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Speaking at Nottingham University on Friday, as part of a gathering of academics to discuss "Cameron’s Conservatives", Ken Clarke warned that the level of debt awaiting the next government would be a "nightmare" compared to the borrowing he had to manage as Chancellor of the Exchequer in the early 1990s.

He said that public expenditure restraint would have to produce large savings to avoid "drastic" increases in taxes.

He praised George Osborne’s handling of the economic crisis and urged the Conservative Party to "minimise stupid promises".

The worst promises were rushed promises, he warned and remembered Margaret Thatcher’s commitment to honour pay settlements promised by Labour at the end of the 1970s.  That commitment delayed restructuring of the public finances by a costly two years, he warned.

He also suggested that David Cameron and George Osborne should avoid very specific descriptions of how they will restore order to the public finances.  Margaret Thatcher and Geoffrey Howe stood on a 1979 manifesto that promised to control borrowing and shift taxation from direct to indirect forms.  There were no specific references to taxes that would rise or fall.

Mr Clarke also told the Conference hosted by The Centre for British Politics that he was very "relaxed" about the state of the European debate within the Conservative Party.  The Party remained eurosceptic but it was a moderate sceptism compared with the right wing nationalism of a few years ago.  He predicted that President- Elect Obama’s commitment to the European Union would encourage all those Tories who rightly valued the Atlantic Alliance to stay close to the heart of Europe.

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