Murdoch hints at switch if Cameron pledges tax cuts

Rupert Murdoch, the head of News International, urged David Cameron last night to commit the Conservative Party to a Thatcherite tax-cutting agenda to win the next election.

The proprietor of The Sun and The Times, whose influence is credited with helping Tony Blair and New Labour win power, hinted that he would be prepared to switch support to Mr Cameron's style of Conservatism if he adopted tax cuts.

To win the next election, he said the Tories would have to say, 'We are going to shrink the size of government', rather than keep expanding. "They have got to shrink taxation in many ways to get better rewards for people who are prepared to risk everything."

His call for tax cuts will act as a rallying call to Conservative right-wingers who have privately warned Mr Cameron he is in danger of standing for nothing by ditching traditional Tory policies. Mr Cameron's allies will warn him against veering to the right to please Mr Murdoch. The shadow Chancellor George Osborne will say today a Tory government under Mr Cameron will put economic stability before tax cuts.

In the latest repositioning by the party, Mr Osborne will use a keynote speech in the City of London to make plain that sorting out the public finances must take priority over reducing taxes. His message will disappoint Tory right-wingers who have been calling for a return to cuts in taxes.

The support of The Sun would be a tempting prize for Mr Cameron. Mr Murdoch complained that Britain under New Labour was "overtaxed and I think business is suffering. I think this year is going to be a very tough year. We think in the newspaper industry it is very challenging.''

Mr Murdoch said he had "a couple of charming meetings'"with Mr Cameron. "He is very bright. He has put together a more impressive front bench than there was before," he said.

But he warned: "It seems to be all about image. I would like some facts and real policies rather than just a lot of almost throwaway positions they take to try to change their image.''

Mr Murdoch said there was a danger the Tories under Mr Cameron would be a cheap imitation of New Labour. "If you believe everything he says, there's not going to be an alternative between him and a New Labour government.''

He warned Mr Cameron against abandoning tax cuts to support the NHS. "If he means it, it is very mistaken. My problem with the Tories and why we swung so hard behind New Labour was the Major government which didn't know where it was, and for the first time we had a Labour proposal which seemed to be very acceptable and reasonably moderate. We swung behind Labour and they didn't turn away from the Thatcher legacy. Tony Blair is on record saying he would not undo what she had done, and he has not.''

He said he could not believe Mr Cameron would ditch the Thatcher legacy. "I cannot believe his party will allow it, nor will the people of Britain. They recognise the Thatcher years were years of complete turnaround for Britain."

He said under Labour and James Callaghan, "Britain had had it". Mr Murdoch recalled the Winter of Discontent and said Lady Thatcher had transformed the country. "Her trouble was that she didn't have her Cabinet with her, and she didn't do as much as she would have liked to have done."

Refusing to rule out giving his endorsement to Mr Cameron, Mr Murdoch said: "He had better talk to the editors of the papers. It has got to be a convincing alternative and something to make Britain a real enterprise country, that rewards people, that welcomes migrants, tackles the school system and brings in private help with the health service."

He said Mr Blair needed to win his battle with Labour rebels over schools reforms. "If Labour is so stupid to prevent Blair putting through these reforms, the Conservative Party should certainly support Blair in achieving them. That is so important for this country."

Writing in The Daily Telegraph today, Mr Cameron seeks to reassure right-wing critics of his leadership. He says that he is "Conservative to the core" and the party would not become "a pale imitation of New Labour" under him.