Chancellor rules out increase in income tax: Clarke 'will keep manifesto pledges', reports Patricia Wynn Davies

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KENNETH CLARKE, the Chancellor, last night hardened his stance against raising income tax to reduce the public-spending deficit, insisting that there was still room for substantial savings on expenditure.

'There's an awful lot to go at in Whitehall still, particularly when we've so expanded public spending as we have over the last 13, 14 years,' Mr Clarke said during a BBC 2 Newsnight interview.

Nor would manifesto pledges be broken to bring the deficit under control, Mr Clarke insisted. 'We are committed to inflation-proofing the pension. We have committed ourselves to protecting pensioners,' he said.

Speaking on the eve of today's annual Cabinet review of overall spending control totals, Mr Clarke also insisted that there would be no 'charging people to go to hospital' - 'that's not on,' he said - or pre-

scription charges for pensioners. 'That's not on, quite definitely not on.'

The Government was committed to the manifesto, he said, adding that he did not agree with recent statements by Michael Heseltine, the President of the Board of Trade, that some pledges might have to be re-


'We are committed to a manifesto . . . I personally intend to stick with the manifesto that I helped to write,' Mr Clarke said.

Pressed on whether the fairest way of finding the money to do so while tackling the pounds 50bn public spending deficit was through higher income tax, Mr Clarke said: 'The idea that all this expenditure is inescapable, that when your spending soars ahead of the revenue you've got, the only thing you can do is tax business, tax income . . . I don't believe that.

'You have actually to begin by constraining your spending to what you can afford.

'I think most people listening to us know perfectly well that in the end governments are in the same position as any other large organisation. You cannot spend money you haven't got.'

But, he went on: 'I do not believe we should put up taxation at a time when we have a modest recovery from recession because the Government is not capable of controlling public spending.'

Mr Clarke also ruled out outright abolition of mortgage interest tax relief for home owners: 'You try telling some young couple buying a house for the first time that this is a middle- class perk that they're enjoying . . . the idea that we are going to abolish the relief altogether is unlikely.'