Clarke sets stage for tax-cutting Budget

BY STEPHEN GOODWIN

Kenneth Clarke, the Chancellor of the Exchequer, heartened Tory activists yesterday with his strongest hint so far of tax cuts in the November Budget.

A return to a tax-cutting agenda would be one of the biggest benefits of a recovery which had put the economy in better shape than for a generation, Mr Clarke told the Conservative Central Council in Birmingham. "The day when I will be able to cut taxes is getting steadily nearer."

Other chords were struck by Michael Howard, the Home Secretary, mixing pledges of tougher punishment with a homily on parental responsibilities. Responding to a debate in which party representatives criticised judges and the Church as "out of touch", and the criminal justice system as a conspiracy of the left, Mr Howard said he wanted to see the courts deciding "far more precisely" what punishment was handed out by way of community service.

He wanted "punishment with a purpose" that would enable the victim and the local community to see more clearly that justice had been done. It should be "hard physical work", such as digging ditches and picking up litter.

Mr Howard confirmed his intention to try out a new regime for young offenders - the US- style "boot camps" about which opinion is divided in the Home Office. It would contain two elements: strict discipline and learning practical skills. "When these youngsters have paid for their crime, they must be given every chance to earn honest money," he said.

But Mr Howard also tried to recover territory taken by Tony Blair by talking of the Conservatives as being the party which understood the concerns of "middle England" and repeatedly stressed the need to create a "neighbourly society".

And he said: "Children need three things above all from a caring family: love, guidance and, yes, discipline."

Mr Howard said he and the Prime Minister had launched a new crusade to encourage people to become volunteers. In the 1980s, the number of people who freely gave their time in voluntary activity rose by 15 per cent, he said. "Translated into actual numbers, that means 17 million people... lending a hand, creating the neighbourly society."

The debate included a call for the introduction of identity cards. Mr Howard acknowledged the strong feeling on the issue among Tory grass roots, but left his options open.

Party activists focused on punishment rather than neighbourliness. Pat Harvey, chairman of the North Cornwall association, said judges were out of touch. Punishment should fit the crime, life must mean life and, ultimately, there should be capital punishment.

Nick Herbert, prospective candidate for Berwick-upon-Tweed, said: "I think the criminal justice system is riddled with the establishment of the left. This amounts almost to a conspiracy against justice - justice for the victim, the police and the public."

Mr Clarke won a standing ovation after telling the conference: "The worst is over. The best is yet to come." A recovery with a difference was under way, the balance of payments had improved and inflation had stayed down as the economy had grown, he said. Britain was growing faster than France and Germany. "They can now feel us breathing down their necks as we catch them up."

Mr Clarke treated as "Budget submissions" calls for cuts in taxes, particularly for the lower paid, in national insurance contributions, and for reductions in public expenditure. And he said: "We are still the only political party that believes that cutting tax is good for the economy and good for the people of this country."

Turning on Labour, he said Tony Blair and Gordon Brown, the shadow Chancellor, were giving fairness a bad name. What was fair about not telling taxpayers how much more they would pay to finance higher public spending? And what was fair about Labour's proposal to hike the top rate of income tax to 50p in the pound?

Mr Clarke added: "When Blair talks about fairness - middle England, reach for your wallet."