Kennedy to seek cuts in Whitehall budgets

Charles Kennedy will today hit back at critics of his leadership by announcing Lib-Dem plans to review public spending and axe Whitehall departments.

He will warn his party faces "hard choices" to find savings of £5billion a year in Whitehall. Money saved would be put back into better services.

Mr Kennedy will set out the policies in an end-of-term speech after senior figures in his party accused him of lacking ideas and focus.

The spending review, to identify a cut of one per cent in the budgets of all departments, will form the heart of the next Lib-Dem election manifesto. Re-allocating the money elsewhere will allow the party to promise eyecatching initiatives without threatening to raise taxes.

The strategy is similar to that of the Tories, who are seeking cuts of up to 20 per cent in departments' budgets, ploughing back most savings rather than offered tax cuts.

Tory leader Iain Duncan Smith will tonight brand Tony Blair the "Arthur Daley of British politics" who has lost the trust of voters.