Defending the tax increases which will take effect in April and attacking Labour's 'tax myths', Kenneth Clarke said: 'We fight elections on low tax. We did last time. We will next time . . .'
The campaign strategy will also be based on 'prosperity and secure jobs' - a clear signal that the Government intends to stick to its successful tactic of seeking a 'feel good' factor, probably with a tax- cutting boost before the next election.
The decision to devote virtually the whole of his speech to defending the Budget strategy and attacking Labour was seen by Labour as an admission that its attacks on the Government over broken pledges on tax were hitting their target.
Coming close to apologising for the Budget, Mr Clarke said he increased taxes 'only with great reluctance'. Colleagues denied his speech to businessmen in Maidstone, Kent, was defensive. 'He is never defensive. He is being very positive,' one source said. But John Major will reinforce the message at a Tory local government conference today in London.
Mr Clarke said the tax increases and pounds 10bn spending cuts were necessary to reduce borrowing, which was costing pounds 3bn a year in debt interest, equivalent to 2p in the pound. Reassuring the Tory right- wing that he was dedicated to cutting spending, he said: 'You can only be a low tax party if you keep control of public spending.'
His aim would be to reduce low marginal rates of tax by spreading taxes more widely. Treasury sources said this was not a hint at widening the VAT base, which he avoided in the Budget.
Sir Norman Fowler, the Conservative Party chairman, sought to counter Labour's accusations of Tory 'sleaze' over the BCCI scandal, claims that the Saudi Arabian royal family had given pounds 7m to the Tory Party, and the auditor's report on the improper sale of council houses by Westminster City Council. He accused Jack Straw, the Labour spokesman on local government, and other frontbenchers of 'indulging in some of the most disreputable campaigning tactics I can remember . . . of smear, and smear, and smear again.'