Secret Labour plan to axe spending on training for young people

■ Freezing salaries and cutting staff at further education colleges.

David Willetts, the shadow universities and skills secretary, said last night: "What's particularly shocking about this document is that the bulk of the cuts are in front-line services. Many other departments including schools and health could be part of the same exercise. They talk about re-skilling Britain, but in reality they are misleading young people about the help on offer at a time when they need that help most urgently."

Since the economic downturn led to a sharp rise in unemployment last year, Brown has repeatedly sought to contrast Labour's determination to boost investment in training with what he claims is a Tory agenda of cuts that would prolong the downturn.

In a speech in January, Brown said: "Now more than ever is the time to invest in our young people, their skills and their talents in training them for the future."

However, with tax revenues devastated by the deepest recession in a generation and the deficit expected to hit £175bn this year, departments have been instructed to scour their budgets for savings, to help deliver a modest reduction, to £173bn in 2010-11.

Darling is expected to spell out in his pre-budget report, expected later this month or in early December, which policy areas will be protected from the axe in future years. "It's about identifying what is 'front-line'," said a Whitehall source.

The Treasury insists that no decision has yet been made about whether the chancellor will spell out where proposed cuts will fall by publishing a full spending review before the election.

A BIS spokesman insisted last night that the need for savings had been made clear in the budget and that ministers were trying to protect services. "It remains our commitment to protect front-line services and identify savings through efficiency measures and improving value for money wherever possible.

"The skills sector has received record investment in recent years and we will shortly be publishing the skills strategy setting out our long-term plans for investment in skills to contribute to the future growth and success of the UK economy."

David Frost, director-general of the British Chambers of Commerce, said companies that had been urged by government to train people would be infuriated that state funding to help them do so was being cut. "This is the latest in a series of funding fiascos that have hit the skills budget. Companies were actively encouraged to train their employees and they have done this. It will be business that gets the country out of this recession and to do this it will need highly skilled employees."

Mark Serwotka, the general secretary of the Public and Commercial Services Union, said funding for the Learning and Skills Council, which is distributing the training budget, had already been "cut to the bone".

"Further cuts will undermine the skills agenda and restrict opportunities for learners at a time when we should be investing to aid the country's economic recovery. Rather than drawing up cuts, the government should be looking at collecting the billions worth of tax that is uncollected, avoided or evaded."