own inflation when he refused to allow himself to be photographed having his tummy measured at the opening of an outsize suit shop.

5 General election, 1992: Lightbown, D (Con), 29,180; jenkins, b (Lab) 21,988; Penlington, G (LibDem); Taylor, J (SDP), 895; Con majority: 7,192.