Tories hint at `rolling tax cuts'

Major in U-turn over education spending n Blair accuses Government of lying, cheating and betrayal

MORE money for education and a three-year programme of tax cuts emerged yesterday as the most likely cornerstones of the Government's strategy to win back middle-class support.

A U-turn over education spending, which has been savagely cut this year, was made clear in John Major's "new agenda" speech to the Conservative Central Council. The Prime Minister also spoke of an initiative to bring pensioners into voluntary community work.

Mr Major was in Birmingham launching his battle for "middle England" against Tony Blair, who was speaking in Derby. But neither party leader used the term. Mr Blair, at the Labour women's conference, made his appeal to "middle-income" Britain, which had been "lied to, cheated, betrayed" by the Tories. Jeremy Hanley, the Tory party chairman, wooed "middle England - middle Britain, if you like" on Friday.

Yesterday, Mr Hanley again got his share of the limelight by appearing to back a plan to phase in tax cuts over three years - straddling a general election - and to challenge Labour to say it would reverse the final stage if elected. Asked whether the Government might introduce a rolling programme of tax cuts into a Finance Bill - as Norman Lamont did with his tax increases - Mr Hanley said the idea was "perfectly valid". He added: "There is a medium for doing so by binding your own government to a course of action, and it is up to the electorate to decide whether they would like us to continue."

The move is being considered by Kenneth Clarke, the Chancellor, but he remains cautious about big reductions before City confidence in the recovery has been consolidated.

The Prime Minister promised yesterday: "Now the economy is growing again and we can look forward confidently to bringing tax down."

On schools, where public protests about this year's cuts have prompted comparisons with the poll tax, Mr Major said: "While I know this year's settlement has been tight, I can assure you education will be at the top of our priorities, as the economy delivers further growth." Senior party figures, it is said, recognise the damage this year's settlement has caused among supporters in middle England.

Mr Major indicated that he had no intention of giving up the Tory leadership. He told party activists: "I did not fight my way from a small terraced flat to this platform just for the hell of it. You don't just drift into Downing Street." He added: "It may indeed be a monumental scrap, but I have never run away from a fight in my life."

But Mr Blair hit back with his strongest attack on the Government's record since he became leader. "The Tories are on the run," he said. "They are panicking because they have been found out and they know they have been found out. The British public now look at the Tory party and they see extremism. They see failure. They see betrayal. They see incompetence."

Middle-income Britain, he said, would judge the Tories by what they did. "Their taxes have been raised - the biggest increase in peacetime history. Their mortgages are more expensive. Negative equity is hammering them. Their schools and hospitals are not as good as they were. Their transport systems aren't working and crime, and fear of crime, now eat into every home in every part of Britain." Labour now spoke for the majority; it was the party that "understands the hopes and fears of the majority of decent people".

Mr Major's speech, billed as giving a new direction for his party, was made up of small-scale policy initiatives, many of which are already in train, rather than the bold vision widely predicted.

There was the clearest indication yet that identity cards will be introduced, highlighting middle-class fear of crime. Mr Major promised a consultation document, but a Downing Street source said: "There are going to be ID cards of some shape or form, for example in the social security field."

Mr Major also mentioned recruiting probation officers from a wider range of backgrounds.Following Mr Blair's claim that Labour is now the party of duty, Mr Major responded: "Duty, responsibility, self-responsibility are the core of the Conservative instinct," and held up the example of his wife, Norma, as a volunteer. He said: "The talents and experience of pensioners are too often wasted at the moment. They should be used in ways that fulfil their lives and benefit the rest of us." In June the Government will announce a programme for voluntary service covering all ages.

On housing, Mr Major promised a White Paper which, aides said, would help extend the right to buy for tenants in the one million housing associations.