Tory MPs begin to accept tax rises may be inevitable: Backbenchers warn of 'unpleasant decisions' to reduce deficit

RANK-AND-FILE Tory MPs yesterday showed the first signs that they may be ready to accept the idea of raising taxes to tackle the pounds 50bn public- spending deficit.

Two senior Conservative backbenchers signalled that the party might have no alternative but to bite the taxation bullet. Their remarks reflect gathering resignation on the back benches that tax rises might be inevitable.

One was the Teignbridge MP, Patrick Nicholls, who was appointed a vice-chairman of the party with key responsibility for campaigning in marginal seats on Friday. The other, Nicholas Budgen, the anti-Maastricht MP for Wolverhampton South West, is a prominent voice on the party's right wing. Both warned in radio interviews that unpleasant decisions would have to be taken.

Mr Nicholls said the ultimate responsibility of any Conservative government was sound finances. 'A government which brought the top rate of income tax down from 98 per cent to 40 per cent need not be embarrassed if for a temporary reason it has to go up slightly,' he said.

Mr Budgen said no one wanted to see an increase in any form of taxation but the alternative might be worse. The people lending Britain pounds 50bn might say 'very sorry, unless you do something more for your borrowing and that means higher interest rates'.

Some right-wing backbenchers are coming to terms with the prospect of higher taxes. But they will keep up pressure on Mr Clarke to avoid raising mainstream direct taxation.

A number will also disagree with Mr Budgen's invitation yesterday to Mr Clarke to take over the leadership from John Major. In a Guardian article, Mr Budgen said that despite Mr Clarke's 'left-wing' views on the exchange rate mechanism, 'all of us, left, right and apathetic middle, can unite in acclaiming your vigour and leadership. We need you'.

However, Edward Leigh, who lost his job as a trade and industry minister in last week's reshuffle, said yesterday that Mr Major's position was not safe, and his survival depended on building bridges with his party's 'alienated' right wing.

Mr Leigh said on BBC radio: 'The problem with the Prime Minister is that he was elected by the right, but . . . all the policies he has carried out since he assumed power have actually damaged the right.'

And Ann Winterton, the Conservative MP for Congleton, said: 'John Major was elected by virtually all the right of the party and . . . he must bear in mind that very fact.'