Redwood steps up calls for tax cuts

A 20,000-word policy agenda including a call for cuts in taxes is to be issued by John Redwood, intensifying the pressure on John Major to adopt a right-wing agenda for the general election.

Mr Redwood is determined to set out his policy priorities before the Conservative manifesto is finalised, in the hope of influencing the Cabinet over the direction of the Tory campaign.

It will highlight the battle for the soul of the Tory Party. The One Nation group of Tory MPs is planning to publish its own agenda for the manifesto in early May, as a direct rebuttal of Tony Blair's claims that Labour is the party of the centre.

Mr Redwood is anxious to ensure that the Tories strengthen their appeal to the traditional Tory voters, who supported Margaret Thatcher through three elections, by highlighting the distinctive policies that set the Tories apart from Labour.

His radical right-wing agenda may also be seen as a further plank in the campaign for the leadership. Downing Street patched up a rift with Mr Redwood last week but positioning is going on for a long-term contest after the election.

Mr Redwood is also preparing for talks with Sir James Goldsmith, the international financier, over his threat to field Referendum Party candidates against Conservatives.

Sir James yesterday repeated his threat to stand against David Mellor in his Putney constituency on the ITV Jonathan Dimbleby programme. His intervention is being taken seriously by Tory Party leaders, who have so far refused to meet his demand for a referendum on Britain's withdrawal from the European Union.

Sir James said yesterday if he was asked to "back off" by Mr Redwood, he would "listen to his point of view and reject it".

The threat of Sir James to Tory chances in crucial marginals may be leading to a more Euro-sceptic tone from the Government.

Downing Street yesterday dismissed as "ridiculous" a report that Mr Major had described Britain's European partners as "a bunch of shits" but there was no doubt that he was angered by the refusal to lift the ban on the export of British beef. Colleagues said Mr Major was inclined to use "ripe" language when he was annoyed.

Malcolm Rifkind, the Foreign Secretary, will meet European partners today as part of the inter-governmental talks on a European common foreign policy. Right-wing Tory MPs will keep up the pressure tomorrow with a backbench bill by Ian Duncan-Smith rejecting the powers over Britain of the European court of justice.

Mr Redwood believes from his own soundings that the Government has got to fulfil its pledges to cut taxes, if it is to regain the trust of the voters. He has called for pounds 5bn in tax cuts.

John Major has privately cast doubt on the prospect of cutting 4p off the basic rate to fulfill the 1992 Tory target of reaching standard rate of 20p in the pounds .

Michael Heseltine, the Deputy Prime Minister, yesterday dismissed Mr Redwood's argument that Kenneth Clarke can finance tax cuts by efficiency savings. He also tried to turn the attack on to Labour over taxation, after a poll of MPs showing many Labour MPs support Clare Short's view that those earning pounds 40,000 or more should pay more in taxes.

He accused John Prescott, the deputy Labour leader, of supporting Ms Short by agreeing on the BBC Breakfast with Frost programme that a fair tax system was one in which some people paid less tax, and others paid more.

Ms Short, challenged about her remarks, refused to recant, but in a clear reference to the "spin doctors" around Mr Blair who disowned her last week, she referred to a few in the party who did not support those aims.

The Labour leadership is likely to be under pressure from its own supporters to be more radical on a higher rate of tax. Mr Blair tomorrow will strengthen Labour's appeal to small businesses, by calling for more deregulation.