Leak puts Clarke in hot water

The Chancellor of the Exchequer, Kenneth Clarke, was left floundering on the ropes last night after taking a Commons battering over plans to cut state support for post-16 education and privatise the roads.

In dramatic exchanges with shadow Chancellor, Gordon Brown, Mr Clarke showed he clearly had not read a 123-page Treasury document that disclosed the plans.

He was so unprepared for the onslaught he could be seen furtively speed- reading the paper. He flicked through it backwards, concealing it within a blue Treasury file, and put it away again as if it were too distasteful to take in at one go.

After details of the paper had been leaked, Mr Clarke attempted to dismiss it as the work of "some kids in the office". He said dismissively: "It's quite entertaining, this document. It doesn't represent anything to do with government policy."

But in a Commons debate on the economy Mr Brown landed blow after blow on the Chancellor, defying him to deny two critical statements in the report, Strategic Considerations for the Treasury - 2000 to 2005.

The paper, in which proposals to privatise welfare benefits were mooted, said "consideration" was being given to:

n A proposal to transfer road ownership "to regulated private companies who would receive their income from road users".

n A reduction of "state support" for post-16 education on the grounds that rising demand was "unaffordable".

Chris Smith, Labour's social security spokesman, stated: "There is no way we would contemplate privatising the basic state pension, privatising unemployment insurance or privatising sickness benefit."

Labour is, however, examining plans which could lead to the privatisation of the rest of Serps, the State Earnings Related Pension Scheme.

Mr Brown at first demanded to know whether privatisation of the roads was under active consideration. Clearly flummoxed, Mr Clarke asked for a definition of privatisation, saying that the document did not define it. Mr Brown then defined privatisation in the terms given in the document and still got no answer.

The shadow Chancellor then challenged the Chancellor on plans to cut post-16 education. Mr Clarke could be seen hurriedly consulting William Waldegrave, Chief Secretary to the Treasury, who was sitting next to him on the Government front bench.

He got up to say: "I have not asked the grade 7 civil servant who wrote this ..." He added: "I didn't know this document was being prepared in the department."

Cabinet will today consider the next year's spending programme, including a tight cap on public-sector pay which is expected to be below 3 per cent, in contrast with this month's hefty pay rise for MPs and ministers.

Contract with Britain?

pages 2,3

Donald Macintyre, page 17