Ken Clarke is high risk for Cameron

Labour today has unveiled its plan for an insurance scheme for the banks. Meanwhile David Cameron has been doing a front bench reshuffle of the shadow cabinet. This is not meant to be a primarily political blog although it may have seemed like it at times but the appointment of Kenneth Clarke to shadow Business Secretary Lord Mandelson is something I can't ignore.

Much is being made of Clarke's stance over the EU, something that's raised the hackles of some of the more right wing Tories and also some of that party's donors. Apparently Cameron and Clarke have agreed to disagree; rather like Basil Fawlty saying "don't mention the war" it seems now to be a case of "don't mention Europe"! When the General Election approaches the Tories will have to decide on whether to adhere to their previous commitment to include a referendum on the Lisbon Treaty in their manifesto, something potentially worth a lot of votes. What the Irish decide to do will influence this no doubt but Cameron will worry about Clarke. Ken by instinct is the sort of person to shoot from the hip, to use straightforward quite robust language and this is to many voters an admirable trait. The downside for the Tories is the risk that he'll go off message.

In the more immediate future the thing that concerns me about Ken Clarke is the lapse of judgment he showed over the VAT rate reduction. At PMQs last week Cameron tried to goad Brown on the disastrous decision to reduce the VAT rate. Brown tried to turn the tables by quoting Clarke's support for the VAT change. That didn't matter with Clarke sat on the backbenches but will be next to impossible to repeat in future confrontations with the PM. On reflection maybe that's why Cameron was keen to make the point last Wednesday realising perhaps that would be his last opportunity.

Another point about rehabilitating Clarke could be that he is at least very identifiable by the population at large. It's often difficult in a shadow cabinet to become a household name, alright for the political anoraks but how many of Cameron's team and their positions are known to the public at large? Cameron, Osborne and now Clarke but how many others? Having said this and casting my mind back to 1997 just prior to Labour coming into power the same question could have been asked. Certainly Tony Blair and Gordon Brown. Perhaps David Blunkett. Not many others I would have thought. Of course Cameron realises just how important communication is these days and if it were solely a contest between Brown and Cameron (using their communication skills) the latter would have a walkover.

Very interesting times to come, I'm sure about that.

VAT argument: Frank Field 1 Ken Clarke 0

At the back end of November when the reduction in the VAT rate was announced I was quite clear in my own mind that this particular policy wasn't going to do the job intended. There doesn't appear to be any evidence that it has motivated shoppers to go spending again, not that it would be easy to judge whether any extra activity would be down to the VAT cut or more likely the massive discounting taking place on the High Street. Interestingly Simon Wolfson of 'Next' and Sir Stuart Rose of 'Marks and Spencer' have poured cold water on the VAT plan this week.

This whole VAT thing came up for debate in the House of Commons last month and the government comfortably won the vote with a majority of 80. One Labour MP who voted with the Tories and LibDems was Frank Field. Now I am an admirer of Frank Field who is quite prepared to assert his independent view and go off message, we need more like him. It will be remembered that he led the rebels causing the government to cave him over the matter of the 10p tax rate. Incidentally what Gordon Brown did for purely political purposes, abolishing the 10p rate in his final budget, is something I believe should never be forgotten or forgiven.

It was former Tory Chancellor Ken Clarke who was one of the first cheerleaders for the VAT rate cut but I can't help thinking that perhaps he is feeling a bit silly now. Clarke is generally credited with doing a good job looking after the Nation's finances in the dying years of the Major administration and has business experience as well. Therefore I was surprised at him taking the stance he did on the VAT.

There are of course instances where the consumer will clearly benefit from the VAT rate change, particularly on the service side as opposed to retail. An example - a car needs £300 of work done on it to pass the MOT test. This is essential expenditure not discretionary purchasing. As such the saving on VAT would prove to be very acceptable! In the HoC debate Stephen Timms for the government reckoned that the average household spent £900 a month on VAT rated goods and services which would mean a saving of £20 per month following the VAT change. Put like that it sounds good but (a) I'm dubious about the figures and (b) I don't think that is enough money to make the family go out and spend the saving. It might go toward paying off a credit card bill (no bad thing) but stimulate them to spend more in the shops? I don't think so.

Bearing in mind that the VAT rate change was the flagship policy in last year's pre-budget report it looks as if the government aren't very keen to shout about its supposed benefits at the moment. My gut feeling is that it's there because of the insistence of the old chancellor (Brown) rather than the present incumbent (Darling).