PUBLIC spending and business took centre stage yesterday as the general election campaign started in earnest.

The Conservatives and Labour traded blows after the dissolution of Parliament marked the start of the countdown to May 7.

They are locked in a heated battle for the keys to 10 Downing Street, with two polls having the Tories ahead and one with Labour in front.

Hampshire’s seats are set to form a key part of the battle between the Tories, Labour and the other parties over the next 39 days.

Many eyes will be on Southampton Itchen, where Labour’s John Denham won by just 192 votes in 2010.

And with Mr Denham retiring there is a fierce rivalry to be his successor, between Labour candidate Rowenna Davis and his former challenger, Conservative Royston Smith.

Other battlegrounds will include Eastleigh, where the Liberal Democrats were pushed close by UKIP in a by-election in 2013, called after the resignation of disgraced former MP Chris Huhne. Yesterday, the Conservatives and Labour began the short campaign by launching attacks on each other – but both suffered setbacks too.

A Conservative claim that tax bills for working households would shoot up by more than £3,000 under Labour was challenged by the Institute of Fiscal Studies.

And Labour, which launched its business manifesto yesterday, was landed in hot water over its use of a quote from the chief executive of Siemens UK in an advert about what the party says would be the risks posed by a referendum on remaining in the European Union.

Prime Minister David Cameron, who travelled to Buckingham Palace to inform the Queen of the dissolution of Parliament, said the country’s voters were left with a “big choice”

between returning him to office to “carry on with the plan that’s turning the country round” or electing Mr Miliband and a return to “more debt, more spending, more taxes”.

He said he would be travelling to “all four corners and all four nations” of the UK ahead of the election, saying: “Because of our long-term economic plan and the difficult decisions we have taken, we have more people in work than ever in our history, living standards are on the rise and Britain is more economically secure.”

Mr Miliband spoke at an event to launch the party’s business manifesto, which includes policies to cut and freeze business rates for more than 1.5 million small and mediumsized businesses, dedicate £30 billion to various regions of the UK for “regional development” and create thousands of new public sector apprenticeships.

During the event he pledged to “build a better country together”, adding: “There are two futures on offer at this election: to carry on with a Conservative plan based on the idea that as long as the richest and most powerful succeed, everyone else will be OK, or a Labour plan, a better plan, that says it is only when working people succeed that Britain succeeds.”

The pledges had a mixed response from business leaders in Hampshire, with Chamber of Commerce chief executive Stewart Dunn saying: “There’s a number of sound policies coming through around investment, access to finance and local infrastructure – all of which are critical to balancing growth in the future.

“At the same time I would look at the tax and regulatory plans they have announced and say ‘think again’ to not negatively affect that growth.”

UKIP leader Nigel Farage, whose party has emerged as the third-highest in polling, was also speaking as he announced his party’s “pledge to Britain”. He says his party’s policies include pumping an extra £3 billion into the NHS, cutting foreign aid and scrapping tax on the national minimum wage.

At this stage many are predicting a second hung Parliament in five years after the Conservatives entered into a coalition with the Liberal Democrats in 2010.

And Lib Dem leader Nick Clegg has predicted another coalition, saying: “It is my view that the era of single-party Government is now over in British politics.

“About the very last thing the country now needs is a lurch to the left or the right and yet that is exactly what the Conservative and Labour parties are now threatening.”

Speaking before his trip to Buckingham Palace with Mr Cameron, he concluded by saying he hoped his party would fill the “reasoned centre ground”.

Today he is set to announce his party’s “manifesto for the mind” and spending an extra £500m a year to bring down waiting times for mental health care.