Brown accused of cover-up on cuts

Tories say leaked document exposes plan by Treasury for huge reduction in spending

Gordon Brown was last night accused of covering up plans to cut public services when a leaked Treasury document showed that Labour would reduce the Government's budget by almost 10 per cent.

The Conservatives accused Mr Brown of telling "lies" as it brandished a confidential Treasury paper omitted from the Budget in April. It suggested Labour's own plans would reduce spending by 9.3 per cent in real terms between 2010 and 2014, by when it would be £36bn a year lower.

In July, the Prime Minister told the Commons: "The Conservatives are now ideologically committed to 10 per cent cuts in public services. This is not the policy of this Government. We are the party of growth, the party of jobs."

The document was sent to the Tories in a brown paper envelope. Itseems they held it back until Mr Brown finally admitted that Labour would need to cut spending, as he did on Tuesday.

David Cameron, who called a press conference to rub salt in Mr Brown's wounds, accused him of mounting a "cover-up" of the true state of the public finances. "This is about trust," he said, recalling Mr Brown's "shiftiness" in accusing the Tories of planning a 10 per cent reduction in spending while secretly planning to do the same.

"Gordon Brown was denying something his own civil servants were telling him was true," the Tory leader said.

George Osborne, the shadow Chancellor, who obtained the document, said: "This is about Gordon Brown misleading the House of Commons and not telling the truth about his own budget."

The controversy allowed the Tories to level at Mr Brown the very charge Labour is throwing at Mr Cameron – that he says one thing and does another. Labour claims Mr Cameron's "two faces" are the chink in his armour.

However, the Tories' attack left them open to criticism that they would cut spending by more than the 10 per cent forecast since they have promised to reduce the deficit in the public finances more quickly than Labour.

Mr Cameron denied that the Tories had already decided to cancel some defence contracts and repeatedly refused to spell out which areas they would cut.

Making clear that he would seek a clear mandate for a spending squeeze, he said: "No ifs, no buts, if you elect us we are going to have to cut public spending because the deficit is so bad."

But he denied Labour claims that the Tories were "salivating" at the prospect of slashing spending. "Just rubbish; nobody wants to reduce public spending," he said.

The Tories seized on three columns in the unpublished report which revealed how spending was projected to rise by the 2013-14 financial year. The last three years' forecasts were omitted from the Budget documents. They show that debt interest payments are due to rise from £27.2bn this year to £63.7bn by 2014 and the social security budget from £165.6bn to £193.4bn.

Robert Chote, director of the independent Institute for Fiscal Studies, said the report suggested there had been "something of a gap between the Government's rhetoric and its arithmetic since the Budget." He revised the IFS's forecast of a 2.3 per cent-a-year real-terms cut in spending to 2.9 per cent, the most severe squeeze since Labour went cap in hand to the International Monetary Fund in 1976. He questioned whether Mr Brown's speech to the TUC, in which he committed Labour to "cuts" for the first time, measured up to the scale of the challenge.

Downing Street denied that Mr Brown had misled parliament. His spokesman said: "I cannot comment on a leaked document. The most important point is that we have not set departmental budgets for the years after 2010-11 because of the uncertainties." He said the report was one of a series of memos that were a normal part of the Budget-making process.

The spokesman denied that a Government-wide review of spending was shelved because it would have revealed deep cuts. The outlines of the review are expected to emerge in the Chancellor 's Pre-Budget Report in November.

Vince Cable, the Liberal Democrats' Treasury spokesman, said: "It's been clear to everybody that cuts are on the way; the issue is when, how, and where. I think the Conservatives are trying to make a big political issue out of this to avoid having to say what they would do?"

Foiled by the footnotes: How the Tories discovered that Gordon Brown's sums did not add up

On the face of it, the leaked Treasury paper obtained by the Conservatives does not look particularly startling. It consisted of seven pages of dry-looking tables, setting out some of the detailed figures underpinning the official assessment of Britain's public finances.

But tucked away at the end was a series of figures that was definitely not intended for public consumption. The final table, headed "Expenditure levels and growth rates", included the "real increases on previous year" in the expenditure limits for various government departments. It showed that after a 6.4 per cent increase in the current financial year, officials had calculated that spending would fall by 0.8 per cent in 2010-11, 4 per cent in 2011-12, 1.8 per cent in 2012-13 and 3 per cent in 2013-14.

As the Tories quickly pointed out, it added up to a 9.3 per cent cut over the next four years, almost exactly the amount that Gordon Brown has been accusing them of preparing to cut expenditure by. The same table also disclosed the spiralling cost of servicing the public debt. Interest payments are projected to more than double from £27.2bn this year to £63.7bn by 2013-14.

Ministers did not attempt to deny the authenticity of the papers. The Treasury simply said it would launch an inquiry into the source of the leak.