Labour fights back on spending cuts charge

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Labour fought back today against charges that it has not been straight with voters over public finances after an independent economic think tank warned Britain was heading for cuts on a scale unseen for a generation.

Business Secretary Lord Mandelson acknowledged that there would be more pain to come after the General Election, and admitted he could not predict how it would impact on incomes and living standards.

The Institute for Fiscal Studies accused all three main parties yesterday of failing to come clean over the scale of the public spending cuts that will be needed after the May 6 poll.

Labour and Liberal Democrat plans would require cuts deeper than in any period since the 1970s, while the Conservative programme involves larger spending reductions than in any five-year period since the Second World War, said the think tank.

But the Lib Dems have identified only a quarter of the spending cuts and tax rises needed to achieve their plans, Conservatives around one-fifth and Labour one-eighth.

Chancellor Alistair Darling insisted this morning he had been "very clear" on the need to cut spending by £38 billion to halve Britain's record structural deficit over a four-year period and had set out plans for tax rises totalling £19 billion.

Asked how this would impact on ordinary people's lives, Lord Mandelson told a press conference in London: "Nobody can forecast what the impact will be on incomes and living standards in this country because it depends so much on our resumption of economic growth."

It was "simply not possible" for governments to set a budget over the timescale considered by the IFS, which looks at the period to 2016/17, he said.

Lord Mandelson and Foreign Secretary David Miliband dismissed comparisons of the UK's economic plight with that of Greece, whose sovereign debt has been slashed to junk status, prompting panic in the markets.

But the Business Secretary accepted that Britain was heading for a "much, much tighter financial climate in the coming period than anything we have known in the last 10 years" which would require "tough choices on spending".

"There will be around £38 billion of reductions against our present plans that will have to be found," Lord Mandelson said.

"But if you are asking me for the specifics of each cut in each department's spending, you know it is not possible at a time like this to set out that detail.

"We are coming out of an economic and financial hurricane but we are not clear of it yet."

Lord Mandelson claimed that Conservative proposals to cut £6 billion from public spending this year to fund the reversal of the planned National Insurance rise would pose "a colossal risk which would send our economy backwards".

And he claimed that David Cameron would "take an axe to public spending", not just because of the parlous state of the finances but because Tories "are positively salivating at the lips over what they can do to cut spending as rapidly as possible, because that is what they believe in".

Lib Dems leader Nick Clegg acknowledged the "full, gory detail" of what will happen to public spending had not been revealed to voters.

But he said while the Lib Dems did not have the "full answer" they had been open about the first £10 billion "downpayment" that would be made to tackle the deficit.

He told BBC London's Vanessa Feltz: "I think what is, right, and I've been quite open about this: has any political party really been able to spell out in full, gory detail exactly what's going to have to happen over the next several years to fill the black hole? No.

"That's partly, frankly, because for very good reasons quite a lot of this is going to depend on growth and tax receipts and all sorts of things.

"We always have been really open. We don't have the full answer about how to deal with the full black hole.

"What we have done, I think uniquely in British politics, it's the first time I can remember any political party doing this, we have set out literally the numbers in our manifesto about how we would provide a £10 billion downpayment within the next year or two to fill the black hole."

Mr Cameron insisted he had gone as far as it was possible for an Opposition to in spelling out the detail of cuts which will be required following the election.

But he admitted that the spending reductions announced so far were "still not enough" and accused Labour of a "complete con" for claiming it would go on investing while other parties would cut.

Whichever party wins the election will have to implement cuts and Tories were "far in advance of the other parties" in saying how they would do it, he said.

Speaking during a campaign visit to a Coca-Cola bottling plant in Wakefield, Mr Cameron said: "We were the first party to say that public spending had to be cut. The others weren't admitting that. We were the first to say 'Here are some of the difficult things that need to be done'.

"We are going to have to freeze public sector pay, we are going to have to ask people to retire a year later, we are going to have to say to people on over £50,000 you can't go on having tax credits. Those are tough and difficult things.

"As an Opposition, when we have got a Government which hasn't even done a three-year spending review, is there more we could do? I don't think there is.

"I think we have gone further and faster than any Opposition in British political history in saying here are tough things that need to be done and also we have said we accept that is still not enough."

Mr Cameron attacked Labour for attempting to turn the election into a choice between investment or cuts: "All they do is talk about what people's plans for cuts are and pretend that they are going on investing.

"It is a complete con. Whoever wins the election, there will have to be cuts."