Page last updated at 22:48 GMT, Saturday, 2 January 2010

Ken Clarke says Tories cannot rule out putting up taxes

Shadow business secretary Ken Clarke
Mr Clarke said every Conservative tried to avoid tax rises

A Conservative government would not rule out raising taxes in order to shrink the UK's deficit, shadow business secretary Ken Clarke has said.

The Sunday Telegraph reported him saying it would be "folly" to rule out increases, including on VAT, alongside cuts in public spending.

"Coming out of a recession when you have such a severe deficit, you can't rule out putting up taxes," he said.

Mr Clarke later told Sky News he did not think he had mentioned VAT.

He said: "What I did say was we've got to have strong, responsible government and given the scale of the debt, the deficit, which is the worst in the western world, we really do have to be in a position where we can't rule anything out.

"But Conservatives prefer control of public spending and I make it quite clear that we will seek to control public spending to avoid tax increases."

Meanwhile, Tory leader David Cameron has said the UK would be "under new economic management" if his party won the next general election.

Mr Cameron used his speech at the Oxford School of Drama on Saturday to call for economic, social and political change.

When you're the most indebted country in the Western world... you cannot start promising you are not ever going to start increasing taxation
Ken Clarke

He said he intended to cut public spending through a one-year freeze on most public sector workers' pay and to bring forward the planned increase in the state pension age.

However, he made little mention of tax, other than a cut in the main rate of corporation tax to help businesses.

Both Labour and the Conservatives have yet to provide full details on how they plan to cut public expenditure.

Last summer, shadow chancellor George Osborne declined to rule out increasing VAT.

He said while the "bulk" of Britain's deficit could be paid off by spending cuts, he was not going to give voters "cast iron" promises on individual taxes.

'Seal the deal'

In the Sunday Telegraph, Mr Clarke said tax increases were something "every Conservative tried to avoid".

"I didn't avoid it when I was getting us out of recession before (in the 1990s)," he said.

"If you can't get it (the deficit) down quickly enough, in order to maintain the confidence of the markets and to create conditions for growth and employment, then you may have to look at tax increases."

Asked specifically about VAT, which some observers expect the Tories to raise to 20% if they win power, Mr Clarke said: "When you're the most indebted country in the Western world... then you cannot start promising you are not ever going to start increasing taxation.

"We will try to avoid it, we'll minimise it if we have to by having proper control of public spending, which we haven't had in this country in the last 12 years."

Mr Clarke also admitted the Conservatives had much more to do to "seal the deal" with voters, and that the Tory leader was having to "struggle" to get his message across.

He suggested that, while health spending would be ring-fenced by a Tory government, there could be significant savings in education.

In December's pre-Budget report, Labour announced belt-tightening measures including a 1% cap on public sector pay rises and an increase in National Insurance from 2011.

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