Redwood sees tax cuts as solution to pounds 152bn debt

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Tony Blair last night accused the Prime Minister of being scared of facing his own party members - in front of the media - and he called on him to debate pre-election issues in "a dialogue with the British people".

Speaking during a visit to Cardiff, the Labour leader said: "John Major would never dare, in a million years, face his own activists. He wouldn't let the cameras into the building because of what people would see."

The challenge, made during Mr Blair's "street-by-street" campaign to take Labour's message directly to the country, was a pre-emptive strike at a political tour by the Prime Minister, which starts in Scotland today, and which is due to take in the North-west, the Midlands, and the West Country.

As the pre-election campaign ground into second gear, the Conservative initiative of the day took the form of a selective briefing for Tory newspapers - to announce that Norma Major will for the first time be joining her husband on the hustings trail. Mrs Major has shown little interest in full-scale political activity, but the party evidently considers her participation as a big plus.

The announcement came after a rare accord between Labour and the Tories who united yesterday to deny that the state of public finances was "unsustainable", with even the Liberal Democrats admitting that their plans for tax rises were "relatively marginal".

Responding to The Independent's revelation yesterday that the Government was now pounds 152bn in debt, after having inherited pounds 20bn of assets in 1979, Tory leadership challenger John Redwood repeated his call for the Chancellor to cut income tax to 20p in the pound in November's Budget. "These figures are very sensitive to growth," he said, "and tax cuts are the best way to promote growth and cut unemployment."

Gordon Brown, the shadow Chancellor, insisted that Labour would reveal its tax plans only after it had the chance to assess the state of the economy for itself. But he went on: "People are starting to see very clearly that the fundamental underlying growth rate of the economy has not been good enough, that the state of the public finances is extremely poor."

He repeated his call for an independent audit of the Government's accounts before the Budget, but a Labour spokesman later refused to accept that the figures meant a Labour government would have to raise taxes.

Malcolm Bruce, the Liberal Democrat Treasury spokesman, said both the other parties were "depending on wishful thinking". It was not possible to improve public services without increasing taxes, as Labour seemed to suggest, nor to cut taxes without cutting services, as the Tories implied, he said.

The Liberal Democrats say they are prepared to put income tax back up by 1p in the pound to 25p if needed to improve education. But Mr Bruce admitted that, "in relation to the shortfall, our proposals are relatively marginal". He pledged that his party would vote against any tax cuts in the Budget.