Treasury committee attacks Brown over tax-raising Budget

Labour MPs were facing embarrassment yesterday because their absence from a House of Commons committee led to the publication of a report that criticises Gordon Brown's Budget.

The all-party Treasury Select Committee attacked the Chancellor for claiming the upper-earnings ceiling remained intact after he raised National Insurance contributions in his April Budget.

It also accused Mr Brown of failing to justify his 1 per cent hike in NI contributions, and said that his forecasts for economic growth were dangerously "over-optimistic."

The report by the committee that usually has a healthy Labour majority was approved despite four Labour MPs absence at the final meeting.

The final report was approved by three Tories and a Liberal Democrat. Witnesses at a hearing of the committee last week remarked only three MPs were present and most of the questioning was left to Andrew Tyrie, a Tory MP.

John McFall, the Labour chairman of the committee, said the absent MPs had "very valid reasons" for staying away.

"Any Budget report is always a politically-charged report and this report is not dissimilar to others," he told BBC Radio 4's the World at One. "There are aspects I welcome, but if I had to write the report in my own language, obviously it wouldn't be the same language."

The report says Gordon Brown failed to persuade the committee that raising NI contributions was the best way of raising cash for public services such the NHS. It added: "The proposed increase in NICs for employees and the self-employed will deliver a tax increase to those groups very similar to a 1 per cent increase in the rates of income tax. We think the Treasury has, as yet, failed to make the case for choosing a method of revenue raising ... which excludes well-off pensioners and people living comfortably off unearned income from making a contribution to higher NHS spending."

David Laws, Liberal Democrat MP for Yeovil who sits on the committee, said the conclusions were justified.

He said: "The criticisms we have made of the Budget are very serious and substantive but they are not party politically orientated."

The report dismissed as "mere sophistry" Mr Brown's argument that the upper-earnings ceiling limit remained intact after his announcement that the 1 per cent increase would apply right across the earnings range.

Tory MP David Ruffley said the conclusions were a result of "everything we heard in open evidence" and not to do with "a bit of tricksy hijacking.

"It is quite wrong to think this is some political trick or some amusing political game. It is nothing of the kind," he said.

The four Labour MPs absent from were Kali Mountford (Colne Valley), George Mudie (Leeds East), Dr Nick Palmer (Broxtowe) and James Plaskitt (Warwick and Leamington). Dr Palmer was attending the funeral of Gordon Skinner, brother of MP Dennis Skinner.

Michael Howard, the Shadow Chancellor, said the report showed "just how big a mistake the Budget was".