Labour's strategy is to use this month's Budget debate to secure backing for commercialisation of the Post Office within the private sector, and to block 17.5 per cent VAT on fuel, due to come into effect next April. There are also signs that those Tories likely to rebel over Europe have not been chastened into submission by the Prime Minister's declaration that defeat on the forthcoming Bill to increase Britain's EU payments would mean a general election.
Yet another indication of discontent is set to surface this week when Sir Marcus Fox, chairman of the backbench 1922 Committee, faces re-election. Tory Euro-sceptics were furious when he warned, before Mr Major did, that the Bill would be treated as a confidence issue.
Tory divisions over the Post Office and VAT will be ruthlessly exploited by Labour. Andrew Smith, shadow Chief Secretary to the Treasury, will seek to put down two separate Commons amendments to be voted on during the five-day debate on Kenneth Clarke's 29 November Budget.
Mr Major will have to balance a new-found Cabinet zeal for firm government with the realisation that the ``nuclear option'' of threatening votes of confidence or withdrawal of the party whip should not be overplayed.
Labour's decision to engage in what Mr Smith called ``lightning warfare'' coincided with the leaking of a minsterial letter showing that a majority of the Cabinet industry committee rejected the option of greater borrowing freedom for a publicly-owned Post Office because it seriously undermined the Government's past approach to privatisation. Jack Cunningham, the shadow Trade Secretary, will challenge Michael Heseltine, President of the Board of Trade, about the document during a Queen's Speech debate today.
Three Tories voted against imposing 8 per cent VAT on fuel last year, but another 10 Tory votes now hang in the balance. About 20 Tory backbenchers forced the Government to drop plans for a 51 per cent sell-off of the Post Office.
Some ministers and Tory party officers are uneasy about increasing VAT. David Shaw, the vice-chairman of the Tory backbench finance committee, said the fiscal justification had ``gone by the wayside'' because of the Government's good handling of public finances.
Nicholas Winterton, MP for Macclesfield, said, about the Post Office, that it was not his job to support the Opposition but ``by the Government's lack of action, or their dogma, Tory backbenchers will be forced to support an amendment from elsewhere''.
John Carlisle, Tory MP for Luton North, said nine Tory backbenchers are ready to vote against the European Contributions (Finance) Bill or abstain.
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