Howard has chance to profit from this election stage-setter

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Michael Howard spotted immediately the blatant political nature of Gordon Brown's pre-election Budget. The Tory leader called it, correctly, the "vote now, pay later" budget. For all Mr Brown's implied claims that the election was the last thing on his mind, this was a budget to reclaim disillusioned votes - especially from pensioners whose propensity to attend the polling station is greater than any other group.

The decision to bribe all pensioners with an additional £200 is a direct response to the Tories' promise to reduce pensioner council tax bills by 50 per cent up to a maximum limit of £500. To some extent, therefore, this battleground has become a Dutch auction between the two main parties. Mr Brown has the advantage, through the power of incumbency, to deliver his promise in time to mitigate the worst effects of council tax bills that are now dropping through pensioners' letter boxes.

But Mr Howard need not be unduly upset that Mr Brown has stolen some of his clothes. Most important, which the Tories must shout from the rooftops, is that this is a one-off payment for the coming year only - craftily not spelt out when the Chancellor announced it at the dispatch box. The council tax is the stealthiest means by which Mr Brown has increased taxes throughout his period as Chancellor. This tax has increased by 70 per cent since 1997. While most bills this spring show modest increases, there is a universal expectation of huge rises in future, following an expected revaluation and re-banding exercise in 2006. That ensures the Tories can make pensioners' council taxes a central election issue.

Mr Brown's promise to extend free bus travel to all pensioners is a blatant election sweetener. But with rural bus services in many areas virtually non-existent anyway and many large urban and metropolitan authorities having already established local schemes, the impact is hardly likely to change many pensioner votes.

Mr Howard's central task is to convince the broad mass of voters that taxes will rise under Labour. The battleground will be whether, on the one hand, voters believe Labour claims that if the Tories get in there will be £35bn of cuts in public services or whether, on the other hand, they believe Tory claims there will be a huge tax bill if Labour is re-elected.

Certainly the experience of the first budget after the Labour election win in 2001 supports Mr Howard's case. A benign pre-election Budget was followed, in 2002, by a huge tax hike of £8bn. Labour was able to get away with that on the basis that the central measure, a 1 per cent increase in National Insurance contributions, would directly respond to voter demands for increases in spending on the public services. This time, voters are not in the mood for further tax increases and may be receptive to the Tory charge that a tax hike is just around the corner.

The Chancellor has denied the Tories any space on the future of the euro - but that may unwittingly have done Mr Howard a favour. The 2001 Tory campaign "24 hours to save the pound" was a disaster. Mr Brown has proved that, so long as he is a senior figure in any Labour government, Britain will not join the single currency. The euro will not figure as an issue at this election.

At last, Mr Howard seems to have found a way of rebutting the wholly bogus charge - that so far Labour has made to stick - that he is planning cuts on frontline services. For the first time, yesterday, his Shadow Chief Secretary, George Osborne, found a form of words to indicate how the Tories would stick to current Labour spending totals on frontline public services. If Labour is re-elected it will be Labour who will, he claimed, be the party that will waste an additional £35bn on bureaucracy by the end of the next parliament that will have to be covered by additional taxation.

The Tories also have the opportunity of a further tax announcement of their own as they have still to spell out how they will use the remainder of the £4bn they have set aside for tax cuts. Mr Howard might be well advised to dust down the 1992 Tory election poster "Labour's tax bombshell".

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