Virginia Bottomley, Secretary of State for Health, warned the Treasury that she did not believe the Government would be able to get away with a further increase of 50p next April.
There was widespread anger when prescription charges were raised in April from pounds 4.25 to pounds 4.75. She was keen to avoid further damage to the Government's popularity before the election by seeking ways of limiting the charge.
Mrs Bottomley was interested in a proposal by the Commons select committee on health that the numbers entitled to exemption from the charges should be reduced, which could in turn allow a cut in the charge. But officials said the proposal had to be rejected when it was discovered that Mr Clarke had last year dismissed it as 'phooey', an intervention they described as embarrassing. The Chancellor was responding to Labour allegations that the Government was considering cutting the exemptions.
Tony Newton, the Leader of the House, told MPs in February that the number of exemptions was greater than in 1979 under Labour.
Exemptions include men aged 65 and over, women aged 60 and over, children under 16 years, pregnant women and women who have had a baby within the previous 12 months.
The Department of Health estimated that the prescription charge could be reduced to pounds 3 if all these exemptions were abolished, leaving only exemptions for patients in receipt of income support, family credit and some other welfare benefits.
His remark effectively ruled out any cuts in exemptions until after the next election, leaving Mrs Bottomley with less room for manoeuvre. Prescription charges have risen by more than 2,000 per cent since the Tories came to power, when the cost was 20p per item. Proceeds have risen from pounds 69m in 1979 to pounds 267m last year and the proportion of the NHS budget produced from prescriptions has more than doubled, from 0.3 per cent to 0.8 per cent.
Ministers believe that the public has become used to annual increases in prescription charges, but there may now be greater resistance to increases because of the current size of the charge.
Mrs Bottomley is guaranteed a real-terms increase in her budget for next year in the Treasury's spending review, but she is under pressure to increase the contribution from charges. She is also under pressure to reduce the cost of the NHS drugs bill, by allowing more items to be sold over the counter without a prescription, by allowing a limited expansion of generic prescribing by GPs and by cracking down on false exemption claims.