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The government's £20bn tax giveaway will hit middle Britain and leave a tax bomb ticking under the public purse, George Osborne said today.
Responding to Alistair Darling's pre-budget report, the shadow chancellor warned it would create a £1tn national debt and he branded a 0.5% increase in national insurance a "tax on jobs".
Laying into the proposals, Osborne said that Gordon Brown's promise to end boom and bust had proved "one of the greatest deceits ever told to the British public".
"The chancellor has just announced the largest amount of borrowing ever undertaken by a British government in the entire history of this country," he said.
"To pay for it he has placed a huge unexploded tax bombshell timed to go off underneath the future economic recovery."
Darling was "giving £20bn in giveaways and taking back £40bn in higher taxes", including a "major rise" in national insurance that would hit middle Britain.
Osborne said the chancellor's statement was "confirmation of the time-old truth: in the end all Labour chancellors run out of money and all Labour governments bring this country to the verge of bankruptcy."
He accused Gordon Brown of playing politics with the timing of his benefits and the delay in implementing the tax rises.
Darling had said the recession would end "half way through 2009" but the tax rises will not come in until 2011.
"I wonder why he chose those dates? This budget is all about the political cycle and not the economic cycle."
The chancellor's growth forecasts were "vastly more optimistic" than those of independent analysts and yet borrowing was set to rise by £512bn over the next six years.
"That means the chancellor is borrowing more on the nation's credit card than all previous governments put together."
It was wrong to blame the US for the recession, he said, because Brown had mistaken a "boom for stability and never prepared Britain for the bust".
Osborne said that the IMF predicted the recession would be worse in the UK than in most other major economies.
"The truth is the prime minister built our economic growth on the pillars of finance, housing and government spending and he never once stopped to think what would happen if the pillars collapsed."
For the Liberal Democrats, Vincent Cable, the party's Treasury spokesman, welcomed measures on vehicle excise duty and mortgage repossessions, conceding this was not a normal pre-budget report but a "national emergency".
But he condemned the prime minister for touring the world like a "celebrity heart surgeon" unaware that, back home, the patient was suffering badly.
John McFall, the Labour chairman of the Treasury committee, welcomed the "fiscal stimulus" but warned there was still pessimism in the business community about the prospect of increased lending.
Darling said the government was monitoring the way the banks treated their customers.
- Pre-budget report
- Economic policy
- Recession
- Economic growth (GDP)
- Credit crunch
- George Osborne
- Alistair Darling
- Tax
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