Labour rules out borrowing to reverse coalition cuts
(34 minutes later)
The economy is going to make life very tough for whoever wins the next election, Ed Miliband and Nick Clegg are warning their respective parties.
Labour would not increase borrowing to reverse cuts in government spending, Ed Miliband has told activists as he warned the party must be "credible".
Mr Miliband will say Labour must face up to the "hard reality" that it will not be able to reverse spending cuts scheduled by the coalition for 2015-16.
Mr Miliband said Labour must face up to the "hard reality" that it will not be able to reverse spending cuts scheduled by the coalition for 2015-16.
Mr Clegg earlier warned Liberal Democrats against fighting the election on a "flight-of-fancy" manifesto.
The party's leader told its policy forum if Labour wins the next election, it will be in "tough" economic times.
The moves precede Chancellor George Osborne's spending review on Wednesday.
The Conservatives said Mr Miliband was "too weak" to stick to the promise.
The review will set out the government's spending limits for 2015-16, but is likely to stake out the battleground for the next general election.
Mr Miliband said: "Our starting point for 2015/16 is that we won't be able to reverse the cuts in day-to-day current spending unless it is fully funded from savings elsewhere or extra revenue, not from more borrowing."
The majority of government departments are facing cuts of between 8% and 10% although the NHS, schools in England and international aid are protected, and the military equipment budget is set for a small increase.
'Crystal clear'
The chancellor has reached a settlement with more than 10 departments but has yet to conclude negotiations with a handful of others, including the Ministry of Defence and Business, Innovation and Skills.
He was speaking ahead of Chancellor George Osborne's spending review on Wednesday, which will set out the government's spending plans for the year following the general election in 2015.
'Crystal-clear'
The majority of government departments are facing cuts of between 8% and 10%.
Mr Miliband is using his speech to hammer home the tough economic inheritance that Labour will have should it regain power after the next election, scheduled for 2015.
"When George Osborne stands up next week and announces his cuts..." Mr Miliband said, "we won't be able to promise now to reverse them because we've got to be absolutely crystal clear about where the money is coming from."
The Labour leader will say his party will not be able to reverse any spending cuts announced by Mr Osborne unless equivalent cuts are made elsewhere or a similar amount of revenue is raised from other means.
Hammering home his message on the economic inheritance Labour will face should it regain power after the next election, Mr Miliband described it as the "toughest for a generation".
"If we win the election, we will come to power in tougher economic circumstances than we have seen in generations, and that will have to shape the way that we govern," he will tell the National Policy Forum.
Labour has already said it would withdraw the winter fuel allowance from the wealthiest pensioners, and would not reverse coalition cuts to child benefit for households where one person earns more than £50,000.
"Our starting point for 2015-16 will be that we cannot reverse any cut in day-to-day, current spending unless it is fully funded from cuts elsewhere or extra revenue - not from more borrowing.
"People will only put their trust in us if we show we are credible," Mr Miliband said.
"So when George Osborne stands up next week and announces his cuts in day-to-day spending, we won't be able to promise now to reverse them because we can only do so when we can be absolutely crystal-clear about where the money is coming from...
'Same old Labour'
"It's a hard reality. But I am clear about it, Ed Balls [the shadow chancellor] is clear about it, and everyone in the Labour Party should be clear about it too."
But the Conservative Party chairman, Grant Shapps, dismissed the pledge, saying the opposition leader was "too weak to stick to his promises".
'To-do list'
"Ed Miliband only offers more spending, more borrowing and more debt - the same old Labour approach that got us into this mess in the first place," he said.
Mr Miliband, who will also set out plans to penalise property developers who "sit on land" rather than building new homes, will say that the public "will only put their trust in us if we show we are credible.
Mr Miliband also set out plans to penalise property developers who "sit on land" rather than building new homes.
"Only if we have the discipline to face the challenge of our times can we change the direction of our country," he will add.
And he drew parallels with Clement Atlee's 1945 Labour government, saying that as well as creating the NHS and building homes, it also ran budget surpluses.
Labour has already said it would withdraw the winter fuel allowance from the wealthiest pensioners, and coalition cuts to child benefit for households where one person earns more than £50,000 will not be reversed.
"By the end of their time in government they were actually starting to pay off the war time debt. But nobody in this party and nobody in this country thinks that government didn't make a difference," he said.
Mr Clegg earlier told his party that the Lib Dems' next manifesto must be coherent and realistic.
In an earlier speech to Liberal Democrat activists, leader Nick Clegg warned his party it risks "irrelevance" if it retreats to the "comfort blanket of opposition".
"I want the manifesto to set out our ambitious vision for a liberal society but it must be a to-do list, not a flight of fancy," he told the party's local government conference in Manchester.
The Lib Dem leader said his party must be prepared to make clear what policies it regarded as sacrosanct in negotiations with another party in the event of another hung Parliament.
"That doesn't mean 'pre-negotiating' our manifesto - producing a bland, generic set of plans we know either of the other parties could sign up to. Far from it.
"We can and must fight the next election on a platform of distinct, forward-looking, liberal policies.
"But, building on the approach we took in 2010, we will be even clearer with people about the commitments which are priorities, and the ambitions which we accept may be affected by resources and circumstances."
