Clarke targets Middle England

COLIN BROWN

Chief Political Correspondent

The Chancellor yesterday warned the conference that cuts in public expenditure to pay for tax cuts could mean changes in policy.

Urging his party to support the spending cuts, which will be announced with the Budget in November, Kenneth Clarke said "controlling spending requires policy change as well".

He also reaffirmed the Government's priority to low inflation at the heart of its economic strategy. Mr Clarke sought to offer the hard-pressed Tory voters in "Middle England" the prospect of rewards in the Budget.

But he was given a lukewarm applause at the end of a debate on the economy that exposed some of the widespread unrest in the party over the past increases in taxes and the plight of home buyers.

He was given a dutiful standing ovation, with Baroness Thatcher and the Prime Minister symbolically side-by-side on the platform for the first time, but it registered one of the lowest readings of the week on the Independent's clapometer.

Facing calls from the hall for tax allowances for housewives, and the restoration of mortgage tax relief for home owners, Mr Clarke said many felt "the time has come for some reward in the next Budget".

Using the words of Francis Urqhart in The House of Cards to confirm their hopes would be fulfilled, Mr Clarke went on: "You may think that - but I couldn't possibly comment."

The Chancellor made it clear he would direct his Budget at "Middle England" and his speech targeted the demands for help in nearly 200 motions for the economic debate.

"It will be a Budget based on traditional values. It will be a Budget that I am looking forward to a lot more than the last two," said Mr Clarke, who raised pounds 3.9bn in taxes in 1994.

"It will be a Budget that addresses Middle England, and Middle Wales and Middle Scotland and Middle Ulster.

"The people who are hard-working and self-reliant. Our people who want to get on. Our people who take responsibility for themselves and for their families. Our people who want to give their children a better start than they had themselves." Mr Clarke added: "Cutting the tax we want to cut can't be done all in one go. It must not be done thoughtlessly and it must be the start of a process continuing into the future.

"We will only cut taxes when it is in the interests of the British economy to do so. The British people are a responsible people who would not want it any other way. So when we cut taxes, it will last. When we cut taxes, it will be for keeps. Mr Blair is terrified that we might be able to cut taxes."

The Labour leader was "just the smile on the face of the Labour movement", he said. Real Labour, behind its grinning leader, was "gritting its teeth and biting its tongue till after the next election".

Mr Clarke urged supporters to write to him with evidence of Labour spending pledges, and made it clear the Tories will seek to repeat the 1992 election campaign against Labour's alleged "tax bombshell".

In the debate, Edward Russell (South Shields) said that the 10 per cent cut in Miras had caused "a great slump in our popularity".

A three-year rolling programme of tax cuts, starting in the next Budget, was demanded by Robert Guy (Richmond). Pauline Blow (West Midlands) said married one-earner families were at a disadvantage compared to two-earner parents and single parents. "Transferable tax allowances would help," she said. "We are asking you to give one-earner couples the tax advantages that dual-earner couples have."

John Godfrey, a former ministerial adviser, was heckled when he urged the Chancellor to adopt Gordon Brown's plan for a windfall profits tax on the privatised utilities. "Shame," shouted one representative, showing Mr Clarke he will have no easy choices.

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