Government determined to hold firm on economy: The Chancellor disappointed many Tories yesterday by maintaining in a newspaper article that there is no alternative to his strategy. Colin Brown reports

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The Independent Online
TINA was brought back to life yesterday by the Chancellor of the Exchequer, Norman Lamont. He relied on Tina - there is no alternative - to reject demands by the Government's grassroots supporters and by business for a change in economic strategy.

Despite misgivings among the Tory constituencies, Conservative MPs last week showed remarkably firm support for the Chancellor in rejecting a quick fix. They rejected devaluation, and were ready to give guarded support to cuts in public spending in the autumn.

That may put them at odds with their own grassroots support, leaving John Major with the task of persuading doubters to put their trust in the Government and Tina. May this signal a return to Thatcherism, which spawned Tina?

The new intake, inspired by Thatcherism, are regarded as 'Thatcher's Children'. Possessing the zeal of the converted, they may help to stiffen the resolve of the back bench to take more pain.

But it is the supporters of John Major's style of Conservatism who are pressing for the Government not to give in to the siren calls for a change of course, and it is the Thatcherite old guard which is calling for a cut in interest rates, even if it means devaluation.

Mr Major, as Chancellor, coined the phrase 'if it isn't hurting, it isn't working', and Mr Lamont, said unemployment was a 'price worth paying' for the defeat of inflation.

The underlying reason for their support appears to be the line given before the recess by the Prime Minister. He extolled the virtues of Tina in a clever steadying operation before the MPs were sent on their holidays.

The effect would have worn off quicker than their sun-tans if the MPs had had more faith in the alternatives. But they genuinely appear to be prepared to endure more economic pain for the promise of sustained recovery.

They have they learned to believe that John Major means what he says. Some say the David Mellor episode has strengthened the perception of the Prime Minister as someone who sticks by his word - and his friends.

When Mr Major came into office, one of his strengths was his flexibility: he ditched the poll tax, and settled a long-running battle for compensation for the HIV-infected haemophiliacs. His readiness to listen, seen as a virtue initially, quickly became a problem. There was talk around the back benches that he was becoming a 'soft touch'.

The theme of Mr Major's administration could well be established this autumn. The coming public expenditure cuts will provide abundant evidence of his readiness to say 'no' and to take unpopular decisions.

There are clear signs that the Treasury will have to revise its hopes of balancing the budget over the economic cycle. With receipts falling and unemployment costs expected to continue rising, the Public Sector Borrowing Requirement is in danger of running out of control.

The danger for Mr Major and the Tory Party is that, if the economic cycle is out of kilter with the electoral cycle, they will not be able to deliver the recovery in time for the next election. According to a straw poll by the Independent of 40 MPs last week, the majority of Tory backbenchers are prepared to put their trust in Tina.

But politicians also change their minds. There is a strong possibility when they return to Westminster, they will be anxious for action.

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