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Tuesday, 11 July, 2000, 11:21 GMT 12:21 UK
Portillo behind Tory tax turn
Shadow Chancellor Michael Portillo and Tory leader William Hague
Michael Portillo opposed William Hague's tax guarantee
By BBC News Online's political correspondent Nick Assinder.

William Hague's move to water down his tax guarantee has handed the prime minister a much-needed opportunity to grab back the political agenda.

For the first time in weeks, it is the Tories who are on the back foot with Mr Hague and his shadow Chancellor Michael Portillo attempting to deny they have executed a U turn.

But Mr Hague's concession that under bad economic circumstances he would always put public spending ahead of tax cuts has opened a chink in his policy which Labour hopes to widen into a chasm.

What is worse for the Tories is that it is widely believed that the climbdown only came after weeks of brow beating of Mr Hague by Mr Portillo.

It is said the shadow chancellor, along with many other Tory MPs including former Prime Minister John Major, believed the policy was unsustainable and a hostage to fortune.

About face

The government had already targeted the policy as one of the opposition's key weaknesses, claiming guaranteed tax cuts could only come at the expense of public services.

And it was increasingly obvious Mr Blair was going to make it a central plank of his election campaign.

But the policy change has now denied the government that opportunity and, while the Tories will suffer in the short-term for the about face, the move has probably spared them longer-term damage.

So any hopes that ministers will be able to further unravel the policy are likely to be dashed.

But there is still some bad news for Mr Hague in the fallout from the change.

Many are now claiming that it is Mr Portillo who is making the key pre-election strategic decisions and he is taking a decidedly pragmatic line.

He has started to narrow down the areas where Labour can successfully attack Tory policies during the election campaign.

It started the minute he was appointed to his job when he abandoned opposition to independence for the Bank of England and the minimum wage. That has now been followed by the tax guarantee climbdown.

Not sparkled

What some Tory backbenchers are whispering is that Mr Portillo, who is still said to harbour leadership ambitions, is proving he has it in him to do the job as well, if not better, than Mr Hague.

So far Mr Portillo has proved a bit of a disappointment to some of his supporters on the Tory benches.

He has not sparkled in the Commons and has yet to significantly best Gordon Brown in any of their face-to-face clashes.

But his performance on policy issues has started to boost his standing in the party.

That will worry Mr Hague who knows that, depending on the Tories performance at the next general election, Mr Portillo is still the man most see as his successor.

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See also:

11 Jul 00 | UK Politics
Hague puts clause in tax guarantee
11 Jul 00 | UK Politics
Annual report revealed to Parliament
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