George Osborne: "The modern Conservative Party is now the dominant progressive force in British politics"
Shadow chancellor George Osborne has said the Conservatives are now the "progressive" force in UK politics.
He said they planned to reform public services such as schools in a way which could achieve necessary spending cuts without harming frontline services.
Mr Osborne said Labour had "abandoned the field of progressive politics" and predicted they would be "condemned to irrelevancy for many years to come".
But Lord Mandelson said Tory "political cross-dressing" would "fool no-one".
In a speech to the Demos think-tank Mr Osborne also warned against a "caricature" of Conservatives as wanting always to "turn the clock back".
The party had led the way recently by holding an open primary to select the parliamentary candidate for Totnes, Devon, he added.
To say that they are the progressives in British politics at one level is laughable. I think it's an audacious try by George Osborne.
Lord Mandelson Business secretary
And attacking Labour's record, Mr Osborne said: "There is nothing progressive about out-of-control spending that the poorest end up having to pay for, and nothing fair about huge national debts that future generations are left having to pay for.
"And it is that fiscal responsibility allied to a passionate belief in public service reform - particularly in education - which is the only progressive route out of this debt crisis."
Spending on health had to be accompanied by "productivity gains", while increasing pupil numbers meant education policy needed reform to ensure more money gets to the "frontline".
Mr Osborne said: "The torch of progressive politics has been passed to a new generation of politicians - and those politicians are Conservatives.
"By pursuing a course of illiberalism, centralisation, fiscal incontinence and opposition to meaningful public service reform, the current leadership of the Labour Party has abandoned the field of progressive politics."
In a question-and-answer session Mr Osborne said Labour was "nowhere on the terrain" of ideas to tackle the debt crisis and the need for spending restraint "and I personally think that will condemn them to irrelevancy for many years to come".
He praised Sweden as a country which had improved its education system, despite its own financial crisis, by allowing independent providers into the state sector.
These companies were able to negotiate better contracts for computers, text books and land and had forced the state bureaucracy to reduce its costs, he claimed.
Earlier, the shadow chancellor told BBC Radio 4's Today programme that he had not discussed the idea of increasing VAT to 20% to deal with the government's deficit.
Lord Mandelson: "My old friend George Osborne is involved in a bit of political cross-dressing"
But Lord Mandelson told the BBC that Conservative plans to "take £5bn of public spending out of the economy" damaged the party's claim to be progressive.
He said : "I think my old friend George Osborne is involved in a bit of political cross-dressing and I don't think it's going to fool anyone."
Lord Mandelson added: "To say that they are the progressives in British politics at one level is laughable. I think it's an audacious try by George Osborne.
"To start taking those amounts of money out of the economy when we are not even out of recession, would they really consider that it would be progressive to do that with the economic and human consequences that this would have?
"It's frankly irresponsible of them even to put forward these ideas."
Liberal Democrat chief-of-staff Danny Alexander said: "It's not clear if George Osborne developed his understanding of the word progressive with his chums in the Bullingdon Club or on the deck of Oleg Deripaska's yacht, but it seems he has misunderstood the concept.
"A progressive party would not cut taxes for multi-millionaires, stand in the way of reforming Parliament or side with bigots, homophobes and climate change deniers in Europe."
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