Increasing income tax for top earners to 45% from 2011 would be "difficult to avoid", Mr Osborne has said - a stance backed up by Mr Clarke and shadow foreign secretary William Hague.

BBC: Peter Mandelson

Trevor Clarke's party colleague, William Humphrey, raised the possibility that by taking evidence from witnesses accompanied by lawyers the committee was overstepping its responsibility .

BBC: OFMDFM Committee

But with Tories in charge of home affairs (Theresa May), foreign affairs (William Hague), defence (Liam Fox) and justice (Ken Clarke), they will not get their way on these issues.

ECONOMIST: The new coalition government

It had long been expected that a battle to replace William Hague might end up as a fight between Mr Portillo and Mr Clarke and that now seems a highly likely outcome.

BBC: By Nick Assinder