Worried Tories look to early tax cuts

THE FORMER Conservative minister thought for a minute, reflecting on a speech by Tony Blair which stressed family values, patriotism, and law and order. ''All he needs now," he said, "is to get the Labour Party committed to hanging. That's the only right-wing icon left."

With Mr Blair's tanks all over their lawn, the omens for John Major's Conservatives, still languishing below 30 per cent in the polls, are not good. Their best hope, as many MPs admit, is early tax cuts. Nigel Evans, MP for Ribble Valley, argues: "We have to start revisiting our tax-cutting ways. We can't afford to wait until the Budget next year. If there is any growth in the economy, the Chancellor has to grasp the nettle now."

The money for pounds 4bn of tax cuts could be found through raiding the pounds 6bn contingency reserve, as suggested by a City report. But the question preoccupying the Tories is: what kind of tax cuts?

Some favour raising the pounds 154,000 threshold at which people have to start paying inheritance tax. Others worry about the idea. "All you need," said one source, "is for a marquis to die a couple of weeks later, leaving pounds 40m untaxed, and you are back into the fat-cats argument."

Abolishing capital gains tax, said one Conservative source, would probably do most to stimulate the economy. Raising the level at which people start paying higher-rate tax, on the other hand, would do most to benefit Tory supporters. Or, the source continued, the Chancellor "could do something sexy, like cut the basic rate". That looks the most likely option.

Ministers have been struggling to find clear blue water in other areas. Meetings at the Home Office have pondered the question: what can we say that Jack Straw cannot copy? Possibilities include a decision to proceed with identity cards, a tougher sentencing policy for persistent offenders and an extended prison building programme.

In education, ministers hope to highlight threats a Labour government might pose to some schools. A ministerial source said: "There are a large number of parents of children on assisted places [at public schools], or in grammar or grant-maintained schools. And that is a constituency that can be played to." Gillian Shephard, the Education Secretary, is expected to announce an extension of the assisted-places scheme.

On health, too, the Tories will try to present Labour as potential wreckers. Ministers will argue that the party wants another big shakeup, with fund- holding for general practitioners under threat.

Then there is Europe. Tory leaders are unsure whether this will play well for them or not. Among other EU members, the move towards federalism, and particularly towards the single currency, seems to be slowing. This reduces the potential for Tory splits. But equally, with next year's inter- governmental conference now unlikely to propose big centralising advances, the option of entering an election on a Euro-sceptic ticket has largely disappeared.

Whatever happens, Labour is determined not to miss a trick. As Cabinet ministers check into Blackpool's Imperial Hotel, six members of the party will arrive at the nearby Savoy. For the first time Labour is sending a unit to "rebut" Tory allegations in daily press conferences.

But the Tories want to go one better than Labour in public relations. The Purcell theme tune from the general election will be replaced by one from the film An Officer and a Gentleman, with the Tories pledging to lift voters "up where they belong". By the end of the week, promises Brian Mawhinney, the Tory chairman, every party representative will be humming the tune.