Portillo will promise to cut taxes by £5.5bn

The Tories will trump any tax cuts unveiled by Gordon Brown in the Budget on Wednesday by announcing an extra £2.5bn of tax reductions before the general election.

The Tories will trump any tax cuts unveiled by Gordon Brown in the Budget on Wednesday by announcing an extra £2.5bn of tax reductions before the general election.

Michael Portillo, the shadow Chancellor, will promise to match the £3bn of tax cuts expected to be announced by Mr Brown and to go further. The Tories, who would reduce Labour's spending plans by £8bn a year, have already earmarked £5.5bn for tax cuts, and will use the remaining £2.5bn to outflank the Chancellor.

Mr Portillo will tell the Tories' spring conference in Harrogate today: "Tax cuts are the only agenda for Britain." He will announce plans to cut the Treasury's 2.5 per cent inflation target to 2 per cent, saying the Government has consistently undershot Treasury forecasts, and that inflation has been lower than 2.5 per cent since April 1999. "There is growing evidence that this is a structural rather than a temporary phenomenon," he will say. "It would be in the national economic interest to reduce the inflation target in order to lock in long-term low inflationary expectations."

Mr Brown may move eventually to a lower inflation target by using the different way of measuring inflation used in other European Union countries. On this measure, inflation in Britain would now be 0.9 per cent instead of 1.8 per cent.

The Tories hope the Harrogate conference will be their springboard for a general election campaign. They will put Europe at the heart of the campaign by promising that their first Queen's Speech would include a Bill to prevent any further transfer of powers from Westminster to Brussels.

Francis Maude, the shadow Foreign Secretary, will tell the 1,200 representatives that a Tory government would open immediate negotiations to renegotiate the common agricultural policy, common fisheries policy and the Nice Treaty.

Michael Ancram, the Tory chairman, will launch a strong personal attack on Tony Blair when he opens the conference this afternoon, saying: "More of us each day regard with undisguisable contempt his moral cowardice and the way he never accepts responsibility for the failings of his ministers and his Government." He will say the Tories are ready for the election whenever it is called.

Mr Blair sought yesterday to quash speculation about a giveaway Budget and suggested that higher public spending should take priority over tax cuts. "It is time to ask not what we can give away for the next election but what we can invest for the next generation," he told the Welsh Labour Party conference in Swansea.