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Chancellor admits tough decisions ahead as Alan Johnson warns cuts will be ‘too deep and too quick’

The chancellor, George Osborne, today said he was determined to see through “tough” spending decisions in this week’s comprehensive spending review.

His remarks prompted his new opposite number, Alan Johnson, to accuse him of “economic masochism”.

Osborne is expected to outline £83bn of cuts, the most drastic reductions in state spending since the second world war. The detailed impact of the cuts became clearer today as the Observer revealed reductions of around 30% to the justice system , involving cuts to the legal aid budget and the closure of 150 courts.

In an interview on BBC1′s Andrew Marr Show, Osborne refused to discuss the detail of the review, but said he was determined to cut government waste and the ballooning benefit budget to safeguard spending on schools and hospitals.

“We have to see this through,” the chancellor said, signalling that he would not shy away from the cuts despite warnings about their impact. “Our plan is the plan that will restore credibility to the public finances,” said Osborne. “It is what the IMF, the OECD, international observers say is necessary. It is what British business says is necessary.

“People in this country know we were on the brink of bankruptcy, and if we are going to have growth and jobs in the future we have got to move this country into a place where people can invest with confidence.”

He added: “We have got to make some tough decisions, but the priority is healthcare, children’s education, early years provision – particularly for some of our poorest – and the big infrastructure developments like Crossrail, Mersey Gateway, the synchrotron [UK-funded science facility], broadband.”

Johnson accused Osborne of threatening a period of economic stagnation by cutting “too deeply and too quickly”. He said the former chancellor Alistair Darling’s plan to halve the fiscal deficit over four years was the “right” pace of cuts for Britain.

Talking on the Marr show, he said Labour had planned to reduce debt “whilst focusing on jobs and growth and without having the economic masochism that I think many in George’s party would like to see – ie: ‘Let’s take this opportunity to shrink the state,’ which I think is a large part of the philosophy here”.

Johnson, who said he was “mildly surprised” to have been appointed as Ed Miliband’s shadow chancellor, admitted Labour needed to be “more specific” about its plans for the economy.

Asked to provide detail, he said he believed a tax on banks should “play a bigger role”, saying it was “perverse” that more money would be raised from child benefit cuts than from the banks. He also suggested Labour would look at increasing capital gains tax.

In his interview, Osborne revealed that those caught making repeated bogus benefit claims would have their welfare payments halted for up to three years. Comparing benefit cheats to muggers robbing taxpayers, he said Britain “can’t afford to waste any more time” in reducing a £5bn annual bill for fraud and error in the benefit and tax credit system.

The crackdown, to be formally launched tomorrow, will include mobile hit squads of inspectors sent to problem areas and a “three strikes and you’re out” rule will strip repeat offenders of benefits. Osborne told the Marr show the new rules were “perfectly reasonable”. He said: “It [benefit] has to go to the people who need it, because the people who pay for it demand no less.” Spending review 2010 Tax and spending George Osborne Alan Johnson Liberal-Conservative coalition Labour Matthew Weaver guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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