Labour strategy for spending cuts to be unveiled

Return to New Labour commitment to public service reform will be key to re-election strategy

Ministers are to reveal plans for public spending cuts encompassing all departments, including health and international aid.

The new strategy, decided over the summer by Gordon Brown and Alistair Darling, the chancellor, will be framed as a return to New Labour's original commitment to public service reform.

No department will be ring-fenced, although plans will focus on "protecting activities and priorities" such as education and fighting child poverty.

The plans are seen as vital to Labour's re-election campaign. They are to be unveiled in a Callaghan lecture by Darling tomorrow, and by Lord Mandelson, the business secretary, in a speech to the Labour centre-left group Progress on Monday.

Brown has been unwilling to acknowledge the need for spending cuts until recently. He told G20 finance ministers that Labour would halve Britain's deficit through a mixture of tax rises and spending cuts.

A cabinet source told The Guardian: "The new economic context is a challenge for us, but New Labour in its original form never saw spending more money as the only solution. We need to revisit the original New Labour approach of public service reform. We are going to put the pedal on reform, but we are also going to project our values in what we propose. It is not going to be the Tory position of a bonfire of spending. We will differentiate ourselves from the Tory position of spend less and reform less."

G20 finance ministers, at a meeting in London on Saturday, agreed that it would be premature to set out stimulus exit strategies at this stage, and that public spending should not be cut back over the next year before the threat of a continued recession is fully removed.

According to the cabinet source, this makes it easier for Labour to set out a tighter spending programme.

Shadow chancellor George Osborne said that Labour's plans to increase spending next year put recovery at risk. He said: "Someone has got say enough is enough."