Clarke plays it prudent over tax cuts tax

Inside Parliament

Kenneth Clarke shrugged off a call for an independent audit of Government borrowing forecasts yesterday as he faced the Commons within hours of the disclosure that public borrowing for 1995-96 was pounds 3bn more than the Treasury expected.

With Question Time for Mr Clarke and his team coinciding with publication of the awkward figures, the Chancellor found his economic forecasting compared with that of his prediction of a Conservative victory in the SE Staffs by-election. [The Tories lost by 13,000 votes.]

Last month the Treasury had to borrow pounds 9.6bn to bridge the gap between its income from taxes and public spending. Though the figure was slightly less than expected in the City, it took the Public Sector Borrowing Requirement (PSBR) for the financial year just ended to pounds 33.2bn - pounds 3.2bn more than Mr Clarke forecast in the November Budget.

Recalling the misplaced by-election optimism, Gordon Brown, the shadow chancellor, said Mr Clarke's borrowing forecast for the next Budget should be subjected to an independent audit "so that the Conservative Party can never mislead this country about tax and borrowing again".

Mr Brown said that Tory forecasts on borrowing over the last four years had been exceeded by pounds 46bn.

Unbowed, the Chancellor said Mr Brown's history of forecasting was "dreadful"

"He advised his party not to vote against the tax cuts that I was able to introduce in the last Budget - one of the few wise decisions, indeed of the few decisions of any kind, that he has ever taken."

Next year's borrowing requirement would be below pounds 30bn, Mr Clarke insisted. "It is quite clear the borrowing requirement is on a downward path towards balance in the medium term."

He had predicted inflation would move towards 2.5 per cent and the basic rate of tax would move towards 20 per cent.

With Tory rightwingers including John Townend, chairman of the Thatcherite 1992 Group, continuing to demand spending cuts to make room for a tax give-away, Mr Clarke stuck to the "prudence" formula. "It would be wrong to attempt to buy the next election by irresponsible tax cuts," he told Labour backbencher Chris Mullin who described the Chancellor as being from the "civilised wing" of the Tory party.

Prominent members of the other wing - the "mean-minded" wing in Mr Mullin's judgement - were busy outside the Commons making common anti-Euro cause with fishermen who sailed their trawlers up the Thames to protest about the Common Fisheries Policy.

John Redwood, last year's Tory leadership challenger and MP for distinctly non-maritime Wokingham, told a rally there was "a smell of brine in the air" and made to beat Drake's drum. "If we cannot get justice in Europe then we must assert our right to govern ourselves," he said.

In the Commons, a real fishermen's representative, David Harris, Tory MP for St Ives, raised their plight with Michael Heseltine, the Deputy Prime Minister, standing in for John Major.

Mr Harris accepted that Britain could not unilaterally withdraw from the CFP and still remain a member of the European Union. He warned: "The CFP is inflicting huge damage on the industry and must be torn up and renegotiated."