No new spending plans before election, says Mandelson

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The Government will not set out a fresh set of public spending plans before the next General Election, Business Secretary Lord Mandelson indicated today.

"I believe that the Chancellor has made that judgment, yes," he told the BBC Radio 4 Today programme amid Tory claims that Labour was trying to hide future cuts from voters.

"The spending period currently operating in Government stretches beyond the next election and therefore it is reasonable to review public spending at that time," he said.

Lord Mandelson said future spending would depend on economic recovery but there would be a "reprioritising of expenditure both within and between departments".

A boost in social and affordable housing would be part-funded by money switched from the Home Office and Department for Transport budgets, he said.

He defended the approach ahead of Prime Minister Gordon Brown's unveiling of a series of policy shifts designed to give people more power over public services.

It includes a major expansion of private sector involvement in health provision today as Mr Brown fights to revive his political fortunes.

Lord Mandelson said it was impossible to predict how the economy would perform over the next two years.

"We are not in a position, in June 2009, to be able to forecast what growth will be and what the performance of the economy will be in 2011. That is why we have to wait."

Any spending review now "would be based on entirely speculative projections of what economic growth will be", he suggested.

"Therefore, what we have decided to do is to link our spending plans to reality rather than to speculation."

Asked how the Government could afford its new pledges, Lord Mandelson said: "We have to live within our means as a Government and being fiscally responsible is an important principle of New Labour.

"So the new policies that are being unveiled today by the Prime Minister reflect a reprioritising of expenditure both within and between departments.

"To give you one example: he will be announcing a major boost in the provision of social and affordable housing over the next two years. That reflects a switch in spending both within the relevant department but also between the Home Office and the Department for Transport to the other department.

"So there are things that can and should be done and, although future spending will be conditioned both by the need to rebalance public finances, to pay down borrowing, our ambition to sustain higher levels of spending will be linked to the performance of the economy on growth and our ability to generate employment.

"And the Prime Minister will be explaining how we believe we can generate both growth and employment in order to pay for the public spending and investment we want to sustain."

Asked if the Government planned to trim spending in real terms, he said: "The spending review, that will take place after the next election when the current review period has ended, will take account of the state of the economy at the time."

He accused the Opposition of being committed to cut "come what may" to pay for tax cuts for the rich.

And he said the Tories were selling their soul to the private sector.

"The Tories, in my view, have entered into a sort of Faustian pact with producer interests in the public services; they are saying they will spend less on public services and they are also saying they will require less of them."

Among the most radical moves being put forward by the PM will be giving patients cash to go private if NHS Trusts cannot meet the 18-week target between GP referral and treatment.

Cancer sufferers would be able to take their funding elsewhere if they are not given a specialist appointment within two weeks.

Similar "entitlements" are being considered for accessing an NHS dentist, late opening hours for GPs at weekends, and getting palliative care at home.

The amount of money would be equivalent to the cost of the treatment on the NHS, and Trusts that fail to meet their obligations could also face other financial penalties.

The changes are likely to be portrayed as a climbdown by Mr Brown, who battled against less drastic Blairite efforts to involve the private sector in public services.

There are similarities to the "Patient's Passport" policy dropped by the Tories after the last General Election. Currently only elective surgery such as hip replacements and cataract surgery is provided through private treatment.

However, after a series of dire poll results and leadership speculation, aides hope that a new policy platform can counter criticism that the Government is "drifting" and get Mr Brown back on track.

The premier will attend a series of events today to launch the Building Britain's Future document.

Other pledges are expected to include freeing up local authorities on housing allocation so priority can be given to people with ties to the community. The BNP exploited anger over the perception that immigrants are pushed to the top of housing lists during recent local and euro elections.

There will also be a "significant" expansion of funding for social housing, and the scrapping of "top-down" targets across services, according to Government sources.