Tories: no-one believes we will cut taxes

MICHAEL Howard will this week be forced to combat a growing threat to his leadership of the Conservative Party, with senior Tories attacking him from both the left and the right after their by-election disaster in Hartlepool last week.

A former shadow cabinet member has attacked Mr Howard for calling Tony Blair a "liar", and other senior Tories are saying he is too cowardly on tax.

The first battle is set to be played out today as Oliver Letwin, the shadow chancellor, will tell party members he cannot propose tax cuts during this week’s conference because no one would believe him if he did.

The Conservatives meet in Bournemouth this week for what is set to be their last annual conference before the next general election.

Most MPs attending believe they will lose and that Mr Howard will quit - making this week into a forum for leadership posturing.

Mr Howard yesterday admitted that finishing fourth behind the UK Independence Party was a "bad result" in Hartlepool, but that the party was in "quite good shape" with more members than Labour and the Liberal Democrats put together.

But two separate factions of Tories have drawn different conclusions about the problem. Former followers of Michael Portillo believe Mr Howard reminds voters too much of the Thatcher days, while right-leaning MPs consider him too soft.

John Bercow, a moderniser who was sacked from the shadow cabinet last month, attacked Mr Howard for spending too much time trying to attack Mr Blair while remaining virtually silent on his own policies.

"I think people are frankly pretty fed up with constant Punch and Judy politics," he told ITV yesterday. "The public know what they think of Labour. What are we going to do? How are we going to improve health? How are we going to improve education and so on?"

He also rejected Mr Howard’s claim, made in an interview with the Spectator magazine, that Mr Blair lied about Iraq. "If you’re asking me would I personally accuse the Prime Minister of being a liar, the answer is no," he said. But on the Tory right, a growing number of MPs believe Mr Howard has been too conciliatory towards Labour - ostracising the Tory base in the process.

"If I had sold half my stock in Michael Howard before, I have sold three-quarters of it now," said one senior front-bencher.

"The electorate hate Blair, but don’t think we represent much of a difference. Michael has spent too long winning lawyer-points from Blair and not enough time listening to what the country is telling us in places like Hartlepool."

The Scotsman understands that at least four senior members of the shadow cabinet believe Mr Letwin is making a major mistake in not proposing tax cuts - which, rebels believe, would forge a valuable tool to use on the doorstep.

But in an implicit admission of the party’s low standing in public esteem, Oliver Letwin, the shadow chancellor, will today say the Conservatives have not recovered from the broken promises of John Major’s government to be trusted on tax.

"When we were in office we made promises on tax we could not keep," he said - referring to the party’s 1992 pledge not to increase taxes, and Labour’s claim that the Major government went on to do so 22 times.

"And everybody knows what happened when Tony Blair promised that he had no plans to increase taxes at all - and then raised taxes 66 times by stealth," Mr Letwin will also say. "So no more promises on tax."

Yesterday, Mr Letwin’s spokesman said the problem - from both the Major and Blair governments - had even affected Mr Letwin’s credibility on the issue. "It’s very tempting for Oliver to give a pledge on cutting taxes, but even if he did, no one would believe him anyway," he said.

The former chancellor Ken Clark, still a serving MP, will not be there to hear Mr Letwin’s remarks.

He has let it be known that he will not attend the Tory conference - for the first time in more than 35 years.

John Redwood, back on the front bench as deregulation spokesman, has devoted his career to calling for lower taxes and today releases a new pamphlet spelling out what he wants to see.

His demands include a "standard 20 per cent rate on most earned income and all company income" and "no stamp duty over 2 per cent on anything". It was written before his promotion last month.

Lord Saatchi, co-chairman of the party, has suggested raising the lowest threshold of income tax from 4,745 to 10,000 - which would see Britain’s eight million lowest-paid workers paying no tax at all.

Although neither Mr Redwood nor Lord Saatchi would repeat these claims now they are on Mr Howard’s team, they are both understood to hold the views privately - and be dismayed that their party’s leader has not backed them.

Mr Letwin’s growing number of front bench detractors believe he lacks the necessary "killer instinct" and fear he is petrified of Mr Brown.

Mr Howard will this week try to claim ownership of the agenda by laying out reforms he would make in his first 100 days as prime minister.

Meanwhile, the Tories will pioneer a new chat show-style conference format, with delegates invited on to the stage and close-up camera shots projecting a conversational image.