Major calls for cuts in red tape to help small firms

THE PRIME MINISTER told MPs yesterday he wanted action in removing restrictions on small businesses to 'go further and faster'.

He said he had asked every Whitehall department to prepare plans for deregulation and would be meeting every secretary of state with their permanent secretaries to draw up detailed plans early in February.

Michael Heseltine, the President of the Board of Trade, has been given the task of spearheading the drive. Mr Major discussed measures on deregulation, law and order, health and education with his Downing Street policy unit at Chequers at the weekend as part of an effort to regain the intiative on his domestic political agenda.

Mr Major told MPs he had asked Kenneth Clarke, the Home Secretary, to prepare plans for tackling the rising crime rate among juveniles. 'This is one of the areas of greatest concern and one we are determined to deal with,' he said

A spring cut in interest rates is expected by Tory MPs to be on the agenda today when Norman Lamont, the Chancellor, reports to the Prime Minister on the Budget strategy, following the weekend Treasury summit at Chevening.

With the pound holding firm, Tory MPs are convinced that Mr Lamont will seek to complete what could be his final budget with a further cut in interest rates, currently 7 per cent, to boost the chances of long-term recovery and revive the housing market.

John Major has forced the Treasury to abandon proposals to rein back record public sector debt by raising the 17.5 per cent rate of VAT or expanding the VAT base to include zero-rated items, such as domestic fuel bills.

Mr Lamont planned to offset some of the pounds 44bn borrowing requirement in his Autumn Statement by raising National Insurance contribution rates for employees from 9 per cent to 10.4 per cent, but dropped the plan at the last moment before the statement was delivered in November.

'There was definitely a plan to raise NICs, but it is assumed John Major intervened. The Treasury was also pretty keen on taxing invalidity benefit at the same time,' one informed Tory source said.

Treasury figures show that the poorest families would be better off with an increase in child benefit. Figures supplied to Nicholas Brown, a Labour treasury spokesman, show that a 1p cut in the basic rate of income tax would benefit a one- earner family with two children on half average earnings by only 39p a week compared to pounds 4.31 for a family on 10 times the average.

The same amount of money would pay for an increase in child benefit of pounds 3.35 for each child per week, leaving the lowest income families with two children pounds 6.70 better off.