THE Tories will today stake their claim as the party of financial responsibility, pledging to create a new watchdog which will stop future governments from racking up “reckless debt”.

The statutory body would force chancellors to balance their budgets over the economic cycle and reprimand those who “fiddle the figures”. The so-called “office of budgetary responsibility” is part of a package of measures to be unveiled by George Osborne, the shadow chancellor, at the Conservative conference in Birmingham.

Osborne said: “It is time to bring an end to Gordon Brown’s age of irresponsibility.”

The Conservatives have likened their watchdog plan to the creation of an independent monetary policy committee by Labour , which has kept inflation in check over the past decade.

The announcement comes as the Labour government is preparing to disclose the fiscal black hole created by rising spending and falling tax revenues.

Independent economists warn that public borrowing could soar to £100 billion.

The Tories would also give the Bank of England new powers to force financial institutions to hold extra cash in reserve in a bid to prevent bank failures.

While critics will see it as state interference in the free market, Osborne insists that it will create a banking sector better able to resist future storms.

Osborne wants the government to underwrite the compensation paid to savers who hold accounts in banks which go bust.

The Tories also hope to cut the length of time that deposit holders have to wait to receive their money down to one week and to increase the maximum pay-out from £35,000 to £50,000.

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