Tax rise hint by Major

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JOHN MAJOR yesterday held open the prospect of further tax increases in this month's budget despite the success of Kenneth Clarke, his Chancellor, in settling spending within the pounds 253.6bn limit.

The Prime Minister's hint of possible tax rises will be reinforced by a plea from senior backbenchers today to Mr Clarke to cut short party misery and boost revenues by introducing VAT on fuel at 17.5 per cent from April.

Sir Marcus Fox, chairman of the backbench 1922 committee, will step up pressure on Mr Clarke to ensure that pensioners above income support level are not penalised by the tax.

Protests from constituencies that compensation must also cover 'nearly poor' people - those on housing and council tax benefit - have also been fed through to the Chancellor.

According to one Treasury minister yesterday, the combined public spending and Budget statement on 30 November will be 'fair'.

Mr Major excited speculation about additional tax increases by saying in response to a question in the Commons that 'other matters' beside public expenditure controls and growth would help in curbing the pounds 50bn deficit.

Downing Street sought last night to dampen the speculation by saying that Mr Major's remarks could equally apply to the pounds 6.7bn in taxes for 1994-5 already set in train by Norman Lamont's March budget.

Mr Major's enigmatic reference to 'other matters' will neverthless ensure that Labour steps up its campaign against the two already approved sets of tax increases.