Tories trade blows with Mandelson over spending cuts

The Tories claimed he had "blown apart" Gordon Brown's argument that the economic recovery was still too fragile to begin tackling the UK's 178bn deficit until next year.

However, a spokesman for Lord Mandelson last night issued a statement insisting that it was still the Government's policy to increase public spending during the financial year 2010-11 while the recovery was secured.

The controversy broke out after the Business Secretary delivered a speech in Nottingham in which he insisted that university sector – which has had its 2010-11 budget cut by 449m – was not being "singled out" for special treatment.

"Much of the rest of the public sector will receive similar constraints in the course of this year or soon after. I have always said that higher education would have to bear its share of public spending cuts, but not more."

His comments were seized on by Shadow Treasury Chief Secretary Philip Hammond who said they showed that is was possible to start cutting the deficit this year as the Tories have promised to do. Peter Mandelson has blown apart Gordon Brown's claim that spending cuts this year would undermine the recovery," he said.

"His intervention reinforces the view of the Governor of the Bank of England, the CBI, the Institute for Fiscal Studies, and credit rating agencies that an early start to cutting the deficit is essential to support the economic recovery.

"People will be asking who speaks for the Government now – Peter Mandelson or Gordon Brown?"

However his comments were dismissed by Lord Mandelson's spokesman who said that the Government's position remained unchanged.

"The Tories are in no position to talk about policy confusion given the chopping and changing we have seen from them over the past few weeks," the spokesman said.

"Our policy is clear and consistent, as set out by the Chancellor in the Pre-Budget Report, public spending will rise in 2010-11 to support the economy until recovery is secured."

The timing of the cuts needed to get the deficit under control has become a key focus of political debate in the run up to the general election. Last month David Cameron was accused of watering down the Tories' plans after he said that there would be no "swingeing cuts" in the first year of a Conservative government.