Tories: We'll put a stop to reckless Labour spending

In a move that will delight Conservative activists and MPs, shadow chancellor George Osborne has decided he will not commit to matching Labour's spending plans beyond 2011.

Mr Osborne will also undertake a rigorous "review" of the latter stages of Labour's three-year spending round that ends in 2010/11.

While the Tories will stick to their pledge to match Labour on NHS, education and international aid for the next three years, they expect to find savings in many other Whitehall departments, party sources revealed.

The change of tone on public spending came as Mr Osborne warned today that Gordon Brown and Alistair Darling's handling of the economy had left Britain in a financial "straitjacket".

Labour's surge in borrowing, with some estimates predicting it could soar to £100 billion by the end of the year, together with its reckless spending rises of recent years have left Britain's finances in a parlous state, said Mr Osborne.

Many on the Right of the party were furious last year when David Cameron and Mr Osborne announced they would match Labour's three-year spending plans for 2008/9, 2009/10 and 2010/11.

The move was aimed at pulling off Labour's trick in 1997 of committing to "eye-wateringly tight" Tory spending plans in their first term.

Mr Osborne still believes that some flexibility is needed should the Tories inherit a downturn and has not ruled out tax rises to keep the public finances in the black.

Yet while the pledge managed to head off charges of "Tory cuts", many Conservatives-believe that the party is confident-enough to plan for more sensible spending beyond 2011 - when the economy may begin to strengthen.

Mr Osborne is determined to bring borrowing back under control. At next month's party conference, the Conservative economic blueprint will include a new "fiscal framework" on how a Tory administration raises and spends money.

Aparty source said: "While there is no shift from our pledge to match Labour from 2008 to 2011, there is a shift in tone. We have specific pledges on health, education and international development, but beyond that if there are areas where Labour has made irresponsible spending pledges, as well as going on a borrowing splurge, we will have to look at that.

George is not going to commit to every dot and comma of Labour's plans."

In an interview with T he Guardian today, Mr Osborne stressed the dire problems that may greet a new Tory government.

"One of the things we are very conscious of is that we are probably going to inherit a complete economic mess," he said.

"I think we will be shocked by the state of the books when we get there. The large budget deficit is the straitjacket on British politics at the moment." He also gave his views on everything from his upbringing to tax breaks for marriage.

THE ECONOMY

Mr Osborne is reviewing his economic masterplan in the light of the global downturn and its impact on Britain. "One of the things we are very conscious of is that we are probably going to inherit a complete economic mess," he said.

"I think we will be shocked by the state of the books when we get there.

"The large budget deficit is the straitjacket on British politics at the moment."

TAX CUTS

Mr Osborne signalled that he might disappoint Right-wing supporters who are looking for early tax cuts. He warned against giving way to "siren" calls which could damage the economy and added that former prime minister Lady Thatcher took eight years to cut the share of national income taken by the State.

"Margaret Thatcher wrestled with very difficult decisions and she was much more flexible and realistic than is sometimes portrayed," Mr Osborne said.

PUBLIC SPENDING

He also stoked up speculation that the Tories will not be bound by Labour spending plans beyond 2011.

Right-wingers are advocating that the Tories should cut public spending and a growing number of Tory thinkers have urged Mr Cameron to abandon promises to match spending plans set out by the Government. Mr Osborne, 37, appeared to be moving towards a tougher stance on public spending but stressed: "The Tory party is not there to impose impossible public expenditure cuts in an economic downturn: that's not what we believe in."

GREEN TAXES

Mr Cameron has rebranded the Tories by championing the environment.

But as cash-strapped voters struggle, one victim of the credit crunch could be green taxes especially after the revolt by motorists over higher road tax.

"I think green taxes are a very powerful tool in tackling climate change," Mr Osborne said. "[But the] case is made much more difficult by Gordon

Brown and Labour because they have used them as stealth taxes."

MARRIAGE

The shadow chancellor also sought to rebuff talk of a rift between himself and Mr Cameron over encouraging marriage through the tax system, with the Tory leader believed to be keener on the idea.

"We will recognise marriage in the tax system," he said.

But equally, he suggests that unmarried parents will not be discriminated against, adding: "I hope a Conservative government will be able to offer things for everyone."

MORTGAGES

Mr Osborne revealed that even the wealthy are feeling the impact of the credit crunch, emphasising that his mortgage had come up for renewal.

"I have the remortgage papers on my desk," he said.

"The mortgage costs have gone up, not the actual mortgage."

PARTY CONFERENCE

At the party's annual rally in Birmingham later this month, Mr Osborne will outline how a Conservative government would have to react to the changed economic landscape which now casts a "long shadow" over British politics.

The Conservative economic blueprint will include a new "fiscal framework" to govern how the Tories raise and spendmoney, overseen by an independent panel, overhauling the way multimillion pound liabilities under the public finance initiative are measured.

POVERTY

Mr Osborne also highlighted that the Tories would aim to tackle "relative" - rather than just "absolute" - poverty.

"I don't think it makes for a happy or strong society to know that there are people so much poorer than your kind of average middle class, that there is an underclass," he said.

UPBRINGING

The St Paul's-educated MP, whose father founded the wallpaper firm Osborne & Little, also contrasted his metropolitan upbringing and lifestyle with Mr Cameron's country background.

"I was brought up in the centre of London and that was my world," he said. "It's not a life of landed estates.

"My parents' set of friends operate in the interior design world, so they are journalists, writers and art dealers."