Tories pledge reform before tax cuts

A sharp warning that a Conservative government will not rush into tax cuts was delivered today by new shadow chancellor Oliver Letwin.

In a move clearly designed to neutralise attacks from Labour, Mr Letwin said the first Tory priority would be "radical" reforms of the health service, education and public transport.

He said on the BBC's Today programme: "I cannot give any kind of guarantee of a particular tax cut at a particular time. We absolutely have to get reform of the public services first."

Mr Letwin's approach marks a big turnaround from that of Iain Duncan Smith. He pledged that an incoming Tory government would give top priority to tax cuts, a commitment known to have worried Michael Howard, then shadow chancellor.

Mr Letwin rejected Labour calls to give up his job in the City as a director of merchant bankers NM Rothschild.

MP Kevin Brennan said he accepted that there was no breach of the rules but added: "It is perception that counts in politics, and although he is not a minister of the crown he is occupying the position of shadow chancellor, dealing with matters relating to the City, relating to business and investments and formulating alternative government policy on that. I would have thought that the potential for a conflict of interest would have meant it would have been better for him to stand aside."

Mr Letwin said he would obey rules on declaration of business interests " punctiliously". However, he went on: "I think it is valuable that I have current knowledge of how industry and the City are faring under the Government."

The shadow chancellor signalled that there will be no Uturn on another controversial Tory policy, to scrap university top-up fees. If the Tories stick to their guns it greatly increases the chance of the Government suffering a Commons defeat over top-up fees.

Mr Howard was today preparing for his first dispatch box showdown at Prime Minister's Questions. Tory MPs believe he will be able to put Tony Blair on the spot more than Mr Duncan Smith did.