General election 2017: PM says Tories are 'party of lower taxes'

The Conservatives are "a lower tax party", Theresa May has insisted, amid speculation her party may raise taxes if they win the general election.

Speaking in Dudley, she said Labour's "natural instinct" was to raise tax.

But the prime minister would not say whether she would keep her party's 2015 manifesto pledge of no rises in VAT, national insurance or income tax.

The shadow chancellor, John McDonnell, accused the government of planning "a tax bombshell".

Liberal Democrat and former business secretary Sir Vince Cable said Mrs May was now "at war" with her Chancellor Philip Hammond over tax.

Mr Hammond said on Friday there should be "flexibility to manage the system" of taxation.

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But Tory party sources have told the BBC that his comments were not a hint at plans to raise taxes in the upcoming Conservative manifesto.

After her speech at the Netherton Conservative Club in Dudley, Mrs May was questioned by reporters about her tax plans.

"At this election, people are going to have a very clear choice," she said.

"They will have a choice between a Conservative party, which always has been, is and will continue to be a party that believes in lower taxes... [or] a Labour party whose natural instinct is always to raise taxes."

The prime minister said the choice was also between "strong and stable leadership under a Conservative government" or a "weak and unstable coalition of chaos lead by Jeremy Corbyn".

Mrs May also declined to guarantee existing spending on state pensions, which currently ensures a minimum 2.5% annual increase.

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Mr Hammond told the BBC's Kamal Ahmed: "All chancellors would prefer to have more flexibility in how they manage the economy and how they manage the overall tax burden down [rather] than having to have their hands constrained.

"But what we put in the manifesto will be decided in the next few days and we will publish that."

Shadow chancellor John McDonnell said the chancellor was facing a £2bn gap in his budget following the government's decision not to go through with an increase in the rate of National Insurance contributions for the self-employed.

"He's recognising he's got problems in the economy, he's got problems in the budgeting that he's done and as a result of that there will be tax rises under a Conservative government if they are re-elected.

"This is quite a tax bombshell."

Sir Vince added that Mrs May needed to clarify her taxation plans and how she planned to "fill the Brexit black hole" in the budget.

"Philip Hammond admitted yesterday that taxes would have to rise, no doubt due to Theresa May's hard Brexit that could leave anything up to a £100bn Brexit black hole in the public finances," he said.

"Theresa May should come clean on how she intends to fill the Brexit black hole if she won't increase taxes."