GEORGE Osborne has been accused of a “shocking display of hypocrisy” by Labour after it was revealed taxpayers footed a £40,000 bill to refurbish his Downing Street flat as he imposed austerity cuts on the country.

Maintenance and refurbishment of the apartment above No 10, used by the Chancellor, his wife Frances, and their two children, came in at £39,880 in 2011-12.

The previous year some £32,651 was spent on works but the Treasury made clear this money covered the state rooms and offices at Number 11 as well as the residence.

The latest details emerged through a Freedom of Information request obtained by the Daily Mail. Initially, the Treasury said it did not hold them but after the Cabinet Office confirmed it had billed the Treasury for the work, the Exchequer produced the figures.

A spokeswoman for the Treasury said: “No 11 Downing Street is a Grade I-listed building and as such the Government is obliged to ensure that it is maintained to an appropriate standard.”

She added: “By long-standing arrangement, the Treasury pays a contribution to the Cabinet Office for the space used by HM Treasury and the Chancellor of the Exchequer within the Downing Street estate, including maintenance of the No 11 state rooms and offices, and the No 10 flat.”

But Tom Watson, the deputy leader of the Labour Party, said: “George Osborne has implemented huge spending cuts that have hit the poorest hardest and warned there is stormy economic weather ahead.

“He should be setting an example by reigning in his own spending but the millionaire Chancellor has instead splashed out tens of thousands of pounds of taxpayers’ money on home improvements.”

The Midlands MP added: “It is a shocking display of hypocrisy and another example of his terrible political judgement. He may have a flat at number 10 but he doesn't deserve to be handed the keys to the front door.”

The row over the Chancellor’s flat refurbishment follows that over David Cameron’s when £64,000 was spent refurbishing the larger four-bedroom apartment above No 11 used by the Prime Minister and his family.