THE Prime Minister signalled yesterday that he intends to fight the next election with the same Cabinet. However, his colleagues' relief will be tempered by gloomy news today about State borrowing and economic growth.

Chancellor Kenneth Clarke will announce this morning that he is about #4.4bn out on Treasury figures predicting what Britain needs to borrow.

Later this week, he will be telling his Cabinet colleagues that even more trenchant cuts in their departmental budgets will be needed if there is to be a hope of a tax cut in his November pre-election Budget.

Yesterday, No..10 sources indicated that the Prime Minister is not yet ready to make ministerial changes this month, but they will not involve Cabinet Ministers.

Agriculture Minister Douglas Hogg is to stay in his position despite the debacle on BSE. Northern Ireland Secretary Sir Patrick Mayhew will continue to handle the delicate peace process, despite his announcement at the weekend that he will be retiring from the Commons at the next election.

Mr Major has clearly decided that it is too late to try to give his Cabinet a fresh look with only 10 months at most to go to the General Election.

His decision should command maximum loyalty from his Cabinet at a time when the Chancellor may have to consider increasing interest rates or even taxation.

All the Euro-sceptics in the Cabinet and those demanding significant tax cuts in the next Budget will have to bite on the bullet throughout the winter.

Shadow Chancellor Gordon Brown launched a pre-emptive political strike yesterday on the eve of the gloomy recasting of Treasury figures today.

He wants to know why Government borrowing has been underestimated by #44bn in the four years since the last election.

``It is now time they came up with answers to explain this black hole in their public finances,'' he said.

Mr Clarke has already admitted publicly that he has no explanation for his Treasury's wrong forecasts. At the same time, the projected growth figure for Britain is expected to be at least a half-per-cent lower than his 3% projection last autumn.

The failure in tax revenues right across the board has been leading the Chancellor to play down hopes for tax cuts in November.

At the weekend, he stated that a tax-cutting Budget is a ``complete non-runner.'' He added ``My boffins got their estimates wrong.''

Mr Brown yesterday claimed that this goes to the heart of the General Election argument that the Tories cannot be trusted with the nation's finances.

Mr Brown also wants to know why VAT revenues are so low, why corporate tax revenues have also fallen and how much is being lost by more widespread corporate tax avoidance.

In Brussels yesterday, Mr Clarke said: ``Tax cuts are a very good thing, but you only get tax cuts when firstly, you have got your spending under control, still respect your priority spending commitments and got your borrowing on a firm downward path.''

The Liberal Democrats yesterday claimed that tax cuts in the next Budget are now out of the question.

Their spokesman, Mr Malcolm Bruce, said: ``Regardless of the need to meet the EU convergence criteria, no prudent and sensible Government should be running the vast borrowing deficits that this Government has been incompetent enough to build up.''

The Cabinet is expected on Thursday to face up to the implications of all this in regard to departmental spending. The gloomy figures will affect spending on health and even defence and all other departments except education which has been declared as Mr Major's number one priority.

A further irritation to the Prime Minister are the utterances of former Prime Minister Sir Edward Heath who celebrates his 80th birthday today.

He said yesterday on BBC Radio that Tory pro-Europeans may have been wrong, out of loyalty to Mr Major, not to fight harder for their case against the Tory Euro-sceptics.

``We know the battles that he has had in the Cabinet and the rest of us have kept quiet,'' he said. ``We may have been wrong but it was out of loyalty that we did it. It may be the time has come when we have all got to shout out. The rest of the party is not prepared to go along with the rebels.''

This could affect Mr Major's stance taken against the EU Social Chapter, which he claimed would destroy jobs in Britain.

He believes that the European Commission is trying to get round his negotiated opt-out in the Maastricht Treaty and has taken the matter to the European Court and warned that there can be no revision of the Maastricht Treaty without this being settled.

Pro-European MP Hugh Dykes (Harrow East), chairman of the Commons European Movement, yesterday defended the Brussels directive which would limit Britain to a 48-hour working week, and said the the Government must ``uphold the rule of law''.

Mr Dykes claimed the Government was in danger of ``over-reacting'' on the issue.

He said it would cause ``head-shaking sadness if, yet again, Ministers pounced too eagerly on this item to appease our xenophobic, anti-European minority of MPs who may be getting the wrong end of the stick''.

``There is plenty of time anyway and the European Court will not decide this matter until the autumn. The directive doesn't impede legitimate overtime agreements.''

q.Sir Edward Heath yesterday also criticised Tory tactics for fighting Labour.

He said the party slogan, New Labour New Danger was ``absolutely wrong'', and warned it would not carry much influence with the younger generation of voters.

Sir Edward said that the Tories faced a ``tough job'' to win the General Election.