SAVAGE cuts in public spending of more than £130 billion will be needed to solve the growing budget crisis, Tony Blair’s former chief policy adviser claims today.

Writing in The Sunday Times, David Halpern, a former senior aide at No 10, says that Britain needs to follow the example of 1990s Canada, which slashed expenditure by 20% to combat a similarly severe deficit.

Halpern warns that modest “efficiency gains” being proposed by both Labour and the Conservatives “just don’t deliver what is needed”.

In order to control Britain’s £175 billion budget deficit, he argues that government needs to be “reinvented” and some basic services may need to be axed altogether.

Halpern’s remarks shatter the political taboo around the discussion of public spending cuts. In his budget last month Alistair Darling, the chancellor, proposed efficiency savings of just £15 billion and a real-terms freeze in expenditure, but not until 2011. David Cameron has spoken of an “age of austerity” but has failed to spell out which programmes he would axe to save money.

However, there are signs that in private both government and opposition are beginning to consider the possibility of a “doomsday budget” if tax revenues continue to slide or investors refuse to buy Treasury debt.

Halpern, who worked in Blair’s Downing Street for six years until 2007, is now director of research at the influential Institute for Government in London, which provides training for potential ministers and civil servants.

The institute will next week bring to the UK the two architects of the Canadian cuts programme: Marcel Massé, a former minister, and Jocelyne Bourgon, who was the country’s top civil servant. They are expected to brief Tory and Labour politicians about their experience.

By the early 1990s Canada was running a budget deficit of 9.1%, despite 15 separate initiatives designed to reduce expenditure. In 1994 it announced cuts in government budgets by an average of 20% over four years. The result, says Halpern, was a dramatic success and Britain, whose deficit will reach 12.4% this year, should follow the Canadian example.

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