Britain:British Conservatives accused the chancellor, Gordon Brown, yesterday of orchestrating "the great British pension theft", as they moved a motion of no confidence in his handling of retirement savings.
Shadow chancellor George Osborne told a stormy House of Commons that the abolition of dividend tax credits in the 1997 budget was Mr Brown's "first and worst stealth tax", amounting to a £100 billion (€147 billion) raid on pension funds.
But the Chancellor dismissed Mr Osborne's demands for an apology, insisting that the change - which the Conservatives were not proposing to reverse - had boosted investment, leading to higher assets, income and dividends for pension funds.
He said that Labour had increased spending on pensioners by £11.5 billion (€17 billion) in real terms.
Yesterday's debate took place as Mr Brown suffered the blow of seeing inflation rise above its 3 per cent ceiling for the first time since he granted independence to the Bank of England in 1997.
It came shortly after the release under Freedom of Information legislation of treasury documents suggesting Mr Brown received advice that the abolition of the credit - worth £5 billion (€7.4 billion) a year to pension funds - would be damaging.
Flanked by Tory leader David Cameron, Mr Osborne said: "This chancellor's boast of economic competence is unravelling before our eyes and the first and worst of all his mistakes was that raid on pensions."
Mr Osborne said the move had left millions with a shortfall in their retirement funds and 125,000 people with little or no pension at all. Since the change, 60,000 occupational pension schemes have been wound up and two thirds of the remaining final salary schemes are closed to new members, he said.
Mr Brown received strong support from prime minister Tony Blair, who hailed him at his monthly press conference as the best chancellor since the second World War and backed his decision on dividend tax credits.
He was loudly cheered by Labour MPs in the Commons as he accused Mr Osborne of "short-term opportunism".
Abolishing the credit was "the right decision for the British economy, it was the right decision for investment, it was the right decision for the long-term stability and growth of the British economy, it was the right decision for British industry, and it is clear today that the opposition have got no alternative to the policy we put forward," he said.
The tabling of the motion forms part of a sustained Conservative campaign to undermine the man who they expect to take over from Mr Blair as Labour leader and prime minister within the next few months.
Mr Brown's position as runaway favourite to follow Mr Blair into 10 Downing Street was boosted by one of the strongest indications yet from Environment Secretary David Miliband that he will resist pressure from the party's Blairite wing to stand against the chancellor.
Mr Miliband has been touted in recent weeks as a possible challenger but told the BBC: "I am not a candidate. We've got an excellent prime minister-in-waiting in Gordon Brown."
Mr Blair played down Labour's lowest poll rating under his leadership but conceded the party would get a boost when he quits. A Populus poll for the Timeshad Labour on 29 per cent, one point down on last month and at a level last seen when Michael Foot was leader in the 1980s.
But Mr Blair insisted there was "every reason for confidence" despite signs Labour could lose heavily in May's devolved and local elections. He had "no doubt" his reforms would continue when he steps down this year. "I think when I go, obviously a lot of the static and unpopularity that attaches itself to any prime minister after 10 years goes with me, it is true," he said.
"But I also believe that the essential New Labour position, which is to get over some of the old divisions of left and right politics and to say you don't have to choose between a more just society and a more economically efficient one, will hold.
"The basic project and framework of New Labour will continue. That won't be to everyone's liking but it is to mine."
- (PA)