* PM Cameron promises income tax cuts
* Britain to hold national election in May
* Cameron's party behind in polls
* Anti-EU UKIP party wooing Conservatives
(Adds details on human rights proposal)
By Andrew Osborn and William James
BIRMINGHAM, England, Oct 1 Prime Minister David
Cameron promised to hand almost half the British population a
tax cut if re-elected next year, a pledge he hopes will win over
millions of voters and refocus debate away from a schism inside
his party over Europe.
The promise, which will cost over 7 billion pounds (11.35
billion US dollar) to fund, was a calculated gambit to try to
shift the narrative from one which has focused on the damage the
anti-EU UK Independence Party (UKIP) is doing to Cameron's
re-election hopes by siphoning off voters and lawmakers.
It was also an attempt to kick-start his Conservative
party's moribund rating in opinion polls, where it has been
trailing the opposition Labour party for months, by holding out
the prospect of a sweetener to balance a less enticing promise
to freeze most welfare pay cheques and to slash state spending.
"So Britain: what's it going to be?" Cameron, 47, asked
supporters packed inside a concert hall at his party's annual
conference in the central English city of Birmingham. "I say:
let's not go back to square one. Let's finish what we have
In a speech which touched on Scotland's decision to remain
in the UK, the threat posed by Islamic State, and Britain's
Second World War role, Cameron told activists he wanted and
needed to be re-elected with an overall majority so he could
govern alone and not in a coalition as is now the case.
"Believe me: coalition was not what I wanted to do; it's
what I had to do," he said. "And I know what I want next. To be
back here in October 2015 delivering Conservative policies."
Cameron has endured a tumultuous month taking Britain into
battle with Islamist militants in Iraq, pondering his own demise
if Scotland had voted to leave the United Kingdom, and watching
as two of his lawmakers quit to join the anti-EU UKIP party.
In his speech he tried to strike a calm statesman-like
posture as he sought to shore up his leadership, steady his
party, and dangle some eye-catching promises before voters.
The centrepiece was a promise to lift 1 million workers out
of tax if re-elected by allowing them to earn more before they
pay any income tax, a pledge he said would also mean reduced tax
bills for 30 million more people, or just under half the
country's total population.
He also pledged to ease the burden on the middle class by
raising the threshold for the country's 40 percent rate of
"With the Conservatives, if you work hard and do the right
thing we say you should keep more of your own money to spend as
you choose," Cameron told delegates to applause.
In another pledge aimed at reassuring voters, Cameron said
he'd increase spending on the country's National Health Service,
an issue which voters list as a priority and perceive Labour to
be ahead on.
Hours before Cameron delivered his keynote speech, Arron
Banks, a businessman who electoral records show has given tens
of thousands of pounds to Cameron's party, said he was switching
his support to UKIP.
His move followed that of two Conservative lawmakers to
UKIP, which wants an immediate British EU exit and sharp curbs
on immigration, and ratcheted up fears in Cameron's party that
UKIP will split the centre-right vote and allow the opposition
Labour party to win.
Nigel Farage, UKIP's leader, hailed the latest defection as
a sign his insurgent party was attracting big financial backers
to bankroll what he has described as an earthquake in British
"The other parties are losing Councillors, MPs and backers
to UKIP, not only voters, and they are all playing their part in
changing the course of politics in the UK for good," he said.
Cameron's party played down the defection and Cameron used
his speech to hammer home what has become his party's main
rallying cry not to vote UKIP, presenting the 2015 election as a
straight choice between Cameron and Ed Miliband, the leader of
the Labour party.
He and his aides have repeatedly argued that a vote for UKIP
will weaken his own party - the traditional standard bearer of
the centre-right - and make it easier for Miliband to win.
"It doesn't matter whether parliament is hung, drawn or
quartered, there is only one real choice. The Conservatives or
Labour," said Cameron.
"Me in Downing Street, or Ed Miliband in Downing Street. If
you vote UKIP that's really a vote for Labour. On 7th May
(election day) you could go to bed with Nigel Farage, and wake
up with Ed Miliband."
Trailing the opposition Labour party in most opinion polls,
Cameron is straining to pacify the Eurosceptic wing of his own
party which wants him to offer firmer commitments on changing
Britain's relationship with Europe.
He has promised to renegotiate Britain's EU ties if
re-elected before holding an EU membership referendum in 2017,
but has been coy about spelling out what he wants to change with
some Conservatives sceptical about the strength of his resolve.
Cameron used his speech to try to calm those jitters, saying
he was steadfastly committed to overhauling Britain's EU ties
and would seek to alter the bloc's freedom of movement rules to
curb intra-EU immigration.
"Britain, I know you want this sorted so I will go to
Brussels, I will not take no for an answer and when it comes to
free movement - I will get what Britain needs," he said.
"Anyone who thinks I can't or won't deliver this - judge me
by my record."
Cameron also sought to appease the right wing of his party
with a promise to scrap the Human Rights Act - domestic
legislation which enshrines the international principles of the
European Convention on Human Rights (ECHR) into British law.
Senior Conservatives have been frustrated by rulings under
the act which they say allow criminals to unfairly escape or
delay punishment and often cite the deportation of radical
Muslim cleric Abu Qatada to Jordan which was stalled for years.
Cameron said he would introduce a new rights bill in its
place - a move that would give the Conservatives freedom to
pick and choose which principles from the ECHR were directly
enforceable through British law.
Increasingly Eurosceptic rhetoric has stoked concerns among
some big business leaders who largely support Britain's EU
The Institute of Directors, a lobby group for British
business, praised Cameron's tax cut proposals but said the
attempt to hinder the free movement of people in the European
Union was disappointing.
"On Europe, it is disappointing that the Prime Minister
intends to put toughening up the rules around the free movement
of people at the core of his impending renegotiation strategy,"
said Simon Walker, its director general.
(1 US dollar = 0.6168 British pound)
(Editing by Guy Faulconbridge)