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Friday, 18 May, 2001, 11:32 GMT
Battle of the Chancellors

By BBC News Online's Steve Schifferes

As the general election campaign nears its mid-point, the battle over tax and spending plans has taken centre stage, with Labour's Gordon Brown pitting himself against the Tory Shadow Chancellor, Michael Portillo.

But, behind the scenes, there is an even fiercer battle, with both chancellors seeking to impose their authority on their own parties in order to strengthen their position in the battle for the succession.

That has involved them in arguments with their leaders, which in turn have threatened to derail their campaigns.

Both politicians know that how they perform during the election will also affect their chances to bid for the leadership of their party, should their respective leaders eventually stand down.

Only Matthew Taylor, the Liberal Democrats' Treasury spokesman and Charles Kennedy's campaign manager, can claim to speak completely in harmony with his leader.

Tensions at the top

The disagreement between Mr Brown and Mr Blair surfaced at the beginning of the campaign, when Labour refused initially to confirm its pledge not to raise income tax rates.

Gordon Brown and Tony Blair
The Blair-Brown alliance: Labour's centrepiece
Mr Brown is believed to have been successful in persuading Mr Blair not to put this promise on Labour's pledge card - replacing it by a vague promise to keep inflation and mortgage rates as low as possible.

And although the promise to keep the basic rate and higher rate of income tax unchanged did form part of the Labour manifesto, Mr Brown and Mr Blair have been putting a very different spin on the party's aims on tax.

It has been left to Mr Blair to stress the importance of providing incentives to enterprise by keeping top tax rates as low as possible, while Mr Brown has preferred to emphasise "targeted" tax cuts aimed at helping the less well-off.

Tensions over role

Since the resignation of Labour's former 'spin master' Peter Mandelson as Northern Ireland Secretary, Mr Brown has become undisputed head of Labour's campaign team, and he conducts the daily news conferences while Mr Blair is out campaigning around the country.

But the tensions over Mr Brown's role have increased, with some arguing that Labour has lacked the campaigning flair that Mr Mandelson brought - and that it has failed to dominate the news agenda, even on the day of its manifesto launch.

Mr Brown has been focusing almost exclusively on the contrast between Tory tax-cutting plans, and Labour's plans for big increases in public spending, the fruits of sound economic management.

All this may help Mr Brown's appeal to traditional Labour activists in a future leadership contest - but it worries party strategists who are determined to hang on to former Tory seats in the south of England.

Portillo's U-turn

Labour's strategy in focusing exclusively on the economic issues has another purpose - to undermine the chances of Michael Portillo succeeding William Hague, if the Conservatives suffer a heavy electoral defeat.

A show of unity: Mr Portillo and Mr Hague
Some Labour strategists fear that Mr Portillo - who has remoulded himself since his electoral defeat in 1997 - would take the Conservatives in a more moderate direction, making them more of a threat.

Much of Labour's negative advertising has featured Mr Portillo, who is also at the centre of the row over whether the Tories have a secret agenda of 20bn worth of tax cuts - not the 8bn that Mr Portillo claims.

But it was Mr Portillo's deputy - the shadow chief treasury secretary Oliver Letwin - who briefed the Financial Times on the Tories' further tax-cutting aspirations.

Targeted tax cuts

And it was the man Mr Portillo replaced, former Shadow Chancellor Francis Maude, who appeared to support those tax-cutting plans.

In contrast, Mr Portillo has been keen to stress the limited - and targeted - nature of Tory tax cuts, helping familes with children, pensioners and poor motorists most, while emphasising that public spending on health and education would still go up under the Conservatives.

In fact, Mr Portillo has spent the past year since being appointed Shadow Chancellor trying to tone down Conservative tax pledges - making room for some increases in public spending in line with economic growth, a policy originally opposed by Mr Hague.

That has not endeared Michael Portillo to the Thatcherite wing of the Conservative Party, his former political base - but it has brought him the support of many One Nation Tories like the former chancellor, Kenneth Clarke.

Avoiding the euro

During the election, the parties are trying their best to downplay their divisions and play to their strengths.

Matthew Taylor: social democrat chancellor?
Even the Liberal Democrats' Treasury spokesman, Matthew Taylor, has downplayed his party's aspirations for Britain to join the euro - in the face of widespread public scepticism - while emphasising its social democratic credentials.

Mr Taylor hopes to paint the Lib Dems as the only honest party which will deliver on its promises for better public services.

Labour has also been downplaying its euro ambitions, with no mention in its manifesto of a two-year deadline before deciding on whether to hold a referendum on the issue.

That may reflect the sceptical view of the chancellor, whose department is due to decide whether the UK meets the five economic tests of euro membership - in contrast to Mr Blair's greater enthusiasm.

Mr Portillo - altlhough soft on spending and more tolerant on crime - is a hard Eurosceptic.

So if the Tories can shift the debate back to Europe, they may have more success in heightening Labour divisions - and weakening Mr Blair.

But Mr Portillo also needs to tread carefully on the issue if he is to avoid alienating his new-found Tory Europhile supporters like Ken Clarke.


Taxing and spending

Rich and poor

Wooing business

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