Britain's national debt is far higher than Prime Minister Gordon Brown is willing to acknowledge, Conservative MP Brooks Newmark argues in a new paper published by the Centre for Policy Studies.

The true level of government debt is not 805 billion pounds as currently reported by the Office for National Statistics, Newmark says, calling for an independent audit of the government's books.

"The lax control of public money over the last decade has created a catastrophic level of debt, now equivalent to 2.2 trillion pounds - or 157.2 percent of gross domestic product," he writes. "This is an increase of 346 billion pounds since last year, when the true level of government debt was 1.85 trillion pounds (or 126.9 percent of GDP).

Newmark, a member of the Treasury Select Committee, discussed "The Hidden Debt Bombshell" with Reuters:

The Conservatives will get a chance to show they are ready for office at their annual conference in Manchester. After 12 years in opposition, the party could be on the verge of returning to power in an election due by next June.

Conservative leader David Cameron has said they will set out plans this week for reducing the country’s gaping budget deficit and unveil a “massive” programme to cut unemployment.

Our team of reporters will be looking for details of what a Conservative government would hold in store and aim to give a behind-the-scenes glimpse of the conference. Comments are open so please share your thoughts and opinions!

 Peter Mandelson gave a glimpse of Labour’s strategy in the next election on Monday, trying to scare voters from choosing the Conservatives by forecasting they would take the country back to the harsh days of the early 1980s.

    The business secretary invoked former Conservative Prime Minister Margaret Thatcher and her hardline ministers as he
sought to portray the modern Conservatives as unchanged from
their predecessors who broke the unions and shrunk the state in
Thatcher’s Conservative revolution after 1979.

    In a speech to the Labour thinktank Progress, Mandelson
raised the spectre of figures loathed by the Left such as Norman
Tebbit, the Conservative cabinet minister famous for recounting
how his unemployed father had “got on his bike” to find work in
the 1930s.

    Mandelson’s speech sounded like the opening salvo in the
phoney war leading up to the general election that Prime
Minister Gordon Brown must call by next June.

    Polls show Labour, whose decade of boom culminated in the
worst bust in post-war British history, has a mountain to climb
if it is to cling to power.

    In a shift of strategy, the Labour government now
acknowledges there will be pressures on public spending once
Britain is through the recession.

    Mandelson said Britain will have to “prioritise and
economise”, contrasting this with the deep cuts he says the
Conservatives are eager to make.

    According to Mandelson, the Conservatives will cut public
spending if they win the next election not because the move has
been forced on them by the Labour government running up huge
debts, but because they are secretly itching to complete an
attack on public services started by Thatcher.

    His theory is that the Conservatives are relieved that the
economic crisis allows them to drop the modernising image they
have adopted under David Cameron.

    In fact, Mandelson’s attack may reflect Labour alarm over
polls showing that Cameron’s attempts to remake the Conservative
Party into a more caring party and shake off the old “nasty
party” image are having success with voters.

    Labour, traditionally seen as the defender of the National
Health Service, can no longer count on enjoying that position.

    A ComRes poll for the Independent on Sunday last month
showed only 39 per cent of voters agreed that the NHS was safer
with Labour, while 47 per cent disagreed.

    That was despite the embarrassment Cameron suffered in
August over Conservative MEP Daniel Hannan’s attack on the NHS.

    Despite promising cuts in public spending, the Conservatives
have pledged increases in NHS spending in real terms.

    Mandelson may also have been stung by Conservative shadow
chancellor George Osborne’s bold claim last month that the
modern Conservative Party was now the dominant progressive force
in British politics.

    “Real reforms to public services, allied to a commitment to
fiscal responsibility, means cuts on the frontline can be
avoided and we can deliver more for less,” Osborne said.

    A glance at recent speeches by Cameron’s front-bench team
shows they have tackled social issues ranging from the need to
regenerate inner cities to tackling the causes of crime.

    That suggests Mandelson and his Labour colleagues may have
difficulty portraying Cameron’s Conservatives as a reincarnation
of Thatcher’s team.

