Chancellors set out economic stalls in advance of general election

LONDON BRIEFING:Representatives of the three main political parties agreed spending cuts will be severe, writes FIONA WALSH

THE NATION was gripped on Monday night – or at least 1.7 million of us were – as three sober-suited men underwent the trial of job interview by live television.

Channel 4 spent three months negotiating the televised debate with Alistair Darling, George Osborne and Vince Cable in a programme that served as a dress rehearsal for the exchanges that will be conducted in the election campaign.

There may have been more answers on BBC2's University Challengeand more viewers – three million – but Ask the Chancellorswas a fascinating, and occasionally entertaining, 60 minutes of prime-time television.

It gave the three contenders for the keys to Number 11 Downing Street the chance to show the public their mastery of matters economic and to explain exactly how they intend to shore up the nation’s finances should their party be elected.

The rivals all agreed on one thing – that future cuts in spending will have to be even greater than those imposed by the Thatcher administration in the 1980s. Darling had already admitted as much after his budget last week when he said the cuts would have to be “deeper and tougher” if the country’s massive £167 billion deficit is to be tackled.

There were questions on the health service, responded to by Darling and Osborne with promises that, along with schools, it would be protected above all other areas when the cuts are made. Cable took a different tack, giving “an honest answer” that there could be no guarantees: “If you ring-fence one very large budget, all that happens is that you rack up massive cuts in the army, the police, local government, housing, transport. So everything has to be looked at.” His candour did not appear to go down badly with the audience.

All three insisted that something must be done about bankers and their bonuses and there were other areas of common ground. But tax and spending cuts predictably exposed the gulf between the three and the tetchiest exchanges came between Darling and Osborne on the Tory plan to reverse Labour’s planned 1 per cent hike in national insurance, which Darling announced in his pre-budget report in December.

In an attempt to grab the advantage ahead of the debate, Osborne unveiled his proposals to reverse the increase on Monday. It was a risky strategy – while the Osborne plan, which will be financed by £6 billion of somewhat vague savings, was welcomed by some business groups, the respected Institute for Fiscal Studies swiftly warned that it would put Britain’s economic recovery at risk.

Dismissing the Tory plan as “a terrible risk”, Darling hammered the point home during the debate: “You are spending nearly £30 billion over a parliament and you can’t identify the credible way with which you can pay for that . . . that really is to take an irresponsible risk. It is poor, poor judgment,” he told Osborne.

That was one of the livelier moments of the debate, but what did we actually learn from the hour-long spectacle? Certainly not much in the way of economic policy or where the spending cuts will actually fall. Darling appeared to rule out a so-called death tax – a controversial 10 per cent levy on estates to fund care for the elderly – when he admitted, under pressure from Osborne, that it was no longer an option.

Other than that, it was an exercise in appearing to be open and honest with the electorate while keeping enough dry powder to fight the election.

Although none of the three landed a killer blow during the debate, the viewers’ winner was widely judged to be Cable, the Liberal Democrats’ veteran treasury spokesman. He came to public attention for his often sage pronouncements at the height of the financial crisis and on Monday evening turned in an assured performance, proffering more policy detail than his two rivals.

He won the most laughs from the studio audience and several rounds of applause too, with soundbites such as “pin-striped Scargills” (bankers) and “noses in the trough” (ditto).

But Darling and Osborne didn’t do too badly, committing no major gaffes or stumbles. A good showing was important for Osborne who, at 38, is the youngest and least experienced of the three contenders. He has come under fire in recent months for his apparent lack of economic nous and is seen by some as the party’s weakest link.

There was an outside chance that the debate could have finished off his short career, but he withstood the assault from Darling and Cable and, for now at least, remains in the running.

Fiona Walsh writes for the Guardiannewspaper in London