Shadow chancellor Michael Portillo charmed the Conservative Party conference with a call for the Tories to become the party of "low taxes and social justice" as he outlined his plans for increasing spending on health.

Mr Portillo pledged to spend more on public services than Labour had in any year it had been in office - but still to leave room for tax cuts.

As a nation, Britain is spending too little on health today

Michael Portillo

And he launched a counter-attack on Labour's plans to increase spending on the health service by calling for a boost to private spending on health - which is likely to ignite a fierce debate.

"As a nation, Britain is spending too little on health today," he told conference.

The Conservatives have already promised to match the government's big boost in spending on the NHS, but Mr Portillo argued that it was just as important to encourage more people to take out private health insurance and "tear down the Berlin Wall" between the public and private sectors.

Mr Portillo also pledged to cut taxes on businesses, to restore the married couples allowance, to give more help to pensioners - and to cut the duty on petrol.

In addition and to strong applause, he said that the Conservatives would keep the pound.

"Our economic policy depends on Britain having its own currency and setting its own interest rates," he told representatives who had queued to see Mr Portillo's first speech at a Party conference since his defeat in the General Election.

NHS Battleground

Mr Portillo said that it was wrong that people were encouraged to spend more of their own money on their home, their retirement and their education, but not on their health.

Mr Portillo will keep Labour spending plans

"For reasons of pure dogma we discourage people from putting money into their health.

"Other countries would have schemes whereby employers and trade unions would provide schemes and we believe we ought to do more of that in Britain too", he said.

But Mr Portillo failed to offer any further tax concessions for private health care.

Shadow health secretary Dr Liam Fox backed Mr Portillo's plan, and said the Conservatives would give decision-making power back to doctors.

"A bigger cake benefits everyone if a real partnership is introduced," he said.

But Health Secretary Alan Millburn said that the Conservative proposals would lead to a two-tier health service.

Keep the pound

In a wide-ranging speech, Mr Portillo praised Denmark's rejection of the euro to conference cheers.

We are a party for people, not against people We are far all people: black Britons, British Asians, white Britons

Michael Portillo

"Denmark has shown that people will not be bullied and fooled by arrogant politicians.

"Remember, the euro is a bright idea recommended by the same people who brought you the Dome," he said.

Mr Portillo said that the Tories shared the same view of the euro as the general public.

"British public opinion is suspicious of the euro as an unproven piece of political dogma. That is our view. That is the view of the moderate majority," he pointed out.

With the Eurosceptics in the ascendancy, it was left to a fringe meeting for former Chancellor Kenneth Clarke to warn the Conservatives not to exclude membership of the euro if it led to real economic benefits.

"The Conservatives will not win the next general election if we adopt a policy of extreme Euroscepticism," Mr Clarke said.

Tories for diversity

Mr Portillo also embraced a new, more compassionate version of Conservatism by embracing ethnic diversity and calling for tolerance for asylum seekers.

"We are a party for people, not against people.

"We are far all people: black Britons, British Asians, white Britons."

"We are for people whatever their sexual orientation.. why should people respect us if we don't respect them," Mr Portillo said to a much more muted Conference hall - until Mr Hague led the applause.