Cuts to public spending are at the centre of the pre-election political battle, after chancellor Alistair Darling appeared to accept that they would be deeper and tougher in a fourth-term Labour administration than in the 1980s under Margaret Thatcher.
His comments sparked Conservative claims that Labour’s election strategy had been “blown apart” by Wednesday’s Budget, which made plain the need for reductions in spending in all areas except health, schools, police and overseas aid.
But Labour hit back with a challenge to the Tories from Lord Mandelson, who accused shadow chancellor George Osborne of failing to explain to voters where and how extensively he would wield the axe.
Analysis by the independent Institute for Fiscal Studies yesterday suggested that areas like transport, defence, housing and universities could be facing a real-terms reduction of 25 per cent to their budgets by 2014-15 if Labour maintains its pledge to protect priorities like the NHS and schools from cuts.
The IFS noted that total public spending rose by 1.1 per cent annually in real terms during the Thatcher era - almost three times the 0.4 per cent a year proposed for the next Parliament in Mr Darling’s Budget.
Asked on the BBC whether the Treasury figures suggested deeper, tougher cuts than those implemented by Mrs Thatcher’s government, Mr Darling replied: “They will be deeper and tougher - where we make the precise comparison, I think, is secondary to an acknowledgement that these reductions will be tough.”
Shadow chancellor George Osborne said: “Labour has been found out.
“Gordon Brown is basing his election campaign on the claim that Labour can go on spending. That is completely blown apart by Alistair Darling’s admission, under pressure, that Labour’s own Budget numbers imply deep cuts.”
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