Labour will leave us with a 'financial mess'

The Shadow Chancellor’s “get real” comments were seen as an important step in his party’s election strategy to make it clear to voters just how bad the economic situation is. He said: “I’m confident the British people understand the serious problems that lie ahead and that we can have the support of the public in dealing with the mess that Labour has created.’’

Mr Osborne urged Chancellor Alistair Darling to admit in next week’s Budget that his spending plans were unaffordable. And he said the next election would shatter the myth that Labour could be trusted with the economy. He said Budget day would be a day of reckoning when the depths of the recession and the terrible state of public fi nances would be revealed.

Mr Darling is expected to unveil limited spending cuts but plans for a full-scale review are thought to have been shelved. Labour contemplates growing public spending by 1.1 per cent a year in real terms between 2011 and 2014, following a general election next year.

That would be barely a third of the average increase since they took power in 1997. But Mr Osborne said the state of the public finances was so bad that public spending would have to be tightened even further if confidence was to be restored in Britain’s ability to beat its massive deficit.

He said that both he and the party’s leader David Cameron had mentally adjusted themselves to the fact they would have to take difficult decisions for the good of the country. He said the Conservatives had already ditched their commitment to stick to Labour’s spending plans in the face of worsening economic conditions.

They are likely to put forward most of their tax and spending policies in outline rather than spell out detailed plans as happened at the last election when their campaign was “drowned in numbers”. Mr Osborne has stressed in the past that he will not be able to make precise plans until he gets into the Treasury and is able to see the exact state of the nation’s finances.

The Conservatives maintain that their long-term ambition is still to lower taxes but have been forced by the recession to make clear that restoring the health  of public fi nances must be their top priority. Mr Osborne yesterday said he favoured spending cuts to fi ll the fi nancial black hole and warned that big tax rises could kill recovery.

Sir Peter Gershon, who led Mr Brown’s drive for effi ciency savings in Whitehall, yesterday offered support for the argument that spending must be curbed. He said increased Government efficiency was not enough to repair the country’s fi nances and whichever party was elected would face “some really tough political decisions.