Middle-ranking ministers are speculating that the Chancellor, Kenneth Clarke, could herald big tax cuts by an announcement in July, paving the way for an autumn poll. The Government could not get through a Finance Bill implementing a giveaway budget because of the summer recess. But it could use the prospect of tax cuts as a launch-pad for an election.
Conservative Central Office sources played down the likelihood of an early poll. "From where we stand," said a Smith Square insider, "as far as strategy is concerned, because of the need to show that the economic policy is working, we are determined to go through to 1997."
The Labour leader, who is in Singapore on a two-day visit, said yesterday: "I increasingly think as I look at the Conservatives that, as the Labour Party prepares for government, they are a party preparing for opposition.
"They are a spent force. They are clinging to power. It is true that the Prime Minister does have a mandate to be in government, but to what purpose? They have no purpose. They have no direction.
"If the Conservatives really do have confidence in their own message, then the sooner they take it to the country the better. I don't see how they can stumble on like this for another 16 months."
When Parliament returns on Tuesday after the Christmas recess, the Opposition will seek to harry the Government as its Commons majority falls to only three - and perhaps down to one - in the coming weeks.
"We believe in the present circumstances we can run the Government very close on issues such as rail privatisation," said a Labour spokesman. "They have still got an inbuilt majority, but we beat them on Nolan [the requirement for MPs to divulge consultancy earnings] and on fishery policies, and we will seek to do the same again."
However, Labour does not plan to go for a vote of no confidence in the Government at this stage, arguing that this is the surest way of uniting the divided Tory back-benchers.
The Opposition will announce 1 February as the date for the by-election in Hemsworth, south Yorkshire, caused by the death of Derek Enright MP. Labour has an impregnable majority in this constituency and expects to take Staffordshire South-East from the Conservatives when the by-election for a successor to the late Sir David Lightbown takes place.Reuse content