The Conservatives have unveiled their plans to reduce council tax bills for pensioners.

Under the Tory scheme, households where everyone is over 65 would receive a rebate of up to £500.

However, Labour questioned the sums involved, arguing that savings needed for such a policy could not be found.

"Even if you abolished all local government inspectorates, you could not even find half of the savings the Tories claim," said deputy prime minister John Prescott.

Liberal Democrats want to replace council tax with a local income tax.

"Pensioners should be wary that this is a promise based on uncosted figures and a cheque from the Conservatives is going to bounce," said local government spokesman Ed Davey.