UK finances a straitjacket: Osborne

The poor state of the British economy will impose a "straitjacket" on an incoming Conservative administration for several years if the party wins the next election, shadow chancellor George Osborne has warned.

Mr Osborne told The Guardian that the "complete economic mess" left by Gordon Brown would "cast a long shadow" over British politics, prompting the Tories to think "very hard" about what they will do in government.

He revealed that he is conducting a review of his own economic plans in the light of the current downturn, stoking speculation that he will shortly announce that the Tories will not be bound by Labour spending plans beyond 2011.

Conservative leader David Cameron has come under pressure from internal party critics ahead of this month's annual conference to abandon his promise to match the spending plans set out by the Government for the period up to 2010/11.

In the interview, Mr Osborne declined to say whether the Tories would match Labour's plans for the next spending round up to 2014.

The shadow chancellor said he would set out his blueprint for the changed economic circumstances at the Conservative conference which begins on September 28, in Birmingham.

According to The Guardian, this will involve looking again at the green taxes at the heart of Tory environmental policy in the light of a new economic climate in which voters are more resistant to such measures.

"I think green taxes are a very powerful tool in tackling climate change," said Mr Osborne. "(But the) case is made much more difficult by Gordon Brown and Labour because they have used them as stealth taxes, by which I mean they don't replace some other tax."

The blueprint will set out how the party will implement its policy of "sharing the proceeds of growth" between public spending and tax cuts, in order to reduce the share of GDP spent by Government over time.

And it will include a new "fiscal framework" to govern how a Tory government raises and spends money, overseen by an independent panel, overhauling the way in which multi-million pound liabilities under the Public Finance Initiative are measured.