Gordon Brown accused the Conservatives yesterday of planning cuts of up to £150bn from public services as he challenged them to come clean about their spending plans.
The Chancellor of the Exchequer, speaking on the fringes of a G8 finance ministers' meeting in New York, opened a bitter pre-election row with the Tories after Labour claimed Oliver Letwin, the shadow Chancellor, had floated the idea at a conference last week of cutting spending to 30 per cent of national income.
Mr Letwin angrily denied the claims as a "farrago of nonsense", but Mr Brown went on the attack, claiming the cuts would be "more extreme than anything Mrs Thatcher ever contemplated".
The latest row emerged after The Independent on Sunday reported Mr Letwin's comments at a conference at the Institute of Economic Affairs last week. Mr Letwin hinted at future cuts beyond the Tories' pledge to cut spending from 42 to 40 per cent of gross domestic product within six years.
He said the party would achieve its savings and "set the path of public spending on a trend to permit further reductions thereafter". He acknowledged that a proposal to cut spending to 35 or 30 per cent of GDP would be rejected by the electorate: "If those were the terms in which the general election were to be couched I am confident I could predict the result, which is that the nation would choose the higher path."
Labour seized on the comments as evidence that the Conservatives are planning deep cuts in public services, a charge which is one of the party's main attacks on the Opposition in the run-up to June's local and European elections.
But Mr Letwin said reports that he was planning cuts to 30 per cent of GDP were "unfounded" while aides insisted he had merely referred to questions put to him.
Michael Howard, the Tory leader, told the BBC: "The truth is that we have made our position very clear: we want to reduce public spending over a period of six years from 42 per cent to 40 per cent of the national income. That's our policy, that's what we'll go to the country on, we're absolutely clear on that. At the next election after that, we'll make our policy for that next parliament clear at that time."
But Mr Brown said: "It would mean rising unemployment. It is simply a return to the boom-and-bust policies that Michael Howard himself was associated with in the early Nineties when you had public spending cuts, interest rates out of control, three million unemployed, and you had a Conservative Party that was simply very poor at managing the economy.
"So I think this is a revelation that raises a whole series of questions about whether the Conservatives are telling the truth about what their real plans are for the public services. People begin to realise that this is more extreme than ever and is very damaging to the public services. Law and order would be cut, defence would be cut, transport would be cut, universities would be cut, science would be cut."