Chancellor still aiming for 20p tax rate

Britain is clearly coming out of recession, the Chancellor of the Exchequer, Norman Lamont, told conference yesterday. 'The green shoots of economic spring are appearing once again,' he declared.

The recovery was indicated by the return of confidence - its vital ingredient, he said, in a muted speech in which he pledged to fight for permanently low inflation and to reduce the standard tax rate to 20p. He also said he would not allow a single EC currency to be imposed on Britain without the consent of Parliament.

'Economies are like tides, they ebb and flow. The turn of the tide is difficult to discern,' he said. That was the verdict of the International Monetary Fund, the Confederation of British Industry, the Institute of Directors, and numerous businessmen and consumers.

He received a warm response when he said that economic decisions should remain within Britain. 'I will not allow a single currency to be imposed on this country,' he said. 'We will not adopt a single currency without the consent of the British parliament. Unlike the Labour Party, we don't want laws to be made and taxes to be raised in Brussels for which the people haven't voted.'

Mr Lamont, speaking with John Major and Margaret Thatcher on the platform, made it clear that the Conservatives still intended to cut basic tax rates to 20 pence in the pound, though it would take time. 'Maybe more than one parliament. But we did it before and we will do it again.'

He said it had been a year of reckoning in the fight against inflation. Only last autumn it was almost 11 per cent, now it was below 5 per cent and falling. 'Soon I will be the first Chancellor of the Exchequer in nearly a quarter of a century who will be able to stand before you and say that Britain has a lower inflation than Germany.'

The Government wanted to make Britain a country of permanently low inflation, which was why John Major had taken Britain into the Exchange Rate Mechanism.

'There were some who thought this would prove too big a challenge for Britain. But they were wrong. Britain has shown it can compete in Europe. And that's the best possible news for employment.

'Nobody, but nobody, wants to see rising unemployment. But unemployment is basically a problem of competitiveness. If inflation gets out of control, we lose jobs.'

That was why there was no conflict between fighting inflation today and unemployment tomorrow. A country of low inflation was one of low unemployment.

Mr Lamont said by moving cautiously and prudently the Government had scored a remarkable hat-trick: bringing down inflation, keeping the pound strong, and cutting interest rates eight times while in Germany they have been rising.

Labour loved to talk about manufacturing, but all British industry needed was profits to make it the best in the world. 'For Labour, profit remains the unspoken word.'

He swiped at Labour promises on the economy. It would raise taxes for everybody by the equivalent of 10 pence on basic income tax. Their policies would force them to. 'Labour tax increases would clobber millions of taxpayers and devastate the British economy.' He also raised the spectre of Labour taxing savings.

The Conservatives delivered lower taxes and better public services. The Government was building a Britain that protected the weak, held out opportunity to the disadvantaged. 'The state does only what it needs to do, but does it well,' he said. Light taxation and light government.'

The motion supporting the Government on its tough action to reduce inflation to allow Britain to compete in the EC single market was unanimously approved.