Hurd underlines need to tackle budget deficit: Foreign Secretary makes a rare intervention into domestic politics. Patricia Wynn Davies reports

THE NEED for the Government to tackle the pounds 50bn public spending deficit was underlined yesterday by Douglas Hurd, the Foreign Secretary, in a rare departure from his normal brief into domestic politics and the economy.

Mr Hurd appeared to underline the Prime Minister's 'singing from the same hymn sheet' edict on Thursday, while donning a Willie Whitelaw elder statesman-like mantle.

Baroness Thatcher, when she was Prime Minister, used to turn to Mr (now Lord) Whitelaw for measured political advice.

Sticking impeccably to the hymn- sheet, Mr Hurd avoided mention of tax increases to help cut the deficit.

Untrammelled by the hymn-sheet, Lord Lawson, the former Chancellor, yesterday cast doubt on 'going for growth' in the economy - the option apparently favoured by Kenneth Clarke. Next year's public spending total will rise by more than double the rate of inflation, suggesting Mr Clarke is seeking to pay for expenditure through growth.

Such a policy would produce a sudden spurt of inflation, Lord Lawson warned. Inflation might be dormant, he said, but 'don't let anybody tell you the dragon of inflation is dead. It is highly likely to wake up.'

Professor Sir Alan Walters, Baroness Thatcher's personal economic adviser and a former thorn in Lord Lawson's flesh, was also critical of the new Chancellor yesterday.

Sir Alan called in a television interview for 'a really tough Chancellor', such as Michael Howard or Michael Portillo.

'Mr Clarke has very little knowledge of economics or finance and seems proud of that. I doubt he has the sort of spine that is needed to control the books. I doubt whether he has the drive, really, to look ahead and do what is necessary with public spending,' he said.

Sir Alan added that he did not know whether Baroness Thatcher shared his views.

Mr Hurd told a meeting of Kidlington Conservatives that the pounds 50bn debt was 'not just a cyclical effect. Tax receipts will go up during the coming years as the economy recovers.

'But to make a real impact on the deficit we must keep tight control on public spending. The system will stop delivering if we overload it. That is why we have to set out the case clearly for curbing public spending.'

He continued: 'The Government is now taking a hard look at its spending priorities. That work is proceeding in a careful and measured way under Michael Portillo. He has said that a clear distinction will be drawn between essential, high priority spending and avoidable spending.

'When the time for decisions comes, in the autumn, they will have to reflect clearly explained priorities and they will have to be fair and be seen to be fair.'

Mr Hurd also seized the opportunity to repeat calls for party unity over Europe and extol the 'intelligent and steady' leadership of John Major.