Chancellor Alistair Darling set out new plans to strengthen regulation of financial markets on Wednesday. The white paper proposes enforcing higher levels of capital for banks and increasing liquidity to prevent a re-run of the credit crunch.

Darling wants banking pay packages to be policed and for a new Council for Financial Stability to bring together the work of the Bank of England, Financial Services Authority and the Treasury.

Although the “tripartite” setup under which the finance ministry, Financial Services Authority and Bank of England supervise the financial markets was widely seen as failing to spot problems at Northern Rock and other banks early enough, Darling has decided not to scrap it.

Shadow Chancellor George Osborne called the Labour plans “more of a white flag than a white paper” in a rebuttal in parliament.

“The next Conservative government will abolish the tripartite system and will put the Bank of England in charge of the banks . . . and other financial institutions because you cannot separate central banking from the financial supervision system,” he said.

What do you think, are the new plans more of a white flag than a white paper? Are the Conservatives on the right track or should the tripartite system be retained?

Prime Minister Gordon Brown is starting to look like an over the hill punch-drunk heavyweight boxer stumbling around the ring desperately hoping that the referee will step in and end the agony.

Having been battered by a raft of cabinet resignations, a dismal performance in last week’s local government elections and now his Labour Party plunging to its lowest level in a century in European elections, Brown appears almost out for the count.

So much so that the bookmakers William Hill are offering odds of 7/4 that Brown will step down as PM by midnight this Saturday.

Former postman, now Home Secretary, Alan Johnson is the 5/4 favourite to replace Brown, with Harriet Harman at 7/1, David Miliband at 8/1, his brother Ed at 9/1, Jon Crudass at 12/1, with the PM’s close friend Ed Balls at 14/1.

And with the Conservative Party’s odds at 1/20 to win the next general election, Brown’s potential successor will need to be a miracle worker to keep Labour in power.

Who do you think should replace Gordon Brown?

Hosting a shindig conference at one of Britain’s most prestigious racecourses in the genteel spa town of Cheltenham hardly sends out a message that David Cameron’s opposition Conservatives are trying to reach out to the masses.

But the decision to come to the rolling hills of the Cotswolds sheds light on one of the obstacles standing between Cameron and the keys to No. 10 Downing Street.

Britain’s third main party — the Liberal Democrats.

The LibDems won the parliamentary seat of Cheltenham in the 2005 election with a majority of about 2,000 over the Conservative candidate.

It is the kind of seat the Tories will want to win next year if they are going to get a decent majority over Gordon Brown’s Labour and be able to push through their agenda.

They will be hoping that coming to Cheltenham sends a strong message to voters here and tips the balance when the election comes — probably in May or June 2010.

While much of the media battle being waged is purely between Gordon Brown’s Labour and the Conservatives right now, both parties know that when the big day comes they will have to do battle on two fronts.

And convincing Liberal Democrat voters to switch may hold the key to what the make up of parliament looks like.

All we’ve heard for the past few weeks is how little room there is for Labour to pump more money into the economy to fight the recession.

The increasingly popular — and confident — opposition Conservatives have gained ground by blaming Prime Minister Gordon Brown for turning the public purse into a public hearse.

But there are a few reasons to suspect that when finance minister Alistair Darling steps up to the dispatch box tomorrow, he will deliver another blockbuster life-support package.

Yes, there are inklings of a recovery out there — some experts say we have reached the bottom — but Labour has to make sure this recession is long gone before it can hope to win an election.

And it only has until mid-2010 to wait before that day of reckoning must come.

Brown might be willing to chance his arm with some big spending to reassure the public that job losses will be kept to a minimum and that Labour cares more about ordinary peoples’ lives in the here and now than it does about the budget deficit and government debt markets.

If this is the worst economic crisis for decades, then there is no easy way out of it and the best thing to do is to take whatever action is necessary to bring it to an end and worry about the consequences later.

