George Osborne confirms for the first time today that he would make significant cuts in public spending and says that Labour is being “dishonest” about the action required to avert financial disaster.

The Shadow Chancellor, writing in The Times (click here to read the article), admits that, until now, he has “tip-toed” around the need for cuts, but says he believes that voters are ready to reward honesty.

He accuses Gordon Brown of masking Labour’s own plans to cut spending after the next election and suggests that even cuts of 10 per cent in all departments but health and overseas aid may not be be enough to shore up Britain’s credibility on the international money markets.

Andrew Lansley, the party’s health spokesman, caused controversy last week when he spoke of cuts of 10 per cent for other departments because of David Cameron’s commitment to real-terms rises in health budgets despite falling overall spending.

Mr Brown seized on the remark, claiming he had revealed a “cuts plan that is wide, deep and immediate”.

But Mr Osborne confirms that a Tory government would, indeed, cut spending, in an attempt to reshape the public debate. “We Conservatives, 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 dishonest,” Mr Osborne writes.

“We should have the confidence to tell the public the truth that Britain faces a debt crisis; 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 means that many government departments will face cuts in their budgets. These are statements of fact and to deny them invites ridicule.”

Despite Mr Osborne’s plea for honesty about the need for cuts, he gives no specific Conservative spending plans, saying only that he will set out “more details in due course”. The party has given some indications, however, including the intention to scrap ID cards. Nor does he commit the party to declaring its plans before the election. “Some savings will only become apparent when we have the chance to look at the books in government,” he writes.

Mr Osborne refers to himself, members of his Treasury team and other Shadow Cabinet members attending a meeting of Canadian ministers who described how they were able to cut spending in the 1990s. The Canadian government at that time cut spending by 10 per cent and reduced its deficit to 3 per cent of GDP in two years, cutting budgets for hospitals, schools and universities, unemployment and defence.

Meanwhile, Kenneth Clarke, the Shadow Business Secretary, threateaned more Tory division on Europe by suggesting that Mr Cameron would not seek to reopen negotiations on the Lisbon treaty if it had been been ratified by the time he came to power.

Mr Clarke angered Tory Eurosceptics by saying he envisaged only “sensible discussions . . . in limited areas” about the division of responsibilities between Westminster and Brussels. That appeared to contradict Mr Cameron’s pledge that he would “not let matters rest” if the treaty were ratified — he has implied, but never confirmed, that he would hold a referendum regardless, as it would lack democratic legitimacy.

Bill Cash, the Tory MP, demanded to know whetherMr Clarke was speaking with the authority of the Conservative Party. Mr Clarke told the BBC that the party’s stance would not mean renegotiation of the treaty, which creates an EU President and removes some national vetoes, but a discussion about the return of competencies to nation states in areas such as employment law. The Tories later issued a statement seeking to clarify its position on the Lisbon treaty.

It said: “There is no change to Conservative policy. As Ken Clarke explained, if the Lisbon treaty is ratified and in force across the EU by the time of the election of a Conservative government, we have always made clear that we would not let matters rest there. In other words, we would not regard these matters as closed. We would regard political integration as having gone too far.”

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