Economy blights Tory relaunch

Queen's Speech is overshadowed by rise in unemployment and fall in retail sales


Fresh signs of weakness in the economy yesterday blunted the impact of the Government's legislative programme announced in the Queen's Speech, and put even greater pressure on Kenneth Clarke, the Chancellor, to use this month's budget as the launch pad for a Tory political recovery.

The first rise in unemployment for two years and sharp falls in retail sales and in the value of the pound threatened to overshadow a Queen's Speech containing contentious measures on asylum, crime, education and housing, and intended to spearhead the Conservatives' "Autumn Offensive".

Tony Blair and John Major began to draw the battle-lines for a prolonged general election campaign in pointed and bitter Commons exchanges over a 1995-96 programme containing 15 Bills for what will be the last full session of Parliament before polling day.

While the Prime Minister said that the speech was a "common sense practical programme of traditional Conservative values", Mr Blair used one of his most effective parliamentary performances as party leader to claim that the programme was not "to help the people of Britain but to play a game in the run-up to the election".

In the fiercest clashes of the day, both Mr Major and the Labour leader accused each other's parties of playing the "race card" over the forthcoming and controversial Asylum and Immigration Bill, which is designed to reduce bogus asylum applications.

Mr Blair, whom senior Tories say will suffer electoral damage if Labour opposes the measure, called for the Bill to be referred to a special standing committee that could call expert witnesses and be "a genuinely consensual exercise in getting at the truth".

Mr Major said that while he would consider the request, he was not immediately "attracted" to the idea. In a strong defence of his own record on race relations, he promised that "genuine asylum cases will always receive a ready refuge in our country" and said that "those who attack this Bill, as Mr Blair did, do our excellent race relations no service whatever".

In an unusually aggressive speech attacking advance ministerial warnings that the speech contained measures intended to "smoke out" Labour, Mr Blair successfully taunted the massed ranks of Tory backbenchers for not challenging him with parliamentary interventions. A further cloud was cast over the Government's political fightback yesterday when Sir Julian Critchley, the Tory MP for Aldershot who is retiring at the election, announced that he would not be voting Conservative for his own MP in Ludlow, the Euro-sceptic Christopher Gill. In a notably unhelpful article in the London Evening Standard, Mr Critchley warned that the Tories would probably be in opposition for at least eight years, and added that defeat could leave the party an "unattractive blend of English nationalists, radicals and populists".

Yesterday's figures have intensified the pressure on the Chancellor to come up with a credible budget that will allow him to reduce interest rates without causing a run on sterling.

Today's figures for the public borrowing requirement, which in the first six months of this financial year has been running ahead of the deficit in 1994, will provide vital clues concerning to the state of the public finances and just how much he can afford to cut taxes on 28 November.

However, the Chancellor may get a fillip from today's inflation figure for October, which is expected to show a fall from 3.9 per cent to 3.7 per cent, as the cuts in mortgage rates made by the building societies feed through and the effects of increases last year drop out.

There were scarcely any surprises in the Queen's Speech itself. But Mr Major said that the Divorce Bill, which is expected to meet stiff opposition from the Tory right, will be taken on a free vote.

The Prime Minister also announced a new initiative on drugs to secure European Union funding to help the Caribbean states prevent themselves from being used as staging posts for drug traffic from Latin America to Europe.

In an oblique reference to Leah Betts, the student who has been in a coma since taking ecstasy, Mr Major said that "only in the last few days we have seen ... a tragic case of how drugs can devastate a family".

The 16 Bills designed to help Major's recovery

Reserve Forces Bill

Tidying up law, plus a new power of call-up for disaster relief and peace- keeping

Chemical Weapons Bill

To ratify the Convention to ban making and use of chemical weapons

Northern Ireland (Emergency Provisions) Bill

Renewal of emergency powers, this time, more temporary than usual.

Broadcasting Bill

To regulate new digital technology and allow bigger TV-newspaper companies

Channel Tunnel Rail Link Bill

Would allow private sector to build, maintain and operate high-speed railway between Folkestone and St Pancras, in London

Nursery Education Bill

Vouchers for part-time places for four-year-olds

Grant-Maintained Schools Bill

Powers to borrow against "non-core" assets

Student Loans Bill

To allow students to obtain subsidised loans from high street banks

Education (Scotland) Bill

Would introduce nursery vouchers north of the border and reform "Highers" (Scotland's A Levels)

Asylum and Immigration Bill

Assumption that asylum seekers from "safe" countries are bogus

Security Service Bill

MI5 to fight organised crime

Criminal Trials Bill

Defence lawyers to disclose broad outline of their case in advance

Housing Bill

Lone mothers would not get priority for council housing but right to buy for some housing association tenants

Health Service Ombudsman Bill

Wider powers to consider complaints about doctors and other clinical professionals

Community Care Bill

Some disabled people would be given cash to buy their own community care

Family Law Bill

"No fault" divorce, new emphasis on family mediation, new framework of protections from violence