Clarke spares Middle England

Personal Finance

THE MIDDLE classes may statistically be better off than they were in the 1970s, but they can be excused for not appreciating the fact.

They must deal with increasing job insecurity, widespread suspicion of the sales staff who have been peddling endowment mortgages and personal pensions of unquantifiable value, and the escalating costs of private education to give children a halfway decent start in life. Then there is the increasing need to provide for private health insurance and falling property values, not ot mention the real prospect of any inherited money being required to provide care for aged parents.

So it is hardly surprising that the middle classes took their revenge last week on the Government they hold responsible for a feel-bad factor that ministers appear neither to recognise nor care about.

Any one of those worries would be enough to make the middle classes nervous and irritable, and the definition nowadays includes a good 70 per cent of the voting population. There can be very few people in this group, who aspire to be financially comfortable, who are not threatened by one or more of those gnawing uncertainties.

In the circumstances, the outcome of the local elections will surprise no one who actually lives in Middle England, wherever that may be. Thanks then to Kenneth Clarke for deciding not to add the pain of dearer mortgages to the suffering of the electorate.

He could easily have been forgiven for raising interest rates to create an artificial slowdown in the economy, as an excuse to revive it later with the tax cuts that alone can redeem the Government's fortunes.

He must have been under heavy pressure to raise rates anyway to support the pound. But he evidently accepts that there is no real domestic argument for raising interest rates. Property prices, so often the engine of inflation in the past, are deeply depressed, earnings are not rising excessively, consumer spending and output are slowing down again, and any inflationary pressures are all external.

He deserves to be congratulated for his ability to see the difference. We will have to wait six weeks to see if Eddie George shared the Chancellor's enlightened view of events.