POLITICS
A taxing interlude for the man who would be king
SIMON HEFFER
The ease with which Mr Kenneth Clarke cruised from the Department of
Education to the Home Secretaryship, and thence to the Second Lordship of the Trea- sury was, in retrospect, cruel. It might have deluded him into thinking the only other promotion he wants would be as simple. The thud of taxation coding notices on the doormats of Britain last week did, however, impede this effortless rise. Most voters sud- denly realised they are about to be made poorer by the Government. Many of them voted Tory in the expectation of not having to endure such privation. Mr Clarke has the job of touring television studios, trying to convince interviewers and, vicariously, the people that they are really very lucky to have him at the Treasury rather than Mr Gordon Brown. He may believe it, but so far the public certainly don't.
'I want Major to survive,' a normally dis- sident right-wing minister told me the other day, 'because Clarke is inevitable.' Some on the right see Mr Clarke as less concerned about curbing high taxation and public spending than the Prime Minister is. This, according to Mr Clarke's supporters, is not the case at all, however much the Chancel- lor's frequent protestations of love for the public services stir suspicion. Mr Clarke's friends say he is well aware of the damage a reputation for welshing on election promis- es does to his party and to him as Chancel- lor. 'Good though he would be at it,' says a backbencher, 'Ken does not want to be Leader of the Opposition.'
With an eye on personal and collective credibility, Mr Clarke is now, apparently, preparing to try to squash the pay review bodies' demands for above-inflation public sector rises of the sort MPs received last year. In the Commons on Tuesday after- noon the normally profligate Mrs Bottom- ley, the Health Secretary, made obedient noises about how doctors were already well paid, and how they ought not to expect too many treats in the near future.
Knowing, as Mr Clarke does, that he must allay distrust of him on the right, an opportunity such as the pay review bodies afford him is helpful. If he succeeds in dig- ging in against them, it will require further inroads into public spending. Without pub- lic expenditure reductions there will be no chance of reducing taxes before an elec- tion. 'The difficulty,' another minister says, 'is this. He's not promising that the rises will be reversed, but that's the conclusion we're drawing. If those reverses don't come, we're in trouble.'
So far, the tax problem does not seem to have dented either Mr Clarke's robustness or his prospects. 'He doesn't think he is under attack,' says one of his closest sup- porters. 'Whenever the succession happens, it's no contest,' says a colleague. 'It's got to be Ken.' However, another one of the Chancellor's adherents admitted that Mr Clarke's undeclared campaign to succeed `relied on Major going quickly, before peo- ple cottoned on to the tax business'. One of the lessons Mr Clarke has taught us is that no minister does a job so well that he does not benefit from moving on from it as soon as possible. Unfortunately for Mr Clarke, the effect of his — and, more to the point, his predecessor's — tax increases are now all too obvious both to the parliamentary Conservative party and the voters.
Whatever the image of self-assurance, one suspects Mr Clarke knows he is facing serious adversity for the first time in his career. Lounging at his holiday retreat in the Mediterranean, he swept aside the ambulancemen when they became shirty.
Inheriting, as Home Secretary, the bad effects of the 1991 Criminal Justice Act, he brazenly tore up large parts of it and set in train a new Bill. But the effects of the Exchange Rate Mechanism policy he so ardently backed are proving less tractable. As a result, Mr Clarke is having to take unprecedented steps to appeal to the elec- torate. When interviewed last Sunday by Sir David Frost, he was sporting a beauti- fully pressed suit, a tasteful shirt, and a tie that did not advertise his membership of the Garrick Club. He looked positively svelte; whether this perceived weight loss was down to a diet, or to pressure of work, one can only guess. The greatest concession of all came on Monday morning, when he
took a page in the Daily Mail, one of the most dogged adversaries of the Govern- ment, to rubbish his opponents' attacks on his conduct of the economy.
Typically, the Opposition have played straight into his hands. When Mr Brown says the tax burden has increased since 1979, when Labour last held office, he ignores two important points. First, as Mr Clarke continually tells us, standards of liv- ing have risen more than taxation. Second, taxation was only as low as it was in 1978-79 because of naked pre-election bribery by that lovable old fraud Lord Healey. This is just the sort of argument Mr Clarke likes. It allows him to rubbish Labour, something at which he is good, while shifting attention from his most righteous and damaging opponents, the hard right of his own party.
The row about how Labour would be tax- ing us more highly were they in office is a complete diversion. They are not in office, nor likely to be for a couple of years at least. They have not been in office since Mr Major was working in a bank. The real issue is that the last public spending round was not as tight as it should have been. Some ministers, notably Mrs Bottomley and Mr Gummer, are presiding over insanely high departmental budgets. This profligacy, following on from earlier errors, has forced the huge (£17 billion) tax increases. The alternative to this Conserva- tive Government taxing and spending too highly is not a Labour government taxing and spending more; it is this Conservative Government taxing and spending less.
Some of Mr Clarke's circle talk of a 'bloodbath' on public spending this year, in preparation for the next Budget; others wonder whether it will still be Mr Clarke's problem, or whether he will have gone on to bigger things by then. He certainly ought to try to be somewhere else if the reversal of the tax rises does not materialise. His priority must be not just to ride this out, but to do so in a way that takes the right of his party with him. Treasury insiders say he and Mr Portillo have a good relationship, which is an important place for Mr Clarke to start. Other right-wing ministers, feeling Mr Portillo should have pushed harder on public spending, are not so sure whether Mr Clarke's apparent respect for his deputy is of much significance to them.
Mr Clarke will have to do more than just be nice to Mr Portillo if he wants the trust of the right that he needs to be safe during this storm; he will have to stop saying things like 'I will do what is necessary, some of it unpopular, to create the conditions for growth to continue.' The right knows that growth is not helped by milking the produc- tive sector of the economy to fund the unproductive. Mr Clarke no longer claims that his is the party of low taxation, but the party whose 'instincts' are to tax low. The answer for the future king, therefore, is clear: back to basic instincts without delay.
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