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George Osborne, the shadow chancellor, accused Alistair Darling yesterday of unveiling a "reckless" pre-budget report that will compound the recession by doubling Britain's national debt to £1 trillion and condemning the British people to a lifetime of tax increases.
In noisy exchanges, Osborne accused Labour of living up to its age-old reputation as a tax-and-spend party by offering £20bn in tax giveaways - to be funded by the biggest borrowing in British history - while taking back £40bn in higher taxes.
He said: "It is confirmation of the time- old truth that in the end all Labour chancellors run out of money and all Labour governments bring this country to the verge of bankruptcy. Stability has gone out of the window, prudence is dead, Labour has done it again. Massive borrowing, rising unemployment, tax giveaways for Christmas paid by tax rises for life, giving with one hand, taking with the other - everything we have come to expect from this prime minister."
In a sign of the battle ahead in the run-up to the next election, Osborne dismissed the main measures announced by the chancellor. He claimed that:
• Half the fiscal measures were designed to compensate people for the government's own "10p tax con" which prompted a backbench rebellion earlier this year.
• A cut in VAT, which may not stimulate spending, has been rejected by France and Germany.
• The half percentage point increase on employers' and employees' national insurance contributions amounted to a £4bn tax increase on families and jobs.
Osborne said: "This isn't just a bombshell, it is a precision-guided missile at the heart of a recovery ... [The chancellor] offers temporary tax giveaways paid for by a lifetime of tax rises for the British people, the national debt doubled and the future mortgaged to bail out the mistakes of the past. This is exactly the road Britain is now on with this prime minister and this reckless budget. Far from being an action plan it represents the greatest failure of public policy for a generation. It will make the recession worse because it will make the recovery more difficult."
Osborne then dredged up one of the most painful moments in the history of the Labour party, the moment when it had to borrow from the IMF. "If Denis Healey had had to announce these figures he wouldn't have turned round at the airport, he would have kept going," he said, referring to 1976 when the then chancellor abandoned a trip to an IMF meeting in Manila to address the Labour party conference.
The shadow chancellor said that Darling was placing the public finances in a more dangerous position than they were in during the 1970s, with £512bn now to be added to the national debt over the next six years.
"The chancellor has just announced the largest amount of borrowing ever undertaken by a British government in the entire history of this country. What he did not admit is that he is going to double the national debt to £1 trillion. A national debt that has accumulated over centuries is going to double in just five years. That is the bill for Labour's decade of irresponsibility. To pay for it he has placed a huge unexploded tax bombshell timed to go off underneath the future economic recovery."
Vince Cable, the Liberal Democrats' Treasury spokesman, questioned the cut in VAT. He said: "What I fail to see is how the economy gets a major stimulus from, for example, a £5 cut in a £220 imported flat-screen television or a 50p cut in a £25 restaurant bill.
"Surely it would be much more sensible to put money directly in the pockets of low-paid workers by cutting their income tax? Not the pathetic £25 they are being offered and if they earn over £20,000 a year the prospect of tax increases.
"What surely is needed is a comprehensive approach which cuts income tax on low-paid, middle-income families, removing the vast plethora of tax reliefs and allowances which the wealthy benefit from."
- Pre-budget report
- Economic policy
- Alistair Darling
- Vincent Cable
- Liberal Democrats
- Tax and spending
- Recession
- Credit crunch
- Government Borrowing
- Income tax
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