Leaders complain of buck-passing, over-optimism and infliction of pain

Iain Duncan Smith accused Gordon Brown of serving up "pain today and pain tomorrow" with a combination of increased state borrowing and tax rises.

He won cheers from Tory backbenchers as he lambasted the Chancellor for breaking the Government's pledges while failing to improve public services.

Charles Kennedy, the Liberal Democrat leader, also attacked Mr Brown, accusing the Chancellor of serving up "a buck-passing Budget and a cross your fingers and hope for the best Budget".

Mr Duncan Smith angrily attacked Mr Brown for raising taxes and inflicting increased borrowing on Britain. He said: "This is a Chancellor who promised us prudence and has now given us higher borrowing and higher taxes at the same time.

"His Budget message is clear; higher taxes, that's pain today, and higher borrowing, that's more pain tomorrow."

Mr Duncan Smith said: "Fifty-three tax rises later, this week when people receive their pay packets they will find that their take-home pay has fallen for the first time in 20 years.

"Now they know what you really stand for; promises, promises, promises. Every year you make them and every year you break them."

Labour MPs beckoned to the former Tory leadership contender Kenneth Clarke, who watched the debate in the gallery above the chamber. But Conservative MPs cheered as Mr Duncan Smith accused Labour of presiding over the failure of manufacturing while increasing taxes on "hard-working families".

Mr Duncan Smith said: "Despite your bombast and bravado we learnt a great deal. We learnt that you have got your forecasts wrong again.

"Your borrowing is up again. Taxes are up and they are going to stay up. From this week a typical family is another £568 a year worse off." Mr Duncan Smith added: "The Chancellor's excuse was that this money would make our public services world class.

"Instead we have a million people on hospital waiting lists, a crime is committed every five seconds, and thousands of children are leaving school without a single GCSE. More tax, more spend, more waste, that is the sum of the Chancellor's approach."

Mr Duncan Smith said he supported additional spending on the war in Iraq. But he cautioned: "He can't blame all his flawed forecasts on world events."

Mr Duncan Smith attacked the Chancellor's decision to impose an increase in employers' national insurance contributions. He said: "The Chancellor has been so hard on business that since 1997 he has taken an extra £47bn from them in tax."

He accused Labour of increasing overall taxation by more than 50 per cent since 1997. Council tax had risen by 60 per cent.

Mr Duncan Smith accused the Chancellor of destroying savings and said Labour had damaged the futures of millions of pensioners by cutting tax relief on pension funds.

He told MPs: "Your pension tax, worth £5bn a year, has hit every single future pensioner.

"You have also created a pension crisis. Someone retiring today will now retire on half the income they would have retired on in 1997. You should apologise to all those people you have damaged."

Mr Duncan Smith poured scorn on Mr Brown's announcement of a trust fund for every newborn baby. He said: "Today, after two years and three consultations, and reannouncements and re-reannouncements, the Chancellor decided to reannounce his child trust fund again. All over- complicated proposals which will do little to help future long-term saving."

John Redwood, a former Conservative cabinet member, said: "I don't want this money spent on an army of spin doctors and quangos and middle managers ... I want it spent on nurses, doctors, and beds."

Mr Kennedy told MPs that the British economy was performing significantly worse than international competitors and attacked Mr Brown for serving up excuses to the electorate. He said: "He should stop blaming the rest of the world and he should feel rather chastened with this Budget this year.

"At this time British people are paying the price for mistakes and they deserve more than just excuses. The current problems are not simply down to the inevitable downturn that has taken place in the world economy."

He said that manufacturing industry was in the worst recession since the Second World War and warned that business investment had fallen at record rates. Mr Kennedy warned: "You can't enjoy the future if you don't invest now."

The Liberal Democrat leader called on the Government to abolish its pension credit, condemning the scheme as a "bureaucratic nightmare".

"It would be better to scrap it and rely instead on a £5 increase in the basic pension and big increases in the age additions."

He said: "All the indicators show that the poorest pensioners are the oldest and that is where we should be front-loading our support with a view to the future."

The experts' verdict: Former budget-makers comment

Lord Barnett

Labour Chief Secretary to the Treasury 1974-79.

"I thought he did nothing, brilliantly. There were all kinds of little bits. Mr Brown has probably been a bit on the optimistic side on the state of borrowing, but it's all right. If by next year borrowing is a bit more, so what? We are talking about GDP of well over £1,000bn. If the economy grows by 1.5 per cent rather than 2 to 2.5 per cent it would not be good, but it would not be a disaster."

Lord Lamont of Lerwick

Conservative Chancellor 1990-93

"It was largely a non-event ... very much as expected, and Mr Brown took it all on borrowing. He is taking a calculated risk. I'm not saying that it's entirely unjustified but it can go very wrong.

"I preferred the Gordon Brown of the first two to three years when he kept expenditure firmly under control. He has given up his years of very low expenditure and gone on a massive binge."

Kenneth Clarke

Conservative Chancellor 1993-97

"He disguised the very unhealthy state of government spending and government borrowing and the effect on businesses. The estimate for growth he makes next year is based on a big increase in private consumption and government spending and a drop in business investment. The wealth creating sector is in contraction and the wealth consuming sector is expanding. That is not a healthy outlook."