Page last updated at 14:47 GMT, Sunday, 16 May 2010 15:47 UK

Cameron announces audit of 'crazy' Labour spending

David Cameron: "I have always described myself as a Liberal Conservative"

David Cameron has announced an audit of the government's books after finding examples of "crazy" spending decisions in Labour's last year in power.

The prime minister told BBC One's Andrew Marr show the review would be launched on Monday by the new Office of Budget Responsibility.

He also announced a crackdown on top civil service bonuses.

And he reassured Lib Dems that deputy prime minister Nick Clegg would be part of the "inner core" of his government.

Mr Cameron said the budget for performance-related pay for NHS managers and senior civil servants for 2010/11 will be cut by two-thirds, saving £15m.

We believe that spending should bear the brunt of the burden in terms of cutting the deficit
Prime Minister David Cameron

The prime minister said: "What we have seen so far are just individual examples of very bad procedures and bad behaviour, spending decisions taken in the last year or so of the Labour government that no rational government would have done - giving something like 75% of senior civil servants bonuses after everything that's happened in the current year.

"That's not a fiscal stimulus. It is a crazy thing to do. We are beginning to find individual decisions like that."

In a statement, the Cabinet Office said only the top 25% of performers would receive a bonus so in future only those making an "exceptional contribution" would be rewarded.

Mr Cameron said it was important to "lead from the front", highlighting last week's decision to cut cabinet ministers' pay by 5% - but he was also careful not to alienate senior public servants writing to them to explain his thinking.

He also announced an inquiry into civil service salaries, to be headed by left wing campaigner Will Hutton, vice chairman of think tank The Work Foundation.

'Difficult decisions'

Mr Cameron said NHS managers and other senior civil servants should not earn "more than 20 times the lowest paid" in their organisations.

The same principles should apply to the BBC, he added, although it would not be included in the review as it was independent.

Scottish Secretary Danny Alexander, a Liberal Democrat, suggested on BBC One's Politics Show Labour may have been reluctant to do a coalition deal with the Lib Dems because they knew what was in store for an incoming government.

"Maybe one of the things they've been doing over the past few months is laying a few stink bombs around Whitehall, and maybe some of them knew that and didn't want to be there when they went off," he said.

Mr Cameron said the spending audit, to be launched by Chancellor George Osborne on Monday, would form part of a wider programme to set out government spending plans for the coming three years.

He said that would involve "difficult decisions" in most Whitehall departments to reduce Britain's record budget deficit.

He also refused to rule out an increase in VAT in Mr Osborne's emergency budget, but said: "We believe that spending should bear the brunt of the burden in terms of cutting the deficit."

'Progressive alliance'

Labour MP Frank Field is also understood to have been offered a role with a new Poverty Commission.

Mr Cameron said he had considered trying to set up a Conservative minority government when his party failed to win an overall majority in last Thursday's general election but he and Mr Clegg decided to go for a full coalition.

He said a document would be published giving more details on how the coalition will work - but he insisted Mr Clegg would be in the "inner core" of the government, which meant he would chair cabinet committees, which guide policy formation, and be consulted on ministerial appointments and sackings.

Mr Clegg will stand in for Mr Cameron at prime minster's questions, when the Conservative leader cannot attend, but Lib Dem MPs will sit together in the Commons and the two parties will fight each other at by-elections.

But the prime minister made clear he expects the two parties to work together and hopes to avoid separate "political cabinets" made up only of Tory or Lib Dem ministers.

Mr Cameron acknowledged the coalition deal would upset some in his party, but insisted it was more than a marriage of convenience, saying: "I have always described myself as a liberal Conservative."

And he paid tribute to the "brave and courageous" actions of Mr Clegg, whose party is meeting to discuss the coalition deal and who has faced criticism from one of his predecessors, Charles Kennedy.

Mr Cameron described his deal with the Lib Dems as a "progressive alliance" based on shared values of "more freedom in our society" and the decentralisation of power. He insisted "this is not just about a group of people who have got together for power".



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