Page last updated at 12:46 GMT, Sunday, 28 June 2009 13:46 UK

Public spending row intensifies

Ed Balls: "Tories will have to slash budgets for education, police, for defence"

Ministers will have to be "defter and smarter" when it comes to public spending, Ed Balls has said, while denying future cuts are inevitable.

The schools secretary denied Labour were ducking the issue, as the debate over spending and alleged cuts hots up.

The Tories say ministers are keeping people in the dark about spending.

And Lib Dem Treasury spokesman Vince Cable said both parties needed to be more honest about the fact that "big programmes would have to be cut back".

Spending priorities

Labour says improvements in public services can still be maintained despite the tougher economic climate.

On Monday, ministers will outline a new approach to public service provision - contained in the government's new "national plan" - with central performance targets in health and education being replaced by a series of minimum entitlements for parents and patients.

But the Tories say Labour is being dishonest about the money available for public services in future years and the budget squeeze required due to the recession and the need to reduce spiralling debt levels.

David Cameron has called on the prime minister to apologise after he said that capital expenditure would rise every year to 2012 when it will actually fall after 2010.

That suggests to me they have got something to hide
Philip Hammond on Labour spending plans

On Friday, Environment Secretary Hilary Benn appeared to suggest that his department would have less to spend after the next election - the first minister to publicly acknowledge this - but No 10 rejected such claims.

Mr Balls acknowledged government departments would have to make difficult decision about spending priorities but he denied that overall spending cuts were inevitable.

Mr Balls said a "steady" reduction in the public debt was necessary but he said he was confident that as the economic outlook improved, Labour would be able to "release resources" to key areas.

"We are increasing investment this year and next year," he told the Andrew Marr programme.

He said he "rejected entirely" reports that Labour had ditched plans for a comprehensive spending review this side of an election - expected next year - in order to avoid a debate on the issue.

The last comprehensive spending review (CSR) - normally held every two years - was in 2007, covering the period up to 2011.

Mr Balls said this was a decision for Chancellor Alistair Darling and he contrasted Labour's commitment to public sector investment with the Conservatives.

The Tories would have to "slash" spending in areas such as schools and defence on "day two" of coming to power in order to fund their pledge to cut inheritance tax.

"We must set out the differences in values, judgements and priorities," he said.

'Kept in the dark'

But Shadow Chief Secretary Philip Hammond said media reports that Labour had postponed a spending review until after the next election showed they wanted to keep the opposition and the public in the dark.

"The government is now reneging on its commitment to do a comprehensive spending review before the election," Mr Hammond told Adam Boulton on Sky News.

Vince Cable on public spending: "The political class has to be more honest with people"

"If they are now u-turning on that, that suggests to me they have got something to hide."

The Lib Dems said ministers were not telling the truth when it came to expenditure as current spending was effectively already being cut.

Mr Cable said the public wanted a mature and open debate about spending before the election, adding that the Tories had a responsibility to be much more upfront about what they would do.

"We have to be much more honest with people than we have been in the past," he told Andrew Marr.

He added: "We have to identify the big programmes now which will have to be cut back."

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