The report accused the Chancellor of misleading the country about the state of the Government's finances in the run-up to the election and making 'promises about the future which he knew could not be carried out'.
Conservative members of the committee had wanted the criticisms of the Chancellor removed, but were absent when the crucial paragraphs were voted on last week. They accused the Labour members of an 'ambush'.
Quentin Davies MP (Con, Stamford and Spalding), said the Chancellor was suffering 'the most misconceived abuse any minister has had to face'. He accused the Labour members of 'very low-grade political sloganising', and described their tactics as 'puerile and offensive'.
Brian Sedgemore (Lab, Hackney South and Shoreditch) in turn accused the Tories of whingeing and sour grapes. 'The Chancellor has cooked the books, broken election promises and should be dismissed because nobody trusts him,' he said.
The report said the Chancellor's efforts to massage official forecasts for electoral reasons deepened lack of confidence in him among the public and the financial markets. 'In our view the only solution may be for the Prime Minister to act on the almost unanimous advice which has come from the City and replace the Chancellor by someone who can inspire more trust.'
The committee members agreed that further tax increases or public spending cuts might be needed if the Government was to balance its budget by the time the economy had fully recovered. It urged that the minutes of monthly meetings between the Chancellor and the Governor of the Bank of England be published and that the Treasury be more open in its explanations of interest rate changes.
The committee urged the Chancellor to state explicitly that he was aiming to scrap mortgage interest tax relief. It also warned that Britain's deep balance of payments deficit remained a cause for concern despite the fall in the pound since Black Wednesday.
The committee warned that the downgrading of the narrow money supply target to a 'monitoring range' damaged the credibility of policy, and urged that the ranges for broad and narrow money be gradually lowered in later years of the medium-term financial strategy. It concluded that the short-run prospects for inflation were encouraging but that unemployment might not peak for a long time.Reuse content