Labour put electioneering first, says Osborne

Labour have lost their "moral authority to govern" by putting electioneering ahead of fixing the economy, shadow chancellor George Osborne said today.

Responding to the Chancellor's statement on the Pre-Budget Report, Mr Osborne told the Commons Alistair Darling had put off tough spending decisions until after Britain goes to the polls.

He accused the Chancellor of failing to produce a plan for dealing with Britain's debts, failing to restore confidence in Treasury forecasting and failing to convince the world that the country is open for business.

And he described the decision to increase National Insurance rates as a "tax on jobs".

Mr Osborne told MPs: "Today, confronted with the biggest budget deficit in our peacetime history, he faced a choice.

"Would he take the tough spending decisions before the General Election or would he completely duck them?

"We were promised a Pre-Budget Report and what we got was a pre-election report. They have lost all the moral authority to govern today."

Mr Osborne said the "full scale of the economic disaster" facing Britain had been made clear by the Chancellor.

"The biggest debt we have ever known, spending cut on almost everything, taxes up on anyone who earns more than £20,000 - Labour's new tax on jobs," Mr Osborne said.

"Every family in the country is going to be forced to pay for years for this Prime Minister's mistakes.

"At the end of their period in office they have indeed adhered to the greatest of golden rules: never trust a Labour government with your money again."

Claims that the Government would be prudent, that Britain was better prepared than other countries for recession, or that boom and bust had been ended had all proved wrong, the shadow chancellor said.

And he added: "The numbers the Chancellor has given us confirm that this Prime Minister inflicted upon us the deepest and longest recession in our modern history.

"No-one will ever believe a word they say on the economy again."

The Chancellor had got forecasts wrong "every single time" he had given a statement to the Commons, Mr Osborne claimed, and had sought to use "sleight of hand" over the scale of recession.

Additional borrowing over the next six years would reach £789 billion "on the basis of pretty heroic growth assumptions", and national debt would be doubled from present levels to £1.4 trillion - £23,000 for every child born today.

The Chancellor's plan for recovery was "not credible" and would not keep interests rates low, Mr Osborne added.

Mr Osborne said the spending plans were "just not credible".

Referring to the Tories recruitment of Government advisers, Mr Osborne said: "As for the waste advisers who wrote those reports that the Chancellor is publishing today, well they've lived up to their names by deciding they are not going to waste any more time with him - they are working with us."

Mr Osborne said he had urged action to tackle bank bonuses but attacked Mr Darling's methods.

"They are going to pay out a load of bankers' bonuses that they shouldn't have been paying out in the first place, they put a one year windfall tax on them and declare it a triumph.

"The real test of this new tax will be whether it curbs bank bonuses instead of curbing bank lending."

The Chancellor had given no details of where the axe would fall on public spending.

"He is achieving the previously impossible trick of ring-fencing a black hole."

The lack of a comprehensive spending review, when they were held before the elections in 2001 and 2005, was a "massive missing piece" of the PBR.

"Lavish detail on the few things they say they are protecting, almost nothing on the many things they are planning to cut.

"They are not being honest with the British people about the real price of their incompetence."

Liberal Democrat treasury spokesman Vincent Cable said it was clear from the statement that the UK's economic position was "still very grave".

He told MPs: "We know now that we are 5 per cent poorer off than we were a year ago and Government estimates of borrowing this year and next year are higher than even they forecast.

"What we needed was a national economic plan and what we have got is an election manifesto."

He said there had been "genuinely great" Labour Chancellors such as Sir Stafford Cripps and Roy Jenkins but "they would not have been obsessed as the Chancellor is today with drawing tactical dividing lines."

Mr Cable told MPs he welcomed "small" initiatives such as help for young people and environmental issues but quipped: "This is a good Budget for bingo and boilers."

He said the Government had been "over-dependent for its revenues on the fickle fortunes of the banking industry."

"We have had an economy that has been built on sand, on the assumption that property prices would rise for ever on consumer borrowing.

"The economy is now being re-built on sand because the only signs of real recovery we have are rising house prices and booming bank profits at a time when industry is continuing to decline."

Mr Cable said: "The Chancellor has clearly been provoked into action by the extraordinarily stupid and arrogant behaviour of the RBS board. What you have come up with, to the extent that it is intelligible, is an extraordinarily complex mechanism."

He asked Mr Darling how he would stop the banks just converting their bonuses into basic salary to avoid the measure.

Mr Cable said the lower paid would be hit by changes to National Insurance: "Any worker earning over £7,000 a year will be paying 32 per cent marginal income tax and 12 per cent NICs. All of the money that is going to be raised in additional tax will now be spent, public spending.

"None of this increase in taxation is going to be used to pay down the borrowing requirement or the deficit, it is complete distortion of the priorities the Government should have."

The whole economic recovery plan was based on an assumption that the single line growth forecast was right, which was "based entirely on optimism and very little else".

He added: "Unless there is fairness, the public will not accept the fact that for the next five years or longer there is going to be real hard slog for this economy and the Chancellor has not set out the way forward that we need."