The proof is in the pay-packet

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The Independent Online
IT IS POSSIBLE to fix the Conservative Party agenda, and there has been a lot of fixing going on this week to give ministers an easy ride. But it is not possible to fix the party's instincts and when the Chancellor, Kenneth Clarke, sat down yesterday his standing ovation lacked sparkle. They were doing it, but they were not enjoying doing it. This was partly because the Chancellor of the Exchequer did not appear to have wasted too much energy in writing the speech, still less delivering it.

Clarke's nonchalance is an attractive characteristic, but it can, perhaps, be taken a little too far. That, though, wasn't the prime reason for their lack of enthusiasm. It wasn't that they missed his message but that they understood it all too well. They picked up the high-mindedly austere tone. Clarke is winning metropolitan admiration as a good, responsible Chancellor. And the Conservative Party isn't quite sure it likes the sound or feel of responsible economics.

Hear, oh reader, the voice of the streets. David Evans MP, a populist whose blokeishness makes Clarke seem a bit of a pansy, told the BBC yesterday: 'Get people with plenty of money in their pocket and they love you. . . . What they care about is can they sell their house for more than they paid for it? Can they sell it easily? Can they take their children on holiday? Have they got enough money left to go to watch Chelsea? If all these answer yes, they will vote Conservative. They couldn't care less about Northern Ireland, they couldn't care less about foreign policy. . . .'

Now Mr Evans does not speak elegantly, but he speaks forcefully. And a further truth is that voters are not likely to feel they have plenty of money in their pockets before the next election, nor are they likely to be able to make a pile in a booming housing market - not, at least, if Clarke and John Major are playing it straight.

Which they are: both Clarke and Major are committed anti-inflationary puritans who are proud of delivering the first sustainable-looking recovery for a generation. After all the shabby economic compromises and premature celebration of the past few decades, they are determined to see it through. In the 'fight against inflation', inflation has thus far licked the politicians every time. This time, they swear, it is going to be different.

But inflation has been such a deep-rooted part of life on these islands that for many people recovery without inflation won't feel like recovery at all. Growth at 3 per cent there may be, but incomes are static, and house prices barely moving. Nor, if all goes to plan, will those things change. A pay rise of a couple of per cent may be a better deal now than a pay rise of 15 per cent in the mid-Seventies, but we are simple- minded folk and find it hard to feel enthusiastic about such mean-looking numbers.

Making a fetish of terraced houses may be economically damaging, but we have become a nation of incorrigible brick fetishists. Unemployment is falling, but the new jobs don't feel as morale-lifting as the old jobs - they are less secure and often part- time. Where companies are doing well, they often put people on to overtime rather than hire new workers.

Some businessmen are getting excited about it all, asking whether this is the beginning of German-style growth. But for the punters it feels disorientating and, dammit, un-British. And it should also be noted that the people who will feel most disoriented, the house-owning Middle Englanders, are the same ones both big parties regard as the key to electoral success. The solid centre of the Tory party understands this instinctively and is worried - hence Clarke's reception, and hence the yearning for tax cuts now, even before the last lot of tax rises have been implemented.

Clarke, though, shows no sign whatever of giving ground. On the monetary side, he has tied himself to a post-Black Wednesday strategy which has handed most power to the Bank of England. On the fiscal side, the Chancellor firmly informed a press conference yesterday that he might not be able to deliver any tax cuts at all before the next election.

We should not take him too seriously: the pressure for handouts will be intense by next year's conference. At the least, one gossiped-about election scenario has the announcement of income tax cuts, at both the basic rate and the 20p rate, coming during an October 1996 election, with the promise of legislation to enact them within weeks of a Tory victory. The more the centre-left of the party succeeds in diverting the right from a campaign strategy based on a nationalistic agenda, as they are desperately trying to do, the more Major will be left with tax as the centrepiece of his election hopes.

BUT can this kind of recovery produce the wherewithall for enough tax cuts? Major knows they will have to compensate for all the other things the Tories are struggling against, from sleaze to Tony Blair's freshness. The Government has already done remarkably well under the huge burden of its indebtedness - one monetarist Tory pointed out privately that, had Labour won in 1992, it would have found the public sector borrowing requirement unfinanceable, and might well have been catapulted out of power by now. Even this government is still on probation and has relatively little room for manoeuvre.

There is, however, no alternative to soldiering on. Above all, there is the Prime Minister to consider: John Major may be prepared to play to the gallery over Europe, but he was hurt by the assault on his personal integrity over the tax issue after the last election, and has shown not the faintest temptation to indulge in economic populism since then. He is steely about monetary and fiscal policy, just as he is almost obsessive about his Irish peace strategy. In both cases, he is said to want history to be his judge. No one in the party would quarrel with that. It's just that they have their eyes on a nearer and more brutal jury, David Evans's 'people with plenty of money in their pockets'. Or, more likely, without it.

(Photograph omitted)

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