Howard to unveil tax plan

Michael Howard today moved to relaunch the Tories as the party of tax cuts, with a claim his party could save money for top earners and the less well-off.

In a sign of revived Conservative confidence, he began to flesh out the party's tax-cutting proposals by launching a preelection consultation on options for reform.

This came as a new opinion poll suggests the Tories have begun to bounce back after suffering rock-bottom ratings in the late summer and early autumn. The Populus survey in The Times put the party at 33 per cent - only one point behind Labour.

Laying out his tax options, shadow chancellor Oliver Letwin said there could be a cut in thresholds for the rich, and higher allowances to lift poorer households out of tax.

The Tories believe they have identified savings of ?20 billion in Whitehall spending.

Choices on Mr Letwin's "menu" include putting up allowances in line with earnings rather than prices, exempting people working only 20 hours a week at the minimum wage from tax and raising higher-rate thresholds to earnings over ?41,000 a year.

Senior Tories have noted that in the US, the Democrats failed to damage President Bush despite campaigning against his tax cuts.