Senior Conservatives have denied suggestions of a rift over party leader Iain Duncan Smith's plans for lower taxes.

Mr Duncan Smith has signalled that lower taxes and less regulation would be at the heart of his party's next manifesto.

That stance was not contradicted by shadow chancellor Michael Howard, but he insisted he could not say whether or not taxes could be cut in his first Budget.

Would a Conservative government be a lower tax, lower regulation government than Labour? Yes Tory chairman Theresa May

Labour later claimed the Tories were "stuck in the past" and unveiled a festive joke about the Conservatives and tax cuts on the party website.

Mr Iain Duncan Smith was depicted being "haunted" by a series of Conservative "ghosts" in a Dickens-style Christmas tale due to appear on the site.

Conservative insiders say Mr Howard was just displaying the natural caution of a shadow chancellor.

'Consistent'

The tax issue is likely to rise up the political agenda in the months ahead, with the government's 1p rise in National Insurance contributions taking effect from April.

Tory chairman Theresa May was among those insisting there was "no confusion" about the party's stance on taxes.

Theresa May: No confusion over tax policy

Mrs May said: "We believe that public services at the moment in this country desperately need reform.

"Does the Conservative Party believe in low tax and regulation? Yes.

"Would a Conservative government be a lower tax, lower regulation government than Labour? Yes.

"Do we believe in reform of public services? Yes.

"Can we say now what we would do in tax terms immediately we came into government? No."

Public services needed reform and only after those changes had been worked out and costed could the party be certain about the tax implications, she said.

But Labour sought to capitalise on the issue, with Labour's chairman John Reid saying: "Until the Tories reject their failed cuts agenda for our schools and hospitals, they cannot be trusted with Britain's future.

"Only the Labour Party will make the investment and reform our vital public services need."

Clarity call

With the Conservatives still struggling in the opinion polls, former shadow chancellor Francis Maude said the leader's strategy was broadly right.

But he stressed the need for clarity on the issue of taxation and spending.

Chris Patten says the party is in "pretty deep trouble"

"It is not desirable to have confusion and I hope it can be cleared up very quickly," Mr Maude told the BBC.

Mr Duncan-Smith had committed to being a "lower-tax, lower-regulation" party in an interview with the Sunday Times.

The Liberal Democrats seized on the Tory leader's remarks.

Treasury spokesman Matthew Taylor said Tory policy on tax and public services did not add up.

"The truth is, you cannot cut taxes without cutting services," said Mr Taylor.

Meanwhile, former Tory chairman Chris Patten warned the Conservatives may not be able to mount a serious challenge for government until after a euro referendum.

Now a European commissioner, Mr Patten told BBC Radio 4's Today: "It is very difficult for the Conservative Party to get its act together as long as the European obsession remains with us."