I think it will be more responsible than any other member of the Cabinet would produce ... but it will not meet the needs of the moment.
The one blot on his copybook is this tremendous deficit. Anything he does which is responsible will repay him. He can cut our deficit without stopping activity.
He has to be very cautious. If he can't cut spending, then he can't cut taxes. My advice would be that Ken should go for virtue, not for vote- purchasing.
If it's a choice between maintaining interest rates or putting them up and cutting taxes, maintaining interest rates must be the priority.
Can Chancellors win elections by being prudent? Did Reginald Maudling's electioneering "dash for growth" budget actually help the Tories to defeat in 1964? And did ' austere and orthodox budget all but win it for Labour in 1970?
If you believe the exclusive club of ex-Chancellors, then the answer to all three questions is "yes". They all recommend that Ken Clarke resists the temptation for a big tax giveway tomorrow.
According to Lord Jenkins, the Chancellor should apply "a slight touch of the fiscal brakes. If he thinks he's emulating me, he'll do just that," he says. Lord Jenkins gave away about pounds 200m in 1970 - the equivalent of around pounds 1.5bn now.
He admires Mr Clarke for publicly resisting the "vulgar" demand for deep pre-election tax cuts and says he is as good a Chancellor as this Government will allow. But he thinks tomorrow's Budget will be "a compromise between the irresponsibility that most members of the Cabinet want and what I am advocating."
The most extreme advice - to raise taxes other than income tax by a net pounds 5bn - comes from Lord Healey (1974-79), who has more than a sneaking regard for Mr Clarke. (And scarcely any for John Major: "What do you do if you see a pin flying through the air? Look for John Major with a hand grenade in his mouth.") Mr Clarke reminds the old bruiser "very much of a feller called Denis Healey. He's got many of Healey's strengths and many of his weaknesses. I used to blurt a lot though I didn't make silly mistakes like thinking that Consett still produces steel."
The 1978 Healey budget was designed as a pre-election one and he vainly advised Lord Callaghan to go to the country in that year. It put pounds 2.5bn - or pounds 5bn in current values - over a full year into the economy.
But Lord Healey cautions Mr Clarke against doing anything similar. "His biggest problem, the one blot on his copybook, is this tremendous deficit. Anything he does which is responsible will repay him. He can cut our deficit without stopping activity." Lord Healey wants the abolition of tax breaks for Profit-Related Pay, and of Mortgage Interest Tax Relief - a relief which he says "is very difficult to justify", particularly as the housing market is on the move.
He wants increased taxes on North Sea Oil and more taxes on petrol "which are very much needed for environmental reasons as well as for money". And he wants to end the "imputation system on dividends". Asked what on earth that is, Healey replies with all his old bluntness: "Look it up." (It turns out to be a relief on advance tax paid by companies on dividends, held to encourage firms to distribute profits rather than use for them for investment.)
Even Lord Howe (1979-1983) - judged by Edmund Dell, the most recent historian of post-war Chancellors, as the most outstanding - allowed himself a bit of a spending spree before the 1983 election. But Lord Howe sums up his advice with just nine words: "Ken should go for virtue, not for vote- purchasing."
Norman Lamont (1990-93) also recommends a "tight budget", adding: "He has to be cautious. There are two risks. On borrowing, there were good figures for last month but the trend of the PSBR has been disappointing."
The other problem is inflation. Like all the others Mr Lamont believes the priority is to keep the recovery going without having to hike interest rates up to unacceptable levels. And that means a "tight" budget. Mr Lamont adds: "Inflation has increased. If it's a choice between maintaining interest rates on the one hand or putting them up and cutting taxes on the other then I think maintaining interest rates should be the priority."
So, caution all round. It all goes to show that there's no-one so prudent as an ex-Chancellor.Reuse content