* Osborne sets June 22 as date for emergency Budget
* Economic forecasts handed to new independent body
* Cameron warned against new tax blow to middle class
* Govt to announce 100 more peers to transform Lords
* PM begins drive to to curb public sector spending
Labour's gross mismanagement of the economy was laid bare today after it was revealed a former minister left his successor a note that said 'there was no money left'.
In a stark message left in a Treasury desk, outgoing chief secretary to the Treasury Liam Byrne wrote simply: 'I'm afraid to tell you there's no money left.'
His pithy summary of the serious challenges facing the new power-sharing administration was revealed by Liberal Democrat David Laws, who has taken on the role.
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Cutting Chancellor: George Osborne, pictured today at the Treasury, is preparing to outline £6 billion in cuts
Speaking at the Treasury today Mr Laws told reporters: 'When I arrived at my desk on the very first day as Chief Secretary, I found a letter from the previous chief secretary to give me some advice, I assumed, on how I conduct myself over the months ahead.
'Unfortunately, when I opened it, it was a one-sentence letter which simply said "Dear Chief Secretary, I'm afraid to tell you there's no money left", which was honest but slightly less helpful advice than I had been expecting.'
Mr Byrne insisted the message was meant as a private joke: 'My letter was a joke, from one Chief Secretary to another,' he said.
'I do hope David Laws' sense of humour wasn't another casualty of the coalition deal.'
Mr Byrne's warning came as Chancellor George Osborne today announced that he will deliver his first emergency Budget on June 22, exactly six weeks after the new coalition Government took office.
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Labour's Liam Byrne: 'There no money'
Mr Osborne said that he would also be setting out next week details of the £6 billion of spending cuts to be made this year.
Speaking at the Treasury with Mr Laws alongside him, Mr Osborne warned that failure to tackle the UK's record deficit would be 'disastrous'.
Mr Osborne said that he and Mr Laws were agreed that the cuts this year were achievable without affecting frontline public services.
He said that the 'great majority' of the savings would be used to start paying down the deficit.
'It is the clear view of the Treasury and the Governor of the Bank of England that these are necessary actions to ensure stability and secure the recovery,' he said.
'The Treasury's assessment is that there is a strong economic case for an immediate spending reduction of £6 billion. So we are in no doubt that this action is advisable.
'By tackling wasteful spending now rather than later, we can demonstrate our commitment to tackling the deficit.'
Mr Osborne confirmed plans to hand over responsibility for setting the forecasts for economic growth and government borrowing - on which the Budget calculations are based - to the newly created Office for Budget Responsibility under Sir Alan Budd.
'Again and again, the temptation to fiddle the figures, to nudge up a growth forecast here or reduce a borrowing number there, to make the numbers add up has proved too great, and that is a significant part of the reason for our current problems,' he said.
'I am the first Chancellor to remove the temptation to fiddle figures by giving up control of the economic and fiscal forecasts. I recognise that this will create a rod for my back down the line.
'That is the whole point. We need to fix the Budget to fit the figures, not fix the figures to fit the Budget.'
Mr Osborne said that tackling the deficit was the 'most urgent issue' facing the Lib-Con coalition.
He warned that failure to get to grips with the problem could lead to the sort of problems now afflicting Greece.
'This is the legacy of 13 years of fiscal irresponsibility. And it poses a very real threat to the recovery,' he said.
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Tough times: David Cameron, on the stairs of No10 yesterday, has told taxpayers they will suffer for Labour's profligacy as the new Government tries to pay down the £163billion deficit
'Greece is a reminder of what happens when governments lack the willingness to act decisively and quickly, and when problems are swept under the carpet.
"If we fail to tackle the deficit we inherited from the previous government, the consequences could be disastrous.'
As part of the £6 billion cuts, the Prime Minister has pledged to slash the lavish bonuses of senior civil servants in a move which will save up to £15million a year.
Mr Cameron warned that only 'exceptional' staff would be entitled to rewards as he ordered a review of Labour's 'crazy' spending decisions.
From this year, the bonuses for NHS managers and senior civil servants for 2010/11 will be cut by two-thirds.
Mr Cameron's crackdown follows mounting public anger over the £130 million-a-year rewards for public servants.
The sum which was paid out last year equates to more than £350,000 a day from the public purse, in addition to salaries, to those working in government.
While the £130 million was the total of all civil service bonuses, Mr Cameron's plans relate only to senior civil servants and NHS managers.
Some are receiving as much as £50,000 in bonus payouts - similar to those enjoyed by City bankers.
As Mr Osborne announced the new independent audit of the economic wasteland left behind by Gordon Brown, Mr Cameron’s own taxation guru warned the Coalition against hammering the middle classes with an excessive burden of tax.
Former Cabinet minister Lord Forsyth, who led the Tory Tax Reform Commission, spoke after the Prime Minister warned those on middle incomes to expect further cuts in child tax credits and rises in capital gains tax.
The Prime Minister said Labour had made ‘crazy’ spending decisions over the past year that ‘no rational government would have done’, and made it clear that taxpayers will now suffer for Labour’s profligacy as the Government tries to pay down the £163billion deficit.
Mr Cameron said Britain’s 250,000 second home owners will have to pay more when they sell up because their nest-eggs are ‘not necessarily a splendid investment for the whole economy’.
But Lord Forsyth, whose proposals to cut taxes in 2006 were welcomed by Mr Osborne, said the tax rises were ill thought out.
He told the Daily Mail: ‘The way out of the problem of the deficit is to create wealth and stimulate growth. You don’t do that by hammering the hard-working classes, and those in the middle who generate the wealth, by putting an excessive burden of tax upon them.’
Referring to the planned huge rise in capital gains tax, he added: ‘You don’t do that by punishing people who save and invest and want to pass assets on to their children.’
The Mail revealed on Saturday that a family of four with an income of £50,000 could be £1,200 a year worse off when the changes are made.
Yesterday Mr Cameron warned of worse to come with a threat to withdraw child tax credits for a million more families.
Under Conservative plans, child tax credits – worth up to £545 a year – will be slashed for families with an income over £50,000 a year.
Now some 1.2 million households earning more than £40,000 a year could lose some or all of the handout.
The Premier admitted he will have to compromise with his Lib Dem partners, who want to cut the credits for families on as little as £31,400.
The Government also seems set at least partially to carry out Lib Dem plans to raise capital gains tax (CGT) from 18 per cent to match income tax rates of 40 or 50 per cent.
Mr Laws said every new spending commitment and pilot project signed off by Labour ministers since the turn of the year would be individually reviewed in a bid to find savings 'in addition' to the £6bn target.
'We will want to test in each and every case whether these are affordable, whether they deliver value for money and whether they remain genuine priorities for the new Government,' he said.
'Each minister will review approvals given by their predecessor and those requiring Treasury approval will have to be resubmitted.'
Any projects which failed the test would be halted, he indicated, but insisted there would be no 'blanket cancellation'.
'This is simply due diligence by the new coalition government in relation to some of the irresponsible decisions we have inherited.'
The Chief Secretary said he had already rejected some suggested cuts which he believed would have damaged frontline services.
'I have, and I will reject any proposals which would damage key services or put at risk those on lower incomes,' he said.
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