Tories mock chancellor's 'taxation by stealth'

William Hague yesterday mocked Gordon Brown as the "stealth chancellor" who boasted of cutting taxes while secretly increasing the overall burden by the equivalent of 8p in the pound.

In the traditional Budget responses from the opposition leaders, the chancellor also came under attack from the left as the Liberal Democrat leader, Charles Kennedy, accused him of putting tax cuts before help for pensioners and adding "insult to injury" for the elderly.

The Tory leader made clear that tax will move to the political centre stage in the run-up to the general election when he rounded on the chancellor for omitting from his Budget statement the £4.5bn of "stealth taxes" he had imposed on Britain. To Tory laughter, Mr Hague said: "He is like a mugger who grabs your money and then wants you to thank him for giving you your bus fare to get home."

Mr Hague told MPs that - even after taking account of yesterday's changes - the overall tax burden would rise by 9p in the pound and would see a cut of only 1p. "For every extra pound that you're letting them keep in their pay packets, you are stealing nine times as much from their back pockets," Mr Hague told the chancellor. "So you have done what all Labour chancellors have done: to increase taxes and the only difference is that you're much stealthier about it."

The Tory leader dismissed the chancellor's claim that he was helping families, saying that he was in fact penalising families by introducing the replacement for the married couple's allowance - the children's tax credit - a year after the abolition of the married couple's allowance.

To laughter, Mr Hague added: "Even the deputy prime minister, John Prescott, wouldn't be very happy with a train-operating company that phased out the 9.15 to Waterloo a year before it phased in the replacement bus service."

Mr Hague "unambiguously welcomed" the extra money for health and education, though he said that the Tories would examine the announcements carefully because "we know all about your triple accounting". He added: "We know that his headline grabbing on Budget night leaves a sour taste in the mouth of doctors and nurses and patients whose expectations are raised and then dashed."

Mr Kennedy, in his response to the Budget, said the real meaning of the chancellor's "prudence with a purpose" mantra was "spending for a second term".

"When we argued that sums of this nature could and should be put into the health service that was described as completely financially irresponsible - today of course it is now the mantra," he said.

The chancellor was cutting taxes rather than spending adequately on education or the elderly, he said. While only £1bn extra would go into schools this year, the cost of the penny cut in the basic rate of tax would be £2.6bn. Making his first Budget response as party leader, Mr Kennedy warned that there would be "genuine anger in the country" over the failure to direct more money to pensioners. Despite higher winter fuel payments and "recycled announcements" of free television licences, there remained a "great missing morality at the centre of this Budget".

The chancellor had announced a consultation on how to develop a new "pensioners' credit", designed to help both those in poverty and those with modest savings, but this would come too late for many pensioners, the Lib Dem leader said.

The Budget also came under fire from the Liberal Democrats for failing to address environmental issues - a theme Mr Kennedy is attempting to make his own. A consultation on reducing stamp duty on the development of "brownfield" sites - as opposed to untouched green space - delayed real action, he said.

The plight of struggling farmers had also been neglected by the chancellor, the Liberal Democrats argued.

However, Mr Kennedy, MP for Ross, Skye and Inverness West, jokingly applauded a freeze in duty on spirits and the cut in air tax for flights between the Scottish islands and the mainland.