Ken Clarke refuses to rule out VAT increase as Tories inch towards more honesty on their deficit plans

In his News of the World column Fraser Nelson turns David Cameron's own soundbite against the Tory leader and warns him not to treat voters as fools, as Labour has done. He slams the speech given yesterday by the Tory leader as containing "as much beef as a vegan sandwich". Nelson's view is widely shared among centre right commentators. They fear that David Cameron and George Osborne have yet to tell voters the truth about the scale of spending cuts and tax rises that will come after the election (whoever wins).

In his speech yesterday this is what Mr Cameron said about reducing the deficit:

"We’ve been clear about our intention to cut public spending, and clear about where some of those cuts will come – from a one-year freeze on public sector pay to bringing forward the planned increase in the state pension age. But it’s not enough just to deal with the deficit. To have a hope of competing in the decades to come, our economy needs a complete overhaul. We need to build an enterprise economy."

I argued on New Year's Eve that there had been a lot of talk of austerity and tough choices but only a small list of savings has actually been announced.

There are signs from this morning's newspapers that the party is edging towards more honesty.

Ken Clarke refuses to rule out an increase in VAT in an interview with The Sunday Telegraph. Asked by the newspaper's Political Editor Patrick Hennessy about a possible increase in VAT to 20% the Shadow Business Secretary replies:

"When you're the most indebted country in the western world, and people are talking about looking at the credit rating of the country, and we're not sure that foreigners are going to buy gilt-edged bonds to finance our debt, 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."

Definitely not a "no" and consistent with his previous tax rise warnings.

Unlike The TaxPayers' Alliance I do not oppose a temporary increase in VAT so long as we see enough pro-poor measures elsewhere in the budget and a maximum squeeze on public spending.

The News of the World lists the sort of spending cuts that the Tories are apparently considering. The list includes "selling off national assets and cancelling "big ticket" items such as the major schools building programme and defence projects" and "abolishing middle-class benefits such as child tax credits and free bus passes."

Tim Montgomerie