There is a moment in Nineteen Eighty-Four when Winston Smith realises that “in the end the Party would announce that two and two made five, and you would have to believe it...the logic of their position demanded it”. The Labour Party reached that moment last Wednesday when Gordon Brown told it that his plans to cut real spending on public services and halve capital spending equalled more “Labour investment”.

This weekend he was at it again, talking about the supposed evils of 10 per cent cuts in departmental budgets - only for the Institute for Fiscal Studies to point out that this is exactly what his own plans involve if he, like we Conservatives, promises to protect health spending.

Perhaps we should not be surprised by the simple, plain dishonesty of it all - as Winston Smith would say, the logic of the election campaign their Party Leader has decided to fight demands it. But it is intellectually fatal for the Labour movement. The big discussion in British politics for the foreseeable future will be how to tackle the debt crisis and deliver quality public services when spending is tight, and Gordon Brown has taken his party to the sidelines of that discussion. Believe me, I have seen what happens when political parties refuse to face the facts of the modern world. It condemns them to irrelevancy for a generation.

That does not mean the Conservative Party can escape our own challenge. We, like Labour politicians, have fought shy of using the “c” word - cuts. We've all been tip-toeing around one of those discredited Gordon Brown dividing lines for too long. The real dividing line is not “cut versus investment”, but honesty versus dishonesty. We should have the confidence to tell the public the truth that Britain faces a debt crisis; that existing plans show that real spending will have to be cut, whoever is elected; and that the bills of rising unemployment and the huge interest costs of a soaring national debt mean that many government departments will face budget cuts. These are statements of fact and to deny them invites ridicule.

Conservatives' confidence to talk honestly about cuts should stem from three other “c” words: context, character and credibility. Let me explain. First, the context of the debate has changed dramatically. We are not arguing any more, as we did in the 2005 election, about fixing the roof when the sun is shining. Instead we are dealing with a roof that has fallen in. According to the IMF, Britain will have the biggest budget deficit of any G20 country, far larger than at any time in our peacetime history. For the first time ever, Britain faces losing its “triple A” international credit rating because of the prospect that our national debt could exceed our national income. That would be a reputational and financial disaster. Every Briton would pay a heavy price in higher borrowing costs and even higher debts.

Second, this is an issue of character. There is endless soul-searching about how to reconnect the political system with a public that has lost all faith in it. Wouldn't a good place to start be to tell the public the truth instead of treating them like fools? Gordon Brown's claim that real spending will rise under Labour is akin to his claim that the 10p tax rise didn't hit the poor and that Alistair Darling is his first choice as Chancellor - it is just not true. It explains why the British people don't listen to him any more. David Cameron has engaged the public's attention, and respect, by telling it straight on public spending - just as he told it straight in the middle of the storm on parliamentary expenses. He said in 2008 that we could not afford Labour's previous spending plans, and set out specifically that this year's spending should be lower.

Finally, our confidence to tell people the truth stems from the credibility we have earned. By consistently putting sound money at the heart of our economic policy, by refusing to promise unfunded tax cuts in good years or support the unaffordable and ineffective VAT cut when times were tough, we have earned a reputation for fiscal responsibility. The result is that international markets are already looking beyond the next election to the prospect of a Conservative Government for reassurance that Britain will get its act together.

But we have also used the past four years to change our party and affirm our commitment to the values of our public services. We protect health spending because our priority is the NHS. We protect overseas aid spending because of our moral commitment to the poorest and the millennium goals we promised them.

Those public service values will guide the way we tackle the debt crisis. The work we have done on reform is all about improving the quality and choice of frontline services, and the professional freedom of those who work in them. It is remarkable that when the people responsible for Canada's successful fiscal consolidation in the mid-1990s gave a recent seminar at the Institute for Government, members of my team and the Shadow Cabinet joined senior civil servants to hear what they had to say. Not a single member of the Government was there.

So far we have set out some specific cuts we would make - like ID cards, quango pay, the cost of politics. And we have set out whole areas we will radically reform both to improve outcomes and get better value for money - like education and welfare. We will set out more details in due course. And of course some savings will only become apparent when we have the chance to look at the books in government.

Perhaps the most important lesson from around the world is that if you talk honestly to the public about the spending decisions that need to be taken, they will respect you and support you. It is time for the Conservatives to have that conversation with the British people.

George Osborne is Shadow Chancellor of the Exchequer

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