How UK Conservatives would tackle key issues

LONDON, Oct 2 (Reuters) - Britain's opposition Conservatives would face a series of thorny issues if they beat the ruling Labour Party in a national election due by next June.
They include:
PUBLIC FINANCES
If elected, the centre-right Conservatives would inherit what leader David Cameron calls a "catastrophic" budget deficit. Public borrowing is forecast to reach a record 175 billion pounds ($279 billion) this year, more than 12 percent of Britain's economic output.
The Conservatives have taken the lead in calling for spending cuts to cut the deficit, warning that if markets lose faith in Britain's commitment to cut public spending, it could have "truly devastating" consequences.
However, they have given few details on specific cuts.
George Osborne, the Conservatives' finance spokesman, said in June his party would protect health and international development spending. Cameron has said he would save money by scrapping a planned national identity card scheme.
The Conservatives would cut the salaries of government ministers and look at changing the system that allows wealthier families to receive tax credits.
The Conservatives -- traditionally committed to cutting taxes -- say they would keep Labour's planned 50 percent income tax rate for higher earners, at least initially. However, Cameron told The Spectator magazine the tax could go "at an early stage" if it turns out to raise no extra revenue.
A Conservative government would face tough decisions on defence spending when troops are fighting in Afghanistan. That could leave ministers focusing on big-ticket items such as planned replacements to the Trident nuclear weapons system, Eurofighter Typhoon warplanes, two new aircraft carriers or the Airbus A400M (EAD.DE) military transporter project.
THE ECONOMY
A Conservative government would face the problem of high unemployment even if the economy had begun growing.
The number of Britons out of work rose by 210,000 to 2.47 million in the three months to July, taking the jobless rate to 7.9 percent, the highest since November 1996.
Policymakers have warned unemployment will continue to rise even as the economy emerges from recession. Some expect the jobless total to hit three million next year.
A Conservative government would also face the problem of finding new engines of growth since the financial services sector has been badly hit by the credit crisis.
FINANCIAL REGULATION
The Conservatives say the financial crisis exposed the failure of a system of regulation introduced by Labour.
They say the Financial Services Authority regulator should be abolished and the Bank of England put in full charge of supervising financial institutions.
AFGHANISTAN
Britain has 9,000 troops fighting in Afghanistan. Heavy recent losses among British troops have led to questioning of the mission in Britain. Polls show a majority of Britons want the troops brought home.
The Conservative position on the war is little different to that of the Labour government.
Conservative defence spokesman Liam Fox said in September that his party wanted Britain to play a long-term role in the war. He said the Conservatives would consider sending more troops to Afghanistan but only to train Afghan forces.
EUROPE
The Conservatives have promised a British referendum on the European Union's Lisbon treaty if they take power and the treaty is not in force across the entire EU.
If Irish voters approve the treaty on Friday, as expected, only Poland and the Czech Republic would still have to ratify.
The treaty has already been ratified by the British parliament, but the Conservatives say they would reverse that decision if British voters rejected it in a referendum.
If the treaty is already in effect across Europe, Cameron says "we would not let matters rest there". He has refused to be more specific.
For a preview of the conference, click on [ID:nL1487893] (Reporting by Adrian Croft; Editing by Michael Roddy)