Tories 'would put up taxes to control deficit'

The Shadow Business Secretary said it would be folly to rule out increases alongside reductions in public spending.

The comments came as Tory leader David Cameron effectively kicked off the General Election campaign, urging voters to make 2010 a “year for change”.

He is expected to make an audacious raid on traditional Labour territory today by pledging to divert more money to healthcare in the UK’s most deprived areas.

Mr Clarke - who has served as Chancellor with a Tory government – said: “It’s something that every Conservative tries to avoid but I didn’t avoid it when I was getting us out of recession before (in the 1990s).

“Coming out of a recession when you have such a severe deficit, you can’t rule out putting up taxes.

“If you can’t get it down quickly enough, in order to maintain the confidence of the markets and to create conditions for growth and employment, then you may have to look at tax increases.”

Asked specifically about VAT, which some observers expect the Tories to raise to 20 per cent if they win power, Mr Clarke said: “When you’re the most indebted country in the Western world...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.”

Mr Clarke also admitted that the Tories had much more to do to “seal the deal” with voters, and that Mr Cameron was having to “struggle” to get his message across.

He suggested that, while health spending would be ring-fenced by a Tory government, there could be significant savings in education.

In his speech in Oxfordshire, Mr Cameron struck a more positive note after his warnings over recent months that the country faces an era of economic “austerity”.

“If we win this year’s election Britain will be under new economic management,” he said.

“We will send out the loudest signal that this country is back open for business and ready for investment.”

He said a chapter of the Tory draft election manifesto would be published today. It is understood that will set out plans for diverting a higher share of NHS resources to services in run-down areas.

Gordon Brown has suggested that Mr Cameron had hoped to win the election without his own policies coming under scrutiny.

He said: “I think the Conservatives wanted an election that was essentially a referendum on Labour. Then they thought they would get a referendum on the small issues.

“This is an election on the big issues.”

The Prime Minister said the Tories had got “everything” wrong on the economic crisis.