Ed Balls lambasted George Osborne for "failing, failing, failing" by presiding over an economic strategy that had resulted in falling growth and increased levels of borrowing and debt.
The shadow Chancellor accused Mr Osborne of trying to blame the rest of the world – notably the eurozone crisis and high oil prices – for the sickly state of the economy when the explanation was much closer to home. And he claimed the Autumn Statement was final evidence of the "true scale of this Government's economic failure".
Mr Balls fluffed his initial attack on his opposite number when he said that the national deficit was not rising, before correcting himself to clarify that it was rising. Amid uproar in the Commons, he went on: "The Chancellor's fiscal strategy has been completely derailed. The defined purpose of the Government, the cornerstone of the Coalition, the one test they set themselves – to balance the books and get the debt falling by 2015 – is now in tatters."
Mr Balls mocked the Chancellor for only producing economic growth that was even slower than that in the eurozone, telling him: "It is not the rest of the world's fault – it is your policies which have failed."
He said the Government had argued that the increasing the rate of VAT to 20 per cent and pushing through "accelerated spending cuts" would boost confidence, secure recovery and reduce the deficit. "But they depressed confidence, choked off our recovery, and borrowing has been revised up," Mr Balls argued. "It is the economy which has contracted and the borrowing and the debt which have expanded."
He said the Government's central mistake had been to fail to put in place "a plan for jobs and growth" alongside moves to cut the deficit.
Mr Balls claimed that the planned cut in the top rate of income tax from 50p to 45p announced in the March Budget would mean 8,000 millionaires would be at least £100,000 a year better off from April. "At the same time the Chancellor is cutting tax credits for working families, cutting child benefit for middle-income parents, raising taxes on pensioners and cutting benefits for the unemployed."
He said the Chancellor could not claim "we're all in this together" without a smirk and described the Government as "completely out of touch". Mr Balls referred to comments by the Tory MP Nadine Dorries, who appeared in I'm A Celebrity.... Get Me Out Of Here!, that Mr Osborne and David Cameron were "two arrogant posh boys who don't know the price of milk".
He said: "No wonder this Prime Minister keeps losing his temper, because his worst nightmare is coming true. Not snakes and spiders in the jungle, but their fiscal rule broken, their economic credibility in tatters, exposed now as incompetent and unfair. Yes, he's the Chancellor... can't someone get him out of here?"
Andrew Tyrie, the Tory MP who chairs the Treasury Select Committee, urged the Chancellor to consider breaking up state-owned banks such as Royal Bank of Scotland, which is 82 per cent owned by the taxpayer.
He suggested that Mr Osborne needed to "open up banks to much more competition from new lenders, clean up banks' balance sheets as the Bank of England has been advocating, and possibly even break up one or more of the state-owned banks to improving their funding and hence lending".
The Labour MP John Denham, a former shadow Business Secretary, said: "Is it a fair summary to say every time you have come here, the economy hasn't grown since last time, that you're planning to borrow more than last time he was here, that spending on public services is going to be cut more than last time he was here, that growth in the future is going to be less than you told us last time you were here. In view of that record, should you be looking quite so pleased with yourself?"
Mr Osborne said: "This Government came in in May 2010, picking up the pieces of an incredibly difficult economic inheritance. We were recovering from the deepest recession since the Second World War, which as I pointed out was an over-six per cent contraction in the economy, which puts into some context the numbers today."
What's in it for us...? Lib Dem scorecard
* Larger-than-expected rise in the income tax threshold to £9,940 – almost hitting their £10,000 target.
* Blocking plans to introduce regional pay for public sector workers.
* Preventing a total benefit s freeze and plans to withdraw housing benefit from the under-25s.
* No mansion tax or revaluation of council tax bands.
* No extra support for childcare costs.
* Big increase in support for gas, with 30 new power stations.
Why George has the Rock to thank
George Osborne unleashed a surprise when he reported that, according to the OBR, the deficit in cash terms in 2012/13 would be smaller than in the previous year. The Chancellor swore there was no trickery involved, because the OBR's figures stripped out the £11bn being transferred to the Treasury's coffers from the Bank of England's Asset Purchase Facility. But he didn't mention that the OBR figure didn't remove a £400m benefit from his decision to take the assets from the bust banks, Northern Rock and Bradford and Bingley, on to the state's books.
If one stripped out that windfall, the OBR forecast instead shows an increase in the 2012/13 deficit on the previous year. The former Northern Rock CEO Adam Applegarth might have been a disaster for the UK economy. But he gave the Chancellor a helping hand.
Ben ChuReuse content