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 Peter 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 £38bn (€43bn) to halve Britain’s record structural deficit over a four-year period and had set out plans for tax rises totalling £19bn (€21bn).
Asked how this would impact on ordinary people’s lives, 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.
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 £38bn 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.”
Mandelson claimed that Conservative proposals to cut £6bn (€6.9bn) 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”.