GEORGE Osborne’s plans to push ahead with tough new fiscal rules forcing government departments to cut spending in a bid to run a surplus will see Britain pursue an economic policy not seen since Dickensian times, a leading think tank has warned.

Paul Johnson, director of the Institute for Fiscal Studies, was commenting on proposals that he Chancellor was due to set out in his Mansion House speech last night. These will introduce legislation to make sure ministers spend less than is coming into the public coffers when the economy is operating “normally”.

But Johnson told BBC Radio 4’s World at One: “It will certainly mark a very big change with the past. And I don’t just mean the recent past but over the last 100 years and more, when we’ve only really rather rarely run surpluses – for three or four years after the Second World War, for two or three years at the beginning of this century.

“Actually to put surpluses into law as something you want to run every year in normal times would take us back to the practice of the second half of the 19th century.”

He warned: “It is important that this is only ‘in normal times’. It is absolutely vital that economies are able to run deficits – and potentially quite substantial deficits – when they are in recession.”

Osborne was expected to use his speech to confirm plans for a “balanced budget” principle policed by an independent watchdog, claiming the general election result represented a “comprehensive rejection of those who argued for more borrowing and more spending” and insisting he wants a “new settlement” to protect the country from an “uncertain future”.

“I come to move Britain from crisis and recovery, and towards a new settlement of responsibility and prosperity,” he will say.

“Without sound public finances there can be no lasting economic security – and without economic security there can be no lasting economic prosperity.

“So the new settlement for the British economy I talk about starts with a new settlement in the way we manage our national finances.

“With our national debt unsustainably high, and with the uncertainty about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining. Indeed we should now aim for a permanent change in our political debate and our approach to fiscal responsibility – just as they have done in recent years in countries like Sweden and Canada.”

But critics said the policy could prove counterproductive, risk economic recovery and slow growth.

“He is preparing to forgo £93 billion of flexibility and spending, in order to meet an ideological target – not an economic one,’’ said SNP economy spokesperson Stewart Hosie. “Even the OECD have warned the Chancellor he does not need to cut as far and fast as he is threatening. By stripping this much extra spending out of the economy, he risks recovery and will almost certainly slow down economic growth.

“The SNP stand by our plan which would see a real end to austerity and we urge the Chancellor to abandon ideology and use the flexibility he has wisely, to strengthen economic recovery.”

Shadow chancellor Chris Leslie added: “Sensible reductions in public spending and a balanced approach are needed – but the public need straight answers from the Chancellor now rather than politics.”

John Longworth, director general of the British Chambers of Commerce, said: “While running a budget surplus is a laudable aim, economic history shows that the national interest sometimes requires fiscal flexibility. It is impossible to predict global economic conditions with any certainty, so no government should put itself into a fiscal straitjacket that limits its scope to respond.

“Any move to constrain future spending should explicitly exclude infrastructure, which is an investment rather than just a cost. Roads, railways, energy grids and broadband drive productivity and job creation – and it is time for government’s contributions to national infrastructure to be removed from the debate on the deficit and the national debt.” Osborne will argue that in the wake of the election it should be “accepted across the political spectrum that without sound public finances, there is no economic security for working people”.

The Chancellor is due to give more details of the scheme in the Budget next month and will challenge the other parties to back the new rules in a Commons vote later this year.

The proposals for a tougher fiscal framework overseen by the Office for Budget Responsibility were first set out by Osborne in January.

The current rules introduced by the coalition require the government to eradicate the structural deficit by the end of a rolling three-year forecast period.