Respected think tank the National Institute of Economic and Social Research has called for a temporary 30 billion pound stimulus aimed at stuffing employers and employees coffers with
cash.

They say the level of government debt is nowhere near where it was at the end of the Second World War and so there is no real panic about getting it back under control eventually. Yes, it may mean higher taxes and less public spending in the future, but that might be a fair price to pay to avoid mass unemployment and social unrest.

All the indications are that Labour won’t risk the ire of experts and opposition alike with another big stimulus, but the truth is they won’t get a second chance to reduce the severity of the downturn.

Besides all that, something interesting was happening in Westminster on Tuesday.

Rather than hounding the Prime Minister’s office with questions about the Budget, Britain’s press pack were jumping all over an emergency announcement on how rules governing the much-maligned MPs expenses system might be changed.

It wouldn’t be the first time that Brown has put up a smoke screen before delivering a knockout, headline-grabbing blow.

Bumper budgets are a tried and tested vote winner … but that might also be just what the economy needs.

Is the Labour Party going to regret not hosting a Spring Party Conference this year?

Yes, it is going to save them a lot of cash, and Prime Minister Gordon Brown has enough to worry about ahead of the G20 financial crisis summit in Britain in April.

But as Britain braces for a nightmare year for the economy, public support for Brown and his Labour Party is starting to slip.

Polls are indicating once again that the Conservatives are looking like red hot favourites to win the next election due by May 2010.

A weekend get together at the start of the year would have given Brown the chance to rally the Labour troops and reassure them about the tough road — and inevitable difficult election — ahead.

Instead, the party will have to wait until September for that morale-boosting pep talk.

Will it be too late for Labour by then?

(UPDATED Dec 18 - This post is now closed for questions)

Conservative Party leader David Cameron will be speaking on the economy and the credit crunch at Thomson Reuters' Canary Wharf office on Monday, followed by a question and answer session.

The Tory leader has argued that two main problems face Britain at present – a recession coupled with a record level of government debt, and that the government is trying to tackle one while ignoring the other.

"Every week this government is in power the mortgaging of the future gets greater. Every week the debt gets larger. Every week the burdens on our children mount up higher,” Cameron has said. He has accused Gordon Brown of "economic crimes" saying the Prime Minister “has brought this country to the brink of bankruptcy and the worst recession in the G7."

Here is your chance to put your questions to the man credited with making the Conservative Party electable again. We will be putting questions from our Web readers to Cameron at the event.

For full coverage of the event, including a live Web cast from 1000 GMT on Monday, see our David Cameron Newsmaker page.

Readers who use the Twitter micro-blogging service can also use the tag #askDC and we will monitor all the responses.

It’s goodbye to buckets and spades, and hello to Brum.

The Conservative Party is meeting in Birmingham for its first conference there for 75 years, away from the seaside B-list of Bournemouth, Blackpool and Brighton.

The return is long overdue, says David Willetts, who was brought up in the Midlands city.

“Birmingham sadly has gone through a period when it was deeply unfashionable,” the Conservative higher education spokesman told me ahead of the conference.

He says the party owes a priceless debt to Birmingham and in particular its 19th century Liberal mayor and MP Joseph Chamberlain.

To redress the neglect Willetts, once dubbed “two brains” for his academic demeanour, has written a pamphlet “Conservatives in Birmingham” for the Centre for Policy Studies.

Without Chamberlain’s 1886 split from the Liberal party over home rule for Ireland - which he opposed - and subsequent alliance with the Conservatives at the head of the newly formed Liberal Unionists, the Tories might have declined into the kind of minority agrarian or peasant party found in Continental Europe.

The coalition and ultimate merger into the Conservative and Unionist Party “meant Britain avoided the Continental pattern of politics with a traditionalist rural party and a separate rationalist liberal free market party,” Willetts writes.

The Conservatives became for the first time “a significant urban force …  and for the first time it appealed to the urban middle class.”

The merger laid the foundation for the dominance of centre-right government in Britain in the 20th century — unlike on the Continent where the centre-right has been split, weak and often out of power.