Howard to annouce council tax cuts for pensioners

Michael Howard will make the Conservatives' first firm tax-cutting commitment today by promising an average cut of £342 in council tax bills for pensioner households.

He will pledge that £1.3bn will be set aside for reducing council tax, arguing that above-inflation rises in recent years have hit retired people on fixed incomes particularly hard.

Under the Conservative plans, the council tax discount would be given to single people aged 65 or more and to couples where both husband and wife have reached 65. The party estimates that 3.8 million households would benefit.

It would help pensioners who do not qualify for relief on their council tax bills because they have modest savings but there will be restrictions to ensure the super-rich do not cash in.

The Tory promises follow accusations that Labour has used the council tax as a form of stealth tax, allowing bills to rise by 70 per cent since 1997. Average bills are to increase by 4.4 per cent in the next financial year, well over the rate of inflation.

The Tories argue that the effect has been that 40 per cent of the increase in the basic state pension for single people has been swallowed up by higher council tax demands since Labour won power. Mr Howard told BBC1's The Politics Show yesterday: "We make this our priority. We think older people in our country need dignity, respect and security. We owe them a great deal. Many of them fought for the freedoms which we enjoy today."

He denied that his role in introducing the poll tax 15 years ago undermined his credibility on local government finance.

In an admission that will be exploited by Labour, he said: "I was wrong about that. We made a mistake about that, governments do make mistakes."

Mr Howard also promised that more hospital beds would be created by the Tories to enable dirty wards to be closed.

Labour is expected to announce a rise this week of 20p in the national minimum wage to £5.05 an hour.

The party is also expected to include, in its election manifesto, a promise to offer women who do not work a state pension. Presently they only qualify for the state pension if they work for at least ten years. That restriction would be swept away under the Labour plan, entitling a woman to a yearly pay-out of £4,139.