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EDITIONS
 Thursday, 4 April, 2002, 05:12 GMT 06:12 UK
Brown's first tough Budget, warns Clarke
Former Chancellor Kenneth Clarke

This is Gordon Brown's first tough Budget since he took over at the Treasury from Ken Clarke in 1997, says the former Conservative chancellor.

According to Clarke, his successor now faces plummeting tax revenues at a time when there is a growing clamour over public services.

I quite agree that people's recollection is that we made a horlicks of quite a lot of things but most of these things are things we didn't do

Ken Clarke
Couple that with some pretty "wild promises" over things like health and transport and the pressure is on the chancellor to deliver.

Clarke has a reputation as a combative, cross-the-street-for-a-fight kind of politician.

Sitting in his office high up in Portcullis House with its view of the millennium wheel, he can look back on a political life in which he had nearly all the big jobs.

Home affairs, health, education - he even made it to Downing Street where he lived at Number 11 when he was John Major's chancellor.

Claims credit

Now, having lost the Conservative leadership race to a much less experienced Iain Duncan Smith, he seems more bruised than bruiser.

Sitting with a huge cigar, he seems determined to preserve his reputation in government now that his frontline political career is all but over.

Ken Clarke
Renowned for his love of good cigars
He claims credit for the economic success of the past few years, but says that Brown now faces genuine difficulties as the economy slows.

"He's got to make sure that he leaves public finances in a reasonably healthy state. Whatever he spends he's got to raise by taxation. He's got to get the balance right."

Clarke accepts that taxes will have to go up and public spending must continue to grow.

But he argues that although health spending must continue to increase overall public expenditure cannot continue to go up at the current rate.

Delayed tax hike?

"On any view public expenditure's got to increase," he says.

"I personally don't think that the total of public expenditure can carry on increasing at the present rate but he's got to increase spending on health and education," he says.

Clarke predicts that when Mr Brown does increase taxation it will only come into effect at a later date.

They were totally on course to have a balanced budget, within the course of the economic cycle and the deficit and debt problems they still cite were actually under control well before 1997

Ken Clarke
"He finds he annoys people less if he makes announcements that don't have immediate effect and people get over the shock of the announcement then nothing happens - their taxes don't go up - and they've forgotten about the announcement before, eventually, they notice their taxes have now gone up."

So what would Clarke be doing if he was still chancellor?

"I would put it in this order: first what are the right decisions for the benefit of the economy over the next 12 months. What's the right mix of tax-and-spending that fit that judgement. Thirdly how you can present it."

He says that in addition to the pressures on the chancellor because of a "slowing" economy and "tax revenues dropping like a stone" Labour backbenchers will be looking to him for a morale boost.

Spending limit surprise

Having squeezed public spending in the first few years of the Labour government the chancellor then turned the tap "on rather gushingly for three years".

The problem now is that there is an expectation among Brown's cabinet colleagues that the money will keep on flowing.

That coincides with a growing clamour about the public services.

Clarke continues to express amazement that Labour stuck to such tight spending plans in the first couple of years.

Members of the government always say that they did so because they had to shed a massive deficit that they inherited in 1997.

But Clarke says that no-one in the government believes that, and he is convinced that neither do many of the public.

Mythology?

"What we left them with was a deficit that was declining.

"They were totally on course to have a balanced budget, within the course of the economic cycle and the deficit and debt problems they still cite were actually under control well before 1997."

It is part of the Labour "mythology" that they faced all sorts of problems with the economy.

Ken Clarke
Clarke always seemed to enjoy Budget days
"In fact they didn't and they know they didn't and I'm absolutely confident that privately they know [that] perfectly well."

He says he accepts that there is a perception among voters that things at the end of the Tory years were in a mess.

But Clarke is keen to reject the notion that the sort of mess that Labour has got itself into with its special advisers would ever have happened under John Major.

"One of the things that journalists take at face value was that it was the same under the Tories."

Trouble

"I quite agree that people's recollection is that we made a horlicks of quite a lot of things but most of these things are things we didn't do.

"It is not true that we had special advisers doing what they do nor is it true that we used to announce tax increases miles in advance."

He says there was one occasion when it did happen.

"The only delayed tax increase I can remember... is Norman Lamont did it with a two stage increase of VAT on fuel which got me into real trouble because the second stage got knocked out and I had to make up for it by raising tax on other things."


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See also:

26 Nov 01 | Politics
13 Sep 01 | Politics
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