Gordon Brown attacks Tories on National Insurance 'panic measures'

Gordon Brown today accused the Tories of resorting to "panic measures" by planning to reverse the bulk of the Government's planned increase in National Insurance.

The Prime Minister hit out at the plan in the Commons, warning it would put the recovery at risk.

And he insisted the Tories planned further tax cuts amounting to nearly £30 billion over the next five years, putting "frontline public service at risk".

He told Tory leader David Cameron: "These panic measures by the Tories won't help a recovery, will mean public spending cuts and put sustained investment in our recovery at risk."

Mr Brown's comments came after shadow chancellor George Osborne pledged to reverse the bulk of the Government's planned increase in NI by cutting £6 billion of "waste" from the public sector.

In the Commons, Mr Cameron accused Mr Brown of "catastrophic misjudgments" on the economy and attacked the proposed NI increase as a "tax on jobs that hits every single business in the country".

The row erupted after Mr Brown reported to MPs on the outcome of last week's European summit.

He said European leaders agreed the economic situation was improving but the recovery was "still fragile".

While deficit reduction plans must go ahead, "measures to reduce the stimulus should be taken only once recovery is secure - and this is the position we will continue, like our European partners, to follow".

Mr Cameron urged the Prime Minister to make clear that "any talk of 'economic government' in Europe is wrong".

"Shouldn't we absolutely rule out any new treaty change which increases EU control over our economic policy and shouldn't we change the law, here in the UK, so that any treaty that did propose handing over new areas of power from Britain to Brussels would automatically be subject to a referendum?"

He pointed to the "very serious news today that Standard and Poor yet again say the outlook on Britain's triple A credit rating remains 'negative' and that additional spending measures will be required to tackle the debt burden".

Mr Cameron said EU leaders had discussed a bailout for Greece and Portugal's credit rating was being downgraded.

But this year Britain is borrowing "more as a share of our economy than either Greece or Portugal".

The European Commission said a number of countries may have to start tackling their deficits this year.

Mr Cameron asked: "Given that Britain and Ireland have the worst budget deficits in the OECD, which countries do you think they were referring to?"

Mr Cameron said the UK has real problems with unemployment and the decline in manufacturing, and demanded: "Why are you proposing to raise taxes on small businesses and hike NI on everyone earning over £20,000 and on every single new job in this country?"

He said this amounts to a "great dividing line", with "Labour standing for waste and taxes" while the Tories stand for "efficiency and aspiration".

Of the planned rise in national insurance next year, Mr Cameron asked: "What on earth makes you think the way to rescue an economy from the longest and deepest recession on record is a tax on jobs that hits every single business in the country?"

Mr Brown said people had "very little trust" in Tory economic policy and asked why the party wanted to "attack the EU" all the time, when millions of jobs depended on membership.

"Why do you resist the European advice that we should work together so that we don't put the recovery at risk?"

He said today's announcement by the Conservatives was to "withdraw £7.5 billion from the economy this year, to withdraw the support that is necessary for the economy to have a sustained recovery".

The move would make it "more difficult for us to retain the jobs and businesses and industrial infrastructure that is necessary".

He urged Mr Cameron to explain "why it is, at a time when people are worried about the recovery, that you wish to withdraw support for the recovery".

The Tories also planned £30 billion in tax cuts over the next five years, which "puts frontline public services at risk", he added.