The Tories are set to unveil their plans for tax cuts next week as the results of their government spending review are finalised.

Shadow chancellor Oliver Letwin will disappoint right wingers by promising limited but fully costed proposals for £5 billion coming off the tax burden.

The Conservatives have pledged to scrap 168 quangos and agencies as part of their programme of cost savings.

Michael Howard said that the move would save £4.3 billion a year even though only 71 of the bodies would be totally abolished.

Some 78 would have their work transferred to another body; 19, including the Met Office, the Driver Vehicle Licensing Authority and the Armed Forces Pay and Personnel Agency, would be privatised.

Other areas of government for the chop include the prime minister's delivery unit and the Downing Street strategy unit.