Right-wing Tories upset by Cameron's tax policy

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David Cameron looks to be heading for a bust-up with Conservative right-wingers after making it clear that tax cuts will take second place to economic stability at the next election.

Edward Leigh, Tory chairman of the Commons Public Accounts Committee, led the questioning of the strategy adopted by the party leader. He said: "It is inconceivable that a Conservative government will not tax people less. Otherwise what is a Conservative government for?"

George Osborne, the shadow Chancellor, defied pressure by Rupert Murdoch, the head of News International, for the Tories to make an explicit promise to cut taxes, by telling a City audience that a future Conservative government would put economic stability before tax cuts.

But Mr Cameron accused critics of clinging on to "comfort-zone Conservatism" and insisting that he would not put the brake on his reforms.

As Tory MPs compared Mr Cameron and Mr Osborne to Tony Blair and Gordon Brown, the Tory leader denied that he was turning the Conservatives into "a pale imitation of New Labour", as Mr Murdoch had suggested. He added that the policies of the right had delivered the Tories defeat in the past two elections. "We supported tax cuts at previous general elections, but Murdoch didn't support us then. We should not take his words at face value," said one ally of Mr Cameron.

Guaranteed promises of lower taxes would not be an immediate imperative because "if the public finances are in a mess, then sorting them out will have to take priority over promises of tax cuts", said Mr Osborne.

But he promised that under the Conservatives, economic growth would eventually outpace public spending, creating a "sustainable path to lower taxes".

Des Browne, Chief Secretary to the Treasury, claimed this would mean cutting public spending by £25bn a year. "We always said that David Cameron was just putting a new gloss on the same old Tory policies. Today we have seen that confirmed," he said.

Mr Cameron's cautious strategy has been warmly welcomed by modernisers in the party. One former frontbencher said: "They ought to be prepared to give two fingers to Murdoch and The Sun, if necessary. If it looks as though we are heading for power, Murdoch will come on board."

Another prominent moderniser who has led calls for a softer social side to the Tories, said: "The public just won't buy the crude tax cut promises any more."

The strategy for winning the centre ground is causing intense frustration among a small group of right-wingers. Eric Forth, a close friend of defeated leadership candidate David Davis, openly questioned the strategy at a private meeting with Mr Cameron last week, saying that if the Tories did not stand for tax cuts, smaller government and tight immigration controls, what did the Conservatives stand for?

But allies of the Tory leader said the right-wingers were in a minority and that Mr Cameron would not make the mistakes of his predecessors in lurching to the right as the election approaches. However, they are also alarmed that in spite of a honeymoon period with the media, Mr Cameron has been unable to establish a lead over Mr Blair. The slump in support for the Liberal Democrats to 15 per cent - their lowest level for years - is seen as a golden opportunity for the Tories to overtake Labour. But if that does not materialise, more Tory critics of Mr Cameron's strategy could be emboldened to speak out.