Fuel protesters and pensioners have forced a retreat, says Portillo

The reaction

Michael Portillo claimed the Chancellor had been forced into full retreat in his pre-Budget statement, blown about by public opinion on pensions and fuel protests.

Michael Portillo claimed the Chancellor had been forced into full retreat in his pre-Budget statement, blown about by public opinion on pensions and fuel protests.

The shadow Chancellor said Gordon Brown had gone back on his earlier promises not to back down to "those who push the hardest and those who pushed the most.

"But does anyone seriously believe that we would have had today's statement if it hadn't been for the fuel protests, if it hadn't been for the panic on the Labour benches, and if it weren't for the fact that they were planning an election?

"He has shown no sign of understanding and he never says he is sorry," Mr Portillo told the House of Commons. "That refusal diminished the Chancellor and he is not half the Chancellor he was a year ago. Today he has merely returned a little bit of the people's surplus, but still he plans to take it back in higher taxes if he wins the next election.

"This statement showed a Chancellor in full retreat, blown about by public opinion, but still a man who even in those circumstances could not come to the House and say, 'I'm sorry'.

"This statement was all about short-term tactics, all about quick fixes.

"This was a Chancellor who today was in full retreat," he repeated.

"This is the statement that the Chancellor told us he would never be able to make; didn't ministers tell us, time and time again, that they could give no concessions to pensioners and no concessions to motorists? They said that could only be done at the expense of closing schools and hospitals. Why didn't the Chancellor repeat that spurious nonsense today.

"Can you tell us - as a result of the changes you made today - how many schools and hospitals you have had to close? Once again the insincerity and the spin of this Labour Government have been laid bare.

"Today you are in pre-election mode, but will you admit that your plans to raise public spending by more than the country can afford, year after year, mean there will be tax increases year after year after year?

"Do you have any understanding of what this extra burden of tax and regulation mean for our economy? Today's statement, like all the Chancellor's others, was characterised by a great deal of microeconomic meddling by a highly interventionist Chancellor."

Matthew Taylor, economic spokesman for the Liberal Democrats, said: "The Chancellor's Labour predecessors introduced mini-budgets in times of financial crisis because of boom and bust.

"This Chancellor," he continued, "introduces them at times of political crisis to introduce policies of bust and boom. Three years of cuts in public service followed by a general election splurge to butt backthe electorate.

"The Iron Chancellor has buckled in the face of protests from pensioners and from Liberal Democrats and some of his own backbenchers.

"But the Chancellor has still left pensions inadequate, as it proved by the fact that millions of elderly people who have paid national insurance in all their working lives still have to rely on means-tested benefits to make ends meet. "

Peter Kilfoyle, who resigned as minister to speak up for Labour heartlands, said: "Earlier on I was asking if there was a doctor in the house because I have never seen so many sick people as I did this afternoon on the benches opposite when you were speaking.

"This has been a very, very welcome statement. It is far- reaching and innovative. The choice facing the country is now between investment in economic, social and human capital as set out this afternoon and the £16bn of unspecified cuts set out by the party opposite."

Kenneth Clarke, the Tory former Chancellor, said to Mr Brown: "Your concern was to ensure no lobby group was left unsatisfied and no pressure group unpaid.

"On this occasion Barbara Castle and the hauliers are allowed their triumph in the hope that he gets re-elected.

"But the only reason you are able to do it is because the Treasury keep getting their forecasts wrong of the revenue it is receiving. Admit that your policies are unsustainable and will force a new government to go back to the drawing board."