Whitehall departments are to face tough new spending rules as the Treasury moves to ensure there can be no repeat of the "mess" that landed Britain with its largest fiscal deficit in peacetime, Danny Alexander will announce.

In what will be regarded as a power grab by the Treasury, its Liberal Democrat chief secretary will tell the departments on Monday they must abide by a new two-point plan or face penalties.

Alexander will set out his plans in a speech to the Institute for Fiscal Studies in which he will launch a highly aggressive attack on Labour which he will depict as the party of "deficit denial" which wants to prolong Britain's period of austerity.

In a sign of the sort of message the Tories and Lib Dems are planning to push after the local elections on 3 May, Alexander will say the two parties came together in the national interest to clean up the mess left by Labour. He will say there is a faultine in British politics with Labour still "wedded to the politics of deficit denial".

Alexander will say: "Our critics' logic means that they are, though they may not admit it, actually proposing even deeper spending reductions in the end. That is the consequence of deficit denial. Instead, we argue that we have to cut our cloth today to reflect our means, and show that we can be trusted to restore our public finances to health."

Alexander will outline two new rules for Whitehall departments which will have to:

• Monitor and share spending information with the Treasury on a monthly basis.

• Identify 5% of their resource budget that could be used as a reserve to be redirected if unforeseen needs arise. At the moment departments rely on the central reserve at the Treasury which has been reduced to £2.8bn from £4bn.

If departments fail to abide by the new rules they could face a series of penalties. These could include limiting their access to the Treasury reserve; reducing the amount of money they are allowed to spend without the Treasury's permission under a system known as "delegated authority", and asking the National Audit Office to carry out an investigation into an errant department.

One government source said: "This is an exertion of Treasury power. The Treasury has quite a lot of extra powers if it chooses to use them."

Alexander will say: "These new controls are not just a tweak to the Whitehall machine. They are another signal of our unwavering determination to deliver the fiscal consolidation we promised.

"It is this focus on delivery that is the cornerstone of our country's credibility. Credibility, let us not forget, which is delivering the record low interest rates that are benefitting millions of families across the UK. That's why, when we look at the mess Britain's finances were allowed to get into, we say 'never again.'"

The IFS, which is hosting Alexander's speech, is likely to have a diplomatic response to his proposals. The IFS says that the fiscal deficit was not caused by poor spending controls in Whitehall departments. It says that the deficit was caused by mistakenly using cyclical tax receipts from Britain's financial services industry to finance structural spending commitments.

Alexander will also use his speech to say the government is on course to meet its spending commitments. He will say that the government has delivered 30% of the savings (£23bn out of £79bn) identified by George Osborne in his 2010 spending review.