Letwin attacks Chancellor's 'stealth taxes' and spiralling spending

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The Independent Online

Oliver Letwin has accused Gordon Brown of being a "credit card" Chancellor, claiming the Government has presided over spiralling levels of borrowing to fuel increasing public spending.

In his first major clash with Mr Brown since becoming Shadow Chancellor, Mr Letwin accused Labour of spending £50,000 an hour and imposing 60 "stealth taxes".

Mr Letwin said: "The Chancellor will have been warned about families who borrow a huge amount on their credit cards. But he is doing the same on the nation's credit card."

But Mr Brown brushed aside criticism of increased borrowing, insisting he would take "no lectures" from the Conservatives on the issue of public finances.

Mr Letwin said: "Why is he doing all this borrowing? Is it because, as the Chancellor is fond of saying, there has been a world economic downturn? No, it can't be, because the borrowing of £120bn which he has just announced between 2002 and 2006 is taking place after the worst of the downturn and against the background of a world economic upturn."

He accused Mr Brown of raising the equivalent of £16,500 from every household in Britain. He said: "We have had 60 stealth taxes: taxes on jobs, taxes on families, taxes on homes, taxes on pensions, taxes on savings, taxes on drivers, taxes on businesses, and of course the biggest stealth tax of them all, a huge rise in council tax."

He told the Chancellor: "The real explanation for your borrowing is not that you have been shy about raising taxes. The real explanation is your spending. You are spending more than £50,000 an hour."

Mr Letwin accused Mr Brown of an "open-wallet policy" on Whitehall bureaucracy. He said: "The saddest thing about the taxes people are paying now, and the saddest thing about those they will have to pay later to repay the Chancellor's borrowing, is that there is very little sign that all this spending is delivering improvements on the scale everyone wants to see."

Mr Letwin also attacked the Chancellor's record on manufacturing and accused the Government of piling regulations on business.

Mr Brown fought back, saying: "Just as I will not take advice from the Shadow Chancellor who supported a Government in the last world downturn that ran 15 per cent interest rates, 10 per cent inflation, lost two million manufacturing jobs and had a million and a half people in negative equity, I will not take advice from the Shadow Chancellor and his party on borrowing.

"For 16 of the 18 years of Conservative government, they were in deficit. For 11 of these 18 years the deficit was above three per cent. It rose to 8 per cent for two years - the equivalent of £80bn at today's prices - in 1992 and 1993, and he has the audacity to try and lecture this side on borrowing."

Mr Brown insisted: "His aim is to cut spending. He is on record, and he will not be able to forget this, proposing cutting public spending to 35 per cent of national income, which is an £80bn cut."

Vincent Cable, the Treasury spokesman for the Liberal Democrats, said: "We do have low inflation, and low unemployment. We've had steady growth and a respectable level of public debt.

"But the statement today showed the Chancellor at his worst. He was trailing a a long stream of complex new tax gimmicks adding to an already over-complicated tax system. There are a lot of very red faces in the Treasury today about the red ink on the Budget."

John McFall, the Labour chairman of the Treasury select committee, commended Mr Brown on a "sound economic framework" and praised the Government's proposals for children's centres in every community. He said: "There are still too many adults and children in this country left behind and we have an urgent job to undertake these initiatives."