Portillo: There should be less bureaucracy

A day before Labour sets out its legislative programme in the Queen's speech, Tory leader William Hague and shadow chancellor Michael Portillo attempted to steal a march with a promise to cut taxes by �8bn - equivalent to 4p off income tax.

But Chancellor Gordon Brown said the opposition's sums did not add up and would inevitably lead to "deep cuts" in public spending.

The issue is set to dominate the political agenda in the run-up to the general election expected next spring.

Both sides are also targeting poorer families in their efforts to claim support from undecided voters.

Public spending

The Conservatives, hit by three by-election defeats, low opinion poll ratings and speculation about Mr Portillo's commitment to politics, hoped the tax plans would help the party regain the initiative.

Mr Hague and Mr Portillo set out their stall in an address to the right-wing think tank the Institute for Economic Affairs on Tuesday.

Tory sums

Save �1.8bn by reducing civil service costs Save �1bn by cutting benefit fraud Save �900m by getting lone parents into work Save �450m by reforming industrial injuries benefit Save �400m by replacing the New Deal Save �400m by cutting red tape and selling assets Save �300m through DTI reforms

Of the �8bn tax cuts pledged, the shadow chancellor said �5bn had already been earmarked. He hoped to deliver income tax cuts of 4p in the pound by 2004.

Mr Portillo said: "Because we have specifically identified where the money is coming from, we can reassure the public that we will be able to commit to the large rises in spending on our schools and our NHS planned by the government."

He intends to give details about how the remaining �3bn would be found in the new year.

Mr Brown said there was "a black hole" in the Tory tax plans. Labour, he said, would deliver "affordable" tax cuts aimed at families most in need.

"The people of Britain will never forgive those who lurch from one opportunist tax decision to another, retreating to the old, short-termist, boom-bust ways of the past," he said.

'Moral shape'

Mr Hague rejected the allegation: "Conservatives believe high taxes damage prosperity, drive away tomorrow's entrepreneurs, undermine a good conscience, generosity, and a sense of personal responsibility and lead to a deep cynicism about the institutions that give our lives moral shape."

But his assurance that lowering tax was consistent with promoting a more selfless society was rejected by the Liberal Democrats.

Their economics spokesman Matthew Taylor said: "The fact is that Michael Portillo can't make his plans add up. Tories can only deliver tax cuts by spending less on hospitals, schools and pensioners,"

Sebastian Coe ushers William Hague away from Labour's billboard

Mr Hague told his audience: "The choice on tax is now clear, between a Labour Party that, despite all the spin and false promises, has reverted to old tax and spend, and a Conservative government-in-waiting ready to cut out waste, ready to support our NHS and our schools, ready to govern for all the people."

Both parties are targeting their spending to benefit poorer families.

Mr Portillo said Labour "stealth taxes" had hit the poorest families hard. "I intend to help families on low incomes and pensioners to live with a little more dignity rather than having to rely on the government."

Tax fight hits streets

Mr Brown, who was addressing the National Council of One Parent Families, said: "We are building a fully modern tax and benefits system under which, for the first time, the tax man can give money as well as receive it."

As well as the war of words on the issue, both parties also took to the streets. Labour supporters had paid for a billboard depicting the Tory leader and shadow chancellor as Mr Boom and Mr Bust to be driven up Whitehall in Westminster.

But its progress was unceremoniously halted by cars driven by Conservative supporters. They dodged through the London traffic and boxed the lorry in before it could reach the conference venue.