Inside Parliament: Taxing tale of two cities: Labour questions government support for Westminster council - Clash over level of local taxes - Major makes pledge on Bosnia

It was clear that the appearance of Michael Portillo, Chief Secretary to the Treasury, at Monday's launch of Westminster Tories' council election manifesto was going to cause trouble. And so it turned out yesterday at Prime Minister's Questions.

This had been billed as the first test of John Major's leadership since pre-Easter backbench calls for his resignation. In the relative comfort of hurled allegations about local government excesses, he gave a solid performance, probably earning a 'pass' for the first paper in a gruelling examination schedule. Margaret Beckett, Labour's deputy leader, queried Mr Portillo's presence in connection with a council that the District Auditor said had wasted pounds 21m of taxpayers' money in discounted home sales. 'Is that an admission that this Government is happy to condone waste and competence?'

Mr Major chose to revisit Birmingham, the Tory target where he spent Monday, rather than address that question. 'I had the pleasure of spending some time in Birmingham,' he said, to Tory cheers. 'If the Right Honourable Lady wishes to talk about waste and incompetence, she might look at some of the activities of (the Labour-controlled) Birmingham City Council over recent years.'

But it was Labour's turn to cheer as Mrs Beckett declared: 'You and your Government deceived the public about the poll tax, about income tax, about VAT - and now they are trying to deceive the public about council tax and about their record on local authorities.

'No one any longer believes this government - and that is why these elections and the Euro-elections will be a referendum of you and your whole government.'

Mr Major replied, amid uncertainty over whether any pun was intended, that he was 'bound to say that was just a little laboured'. If Mrs Beckett wanted to talk about 'deceipt on taxation', she need look no further than Jack Straw, Labour's environment spokesman. He had been forced to admit after weeks of prevarication that Tory councils were 'noticeably less expensive for the council-tax payer than Labour authorities'.

In a reference to the ongoing technical argument over the two main parties' differing measures for making comparisons, he declared: 'Whatever band of council tax you take, the answer is the same - Labour councils tax more than Conservative councils.' Westminster council, he added later, collected its rents.

While that battle of nerves remains to be played for all it is worth over coming weeks, many MPs were relieved to hear Mr Major pledge that there would no loss of nerve over Bosnia.

Warning the Bosnian Serbs that United Nations air strikes would be used again if necessary, he said: 'Close air support will remain available to UN commanders . . . I hope that those who may be prepared to attack Unprofor will draw the appropriate lessons from what has happened.'

But a diplomatic note was sounded by Sir Peter Tapsell, Tory MP for Lindsey East, who raised Russia's complaint that it had not been consulted over the raids. Similar concerns came during defence questions and during a subsequent statement by Douglas Hurd, the Foreign Secretary.

Sir Peter pressed Mr Major: 'Following your recent success in welcoming the introduction of Russian ground troops into the former Yugoslavia . . . will you now try to use your influence to improve communications between the Secretary General of the UN and President Yeltsin, so the Russian president won't feel excluded from the implementation of resolution 836 - for which Russia voted?'

Mr Major replied: 'Both Unprofor and Nato acted in accordance with the Security Council resolution you mentioned . . . In that particular instance the close air support operations did not require further consultation with any government and in those circumstances were correctly authorised.'

Later, Mr Hurd told MPs that the Russians were 'indispensable' in influencing the Serbs.

But, he added, they were also realists who knew the procedures for close air support. 'They know . . . they do preclude consultation in advance.' The diplomatic task now was to 'hook' the Serbs into the recent Croat-Muslim agreement, he said.