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Cabinet rivals Ed Balls and Alistair Darling were today embroiled in a row over spending.
The Chancellor rebuffed an “audacious” demand from Mr Balls for a 1.3 per cent spending increase over four years, worth about £2.6 billion.
Mr Balls put in the long-term bid despite the Treasury ordering every department to find savings because of the unprecedented pressure on the public finances. Mr Balls claimed he had been asked to send in a bid.
However that was flatly contradicted by a Treasury source who said: “Alistair did not ask to receive what was sent.”
Treasury sources said the Chancellor was not currently considering bids for spending beyond 2011 and seemed perplexed as to why Mr Balls's Department for Children, Schools and Families had put in the bid.
However a source close to Mr Balls insisted: “Ed would not submit anything to the Treasury that had not been discussed with the Chancellor.”
The jousting was seen by some as Mr Balls burnishing his leadership credentials as a fighter against Tory cuts at Mr Darling's expense. It comes ahead of next month's pre-Budget report, which will reset spending before the election.
A senior Treasury official slapped down Mr Balls, saying: “We have not launched the Comprehensive Spending Review and there is not a process by which we have asked such departments to put in bids of this sort.” A source close to Mr Balls denied the £2.6 billion figure contained in a report in today's FT but did not deny that a bid had been submitted to take spending forward to 2014.
A 1.3 per cent annual increase would easily break departmental guidelines and is twice the overall Whitehall spending ceiling of 0.7 per cent after inflation. Such an increase for education would require 12 per cent cuts in other departments, rising to 20 per cent if Labour holds back from cutbacks to the NHS.
Treasury sources revealed there will be no Comprehensive Spending Review until next year. They said it was impossible to consider departments separately from each other. According to the FT, Mr Balls wanted to demonstrate that Labour would not “sacrifice children's services to the cause of deficit reduction”. Officially, Mr Balls's department said it could not comment.
The Conservatives seized on the spat. Shadow Treasury minister Philip Hammond said: “Gordon Brown's government is disintegrating.”
Reader views (9)
@ Nobby, London
"Labour are trying to safe guard education"
I think you will find that statement is an oxymoron.
- Frank, Home Counties, England., 18/11/2009 09:22
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Balls knew it would it turned down. To the voters it looks as though Labour are trying to safe guard education, but with Darling turning it down it also looks as though the Government are serious about gripping department spending.
- Nobby, London, 17/11/2009 13:32
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He is just doing what this government has been very good at - throwing other peoples' money at everything in sight. If only they were as skilled at making sure it was spent wisely and got value for money, we would be a very different country and they would be in power for many years to come.
- George Woodhouse, Stalham, Norfolk, 17/11/2009 12:18
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Thank heaven I am out of that circus called England.Who the hell is that goon balls?
- John, benidorm,spain, 17/11/2009 11:59
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Balls at school was in fact very good at economics....shame he has evolved into such a political spiv.
- Tom, St. Albans, 17/11/2009 10:58
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If parasite Balls possessed a brain he would be very dangerous.
- Reuben Camara, Plot 1, Morecambe Compound, EUSSR, 17/11/2009 10:14
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Labour would not“sacrifice children's services to the cause of deficit reduction”. Really?
Triteness and Fiscal lunancy all in one sentence. If this carries on, the Tories election slogan should be 'a vote for Labour is a vote for the IMF'.
- John, Bristol, 17/11/2009 10:11
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Perhaps it would help if Balls went back to school to learn economics.
- Tojo, Hythe Kent, 17/11/2009 09:57
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Balls is obviously Broons spiritual successor, they're both utterly clueless and throw taxpayers money around like it grows on trees.
- Bob, Cheam, 17/11/2009 09:21
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