Michael Howard has said the Conservatives will not cut taxes if it hampers the party's ability to fund reforms of Britain's public services.

Amid continuing debate over the future of Tory tax policy, the shadow chancellor vowed that the party would continue to "believe in low taxes".

"Under the Conservatives, as Iain has always insisted, a fair deal on tax and improving the public services will go hand in hand," said Howard.

"Because reforming and improving the public services is the only way to break Labour's vicious circle of ever higher taxes and ever failing services. It is the key to everything we want to achieve. It has got to be done and we'll do it."

A Conservative government would restore the link between state pensions and earnings, David Willetts said.

Under the plans, single pensioners would see their income boosted by £7 per week above inflation. The shadow work and pensions secretary delivered the commitment as the party conference in Blackpool debated policies to deliver "a fair deal for pensioners and savers".

Conservatives last night screened their most aggressive party political broadcast in years. Accusing Tony Blair of "lying", Paul Baverstock, the party's director of strategic communications, described the broadcast as "a nice piece of political knockabout".

The Conservatives are considering turning their back on seaside conference venues including Blackpool for in favour of other cities such as Newcastle and Birmingham.

Although Blackpool borough council expects the Tories to return in 2005, Central Office says it has made no decision on a return in two years, after a break in Bournemouth.

"There's a lot of speculation," a spokesman said. "We're in Blackpool now, having a great time. If only someone could sort out the weather."