Heseltine hints at breaking manifesto pledges: Chancellor 'will have to look at all options' to reduce pounds 50bn deficit

SOME Tory election manifesto commitments may have to be broken to reduce the pounds 50bn public deficit, Michael Heseltine, President of the Board of Trade, said yesterday amid ministerial disarray over taxation.

Mr Heseltine refused to rule out the possibility that Kenneth Clarke, the Chancellor, may have to raise income tax in the Budget, although that option was rejected by John Redwood, the Thatcherite Secretary of State for Wales. Mr Redwood said: 'Our manifesto said no to increased income taxes - it was right then; it is right now.'

Mr Heseltine said in a BBC interview: 'Those are the views that would be today held by the Cabinet, those are the manifesto views but . . . if you were the new Chancellor, you will revisit all the options and all the difficult

decisions.

'You will find in practically every case that there is a manifesto commitment which blocks off the options, and if you then say, 'Fine, we've made a manifesto commitment, all the options are blocked off,' well, I tell you, it won't be pounds 50bn defict we're dealing with next year, it will be a bigger one.'

The Prime Minister said in a Mail on Sunday interview he believed in the 'lowest possible taxation' and party leaders believe increasing income tax would be fatal for the Tories.

Mr Major also confirmed that invalidity benefit was a key target for cuts. But he failed to reassure right-wing Tories who fear Mr Clarke will ease the cuts in public expenditure by tax increases in other areas, such as extending the VAT base.

Mr Heseltine, asked why he was not being as coy as Mr Redwood, said: 'Well, he's a younger man. . . they haven't been through some of these traumas in the way that I have.'

Leading right-wingers dismissed reports that they had swung behind the Chancellor, due to deliver the keynote Mansion House speech tomorrow. 'It must be Clarke's friends putting it about. We are sticking with Major because of the fear of getting Clarke to replace him,' said one.

Mr Major conceded the threat. 'That is a matter for others, not me. . . . But I doubt it this year. I doubt it. Who can tell what is going to happen in years to come? I would strike out 'this year'. I would just say I doubt it,' he said.

The Tory right wants Michael Portillo, 40, as the eventual successor to Mr Major, 50. The Chief Secretary to the Treasury was said to be 'brilliant' at a private meeting last week with the 1922 Committee executive. Michael Howard, 51, the Home Secretary, appeared to dish the chances of Mr Clarke, 52. Speaking on BBC television, he said: 'I want John Major to be Prime Minister for a long time. I strongly suspect that when he makes way for someone else, he won't be making way for an older man.'

Colin Welch, page 18

Gavyn Davies, page 23