Bruce warns of spending cuts

The Chancellor's increased funds for health and edcution maybe 'wiped out'

Budget Could Lead to Cuts Say Lib Dems

Mr Bruce predicted public spending cuts because Mr Brown had not given government departments enough money to offset the effects of rising inflation. He claimed at least half the extra money promised for education and health would be wiped out by the rise in inflation the Chancellor forecast.

A Treasury spokesman said he could not comment until Mr Brown had considered the arguments and replied to Mr Bruce. However Mr Bruce's claims were dismissed by a Labour Party spokesman, who described the Liberal Democrats as "economically illiterate".

Mr Bruce said: "The worst element of all in Gordon Brown's Budget was a £5 billion real cut in the level of public spending next year, which will cause cuts across all areas of Government, probably breaking Labour's promises in areas such as policing and overseas aid. For example, this cut could mean over 6,000 police officers being axed."

The Liberal Democrat critiique of Mr Brown's economic polices comes ahead of the final day's debate on the Budget, taking place in the Commons on Monday.

Mr Bruce said Mr Brown should make a Supplementary Budget Statement to the Commons this week outlining where the cuts would fall or how he plans to prevent them.

"These developments make an absolute mockery of Gordon Brown's claims to be providing extra money for education and health as most of the extra money will be eaten into by inflation."

Mr Bruce said Mr Brown had taken the higher inflation forecasts in adjusting upwards the amount of money he expects to get from taxation, but made no similar compensation adjustment to protect spending totals from higher inflation.

A Labour spokesman said: "The Liberal Democrats in the election thought they could raise £10 billion from a 10p increase on cigarettes. They are economically illiterate and nobody takes them seriously."

Andrew Dilnott - Lib Dems maybe right

Andrew Dilnott of the Institute of Fiscal Studies said he believed the Liberal Democrats could be right. "I think they are broadly right," he said on the BBC Radio 4. "If this new inflation forecast turns out to be correct then the real level of public spending, this year and next year, will be even lower than expected and that will be extending what's already an unprecendentedly very low public spending growth."