Heseltine warns against rate cuts: Tories told not to lose their nerve

MICHAEL HESELTINE yesterday warned the Government against an inflationary boost to the economy to lift John Major and the Tory party out of the doldrums.

The intervention by the President of the Board of Trade will be seen as a shot across the bows of Tory colleagues who have been demanding a further cut in interest rates to offset the tax increases before they hit Tory support in April.

Warning colleagues 'don't lose our nerve', Mr Heseltine said on BBC Television: 'I think that the economic factors today facing the British economy are about as encouraging as I can ever remember, providing we don't do what has happened, time and again, since the war, when the currency has been devalued, which is to let inflation overrun our expectations.'

The pressure for interest rates cuts is likely to be heightened by the Bank of England inflation report tomorrow. Although inflation rose from 1.4 per cent to 1.9 per cent in December as a result of indirect tax increases, it will show the underlying rate of inflation is 'comfortably within the Government's target range', Eddie George, Governor of the Bank, said on LWT's Walden Programme.

Mr Heseltine was rallying round John Major's leadership, after further buffeting over weekend reports that Mr Major would not resign in spite of expected Tory defeats in the local elections in May and the European elections in June. Mr Heseltine said: 'I don't know of a political leader who has not gone through this sort of crisis in mid-term.'

John Smith, the Labour leader, launched his party's European and local government campaigns in Glasgow by emphasising Labour's economic competence. 'We have one simple message for the British people - Britain will be better off with Labour,' Mr Smith said.

According to a Gallup poll in today's Daily Telegraph, Mr Smith is rated higher than any Labour leader in opposition for decades. The proportion of voters considering him a good Labour leader has exceeded 50 per cent three times in the past four months. During Neil Kinnock's eight-year tenure his rating reached 50 per cent only once.

But Bryan Gould, a former Shadow Cabinet member, said Labour had abandoned socialism. 'We have given up supporting the interests of the workers and for peculiar reasons we have sided with the wealthy. I want to see us swap back,' he said.

Labour leaders were accused of 'shying away' from financial reforms to local government in a report by the Fabian Society.

It urges Labour to adopt local taxation, including a local sales tax, a tourist tax and a tax on dog ownership.

Beyond the Town Hall; Fabian Society, 11 Dartmouth Street, London SW1 9BN; pounds 3.50.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living