Blair pledges more cuts in taxes

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TONY BLAIR will commit himself to further tax cuts today when he unveils a new blueprint for Europe's centre-left parties with Gerhard Schroder, the German Chancellor.

Their call for reductions in business and income taxes will worry some Labour MPs, who will view the programme as a further move away from traditional Labour policies.

Other elements in the plan include: sweeping reforms of the welfare state; ending the "job for life" culture; economic reform based on financial discipline and abolition of regulations for businesses.

The proposals have been drawn up by a working party set up last year which included Peter Mandelson, who continued to serve on it after he resigned from the Cabinet last December.

The programme will be unveiled by Mr Blair and Mr Schroder at a press conference at Labour's Millbank headquarters tonight.

Officials involved in drawing up the programme say it signals New Labour's final rejection of "old Labour" policies. But they insist it remains faithful to Labour's traditional commitment to social justice.

"Lower taxes rather than higher taxes are the way forward," one close Blair ally said last night. He said the Prime Minister was determined to extend Labour's cuts in corporation tax, the 10p starting rate of income tax introduced in April and the 1p cut in the 23p basic rate.

Labour will hail the joint programme as evidence that Mr Blair is leading mainstream opinion in Europe while the Tories are isolated. Last night Gordon Brown, the Chancellor, challenged the Tories to rule out any future links with Italy's neo-fascist Alleanza Nazionale Party, after revelations in The Independent yesterday that it had held secret talks with British Tory MPs.