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George Osborne, the Shadow Chancellor, accused Gordon Brown of taking Britain in the wrong direction yesterday by making the economy less competitive and ill-equipped for future challenges.

Instead of making the economy more flexible and global, Mr Brown had continued to extend and complicate the tax system and spend more on public services without demanding reforms, he said.

The Chancellor’s borrowing forecast for this year of £37 billion would give Britain the largest structural deficit of any major European economy while growth forecasts for two years’ time had been downgraded. Mr Osborne attacked Mr Brown for failing to mention that Britain had seen the largest rise in unemployment in the developed world and failing to address the “crisis” in the National Health Service. “Today the Chancellor had no new answers,” he said. “He promised a change of gear but all we got was more of the same.”

On every international measure Britain was becoming less competitive, he said. The rate of productivity had fallen to 1.6 per cent, down from 2.6 per cent when Mr Brown became Chancellor, and one in six children aged 16 was unable to read, write or add properly.

Every one of his borrowing figures for the next six years would be higher than forecast in the Budget in March, despite the biggest tax increases in Britain’s peacetime history, equivalent to £9,000 per family.

“In a world where our competitors are simplifying and reducing their business taxes, we — almost alone — are increasing ours,” Mr Osborne said. “Where is the long-term sense in that? Where is the sense in landing us with the most complicated tax code in the developed world?”

He criticised the rise in air passenger duty, saying that that should have replaced an existing tax rather than adding to the tax burden, and said the share of green taxes had fallen under Mr Brown while carbon emissions were higher than when he became Chancellor.

The extra money announced for schools, Mr Osborne said, epitomised the Chancellor’s greatest mistake of spending money without reform, with school standards not rising fast enough and health mortality rates not dropping faster despite higher NHS budgets.

Turning to Mr Brown’s ambition to succeed Tony Blair, Mr Osborne said that the Chancellor would not offer the country a fresh start but a continuation of a Labour Government in which he had been a central figure throughout. “The hospital cuts are his cuts, the failing schools are his failures, the pensions that were destroyed were destroyed by him,” Mr Osborne said.

“The truth is this: Labour can only be new once. If the public want change then they are going to have to vote for it.”

Vince Cable, for the the Liberal Democrats, applauded the doubling of air passenger duty and rise in fuel duty but said that such environmental taxes had not gone far enough and amounted to only a tenth of that advocated by Sir Nicholas Stern in his report on the economics of climate change.

The Chancellor’s green credentials were also damaged by Kate Barker’s report proposing more flexible planning controls that amounted to “a property developers’ charter” and Sir Rod Eddington’s call for the expansion of airports, he said.

Mr Cable asked why, despite the Government’s focus on education and science, the number of students achieving A-levels or their equivalents in mathematics, science and modern languages had progressively fallen.

He accused Mr Brown of ignoring problems of personal debt, saying two million people had extreme debts, one in six had severe debts and there were 100,000 repossession orders a year before the courts.

Mr Cable gave warning that the Chancellor’s future spending on pensions, policing and hospitals were at risk because of open-ended commitments to the war in Iraq, defence contracts such as the Eurofighter aircraft and replacing Trident, new nuclear power stations, identity cards and the London Olympics in 2012.

He also asked why, after ten years, inequality remained as bad as it had been under the Conservatives and inequality of wealth was worse.

John McFall (Lab, Dumbartonshire West), chairman of the Commons Treasury Committee, gave warning of a trend towards a two-tier workforce, with the well trained enjoying rising wages and prospects but the unskilled facing stagnant wages and comparative poverty. He said employers must do more to train staff.

Kenneth Clarke (C, Rushcliffe) said Mr Brown had kept the economy growing thanks only to a “sea of mounting public debt” and whoever replaced him as Chancellor should look beyond his extravagantly optimistic descriptions of the public finances.

Stewart Hosie, for the Scottish National Party, attacked the Chancellor for failing to outline steps to reverse a “growth gap” in which Scotland’s economy grew at a rate almost 1 per cent slower than the remainder of the UK.

Shadow boxer

The Shadow Chancellors faced by Gordon Brown

Peter Lilley 1997-98

Francis Maude 1998–2000

Michael Portillo 2000–01

Michael Howard 2001–03

Oliver Letwin 2003–05

George Osborne 2005–

Out for the count

Gordon Brown’s PBR speech word count

1997 4,199
1998 4,232
1999 5,055
2000 7,193
2001 6,015
2002 5,007
2003 5,077
2004 5,525
2005 4,928
2006 5,275

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