Gordon Brown suffered an embarrassing mauling from David Cameron over his failure to call an election yesterday as his “fightback” Pre-Budget Report frayed at the edges.

Labour MPs, who watched in uncomfortable silence as Mr Cameron forced their leader on to the ropes, urged the Prime Minister to rethink his Commons style and strategy or risk handing the initiative to a resurgent Tory party.

Rarely has an Opposition leader scored such a complete victory in Prime Minister’s Questions, as Mr Cameron flayed Mr Brown over his reasons for not proceeding with an autumn poll and Alistair Darling’s “theft” of Tory policies on inheritance tax and non-domiciles.

Labour MPs, deeply uneasy that the fiasco of the last week has raised the stature of both Mr Cameron and George Osborne, the Shadow Chancellor, said that Mr Brown’s obvious anger at the attacks on him confirmed that Mr Cameron had scored direct hits. They advised Mr Brown to use Tony Blair’s technique of defusing Conservative onslaughts with a joke or by trying to look as if he was enjoying himself.

Gordon Brown's Black Wednesday

The Northern Rock disaster has torn away any remaining credibility the Prime Minister had

Background

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At the same time the PreBudget Report (PBR), dubbed a magpie budget, was under severe scrutiny, with analysis appearing to show that the Chancellor had seized up to £2 billion from pensioners. Documents revealed that the PBR would advance by five years a planned cap on the value of the new state second pension, meaning that £400 million a year will be taken out of the pensions system, limiting payouts to beneficiaries.

The Conservatives also seized on calculations by the Institute for Fiscal Studies (IFS) showing that under Mr Darling’s plans, the average family would be paying an extra £2,600 a year in tax by 2012-13. Mr Osborne said: “Independent experts now find there is a £50-a-week tax bombshell for families. This shows just how cynical and calculating Gordon Brown’s Government has become.”

The IFS figures showed there would be an impact on families’ tax bills from two factors – a growing economy raising their incomes and Mr Darling’s plans to raise the proportion of the country’s income taken in tax from 36.8 per cent to 37.6 per cent by 2012.

People will pay more in tax as their incomes grow, and the Chancellor will also take a larger slice of those higher incomes. The IFS estimated that incomes would rise by the equivalent of £5,500 a year per family by 2012, of which £2,600 will go in taxes.

The institute added that the Conservatives would also “presumably deliver quite a large proportion of that tax increase”, if they were to fulfil their promise to match Labour’s spending plans.

The Treasury last night accused the Tories of misrepresenting the IFS numbers. “These figures are totally misleading. They add taxes paid by companies like corporation tax, companies’ VAT payments to those it counts as being paid by families," a spokesman said.

The IFS also gave warning that the Chancellor’s forecasts for the government’s finances were in danger of proving to be optimistic. A slowdown in the economy next year, triggered by the credit crunch in financial markets, meant that the Treasury already expected to lose £4 billion in income tax revenues, thanks to weaker wage growth, and another £3 billion in corporate taxes as City profits were hit.

The sharp slowdown in Whitehall spending growth could make it tough for the Government to deliver its goals on public services and its pledge to slash child poverty, the IFS also argued.

After Mr Darling announced on Tuesday that he would borrow another £16 billion over five years to plug the resulting budget hole, the IFS said that the Government’s financial position looked vulnerable and its budget rules were at risk of being broken.

Mr Cameron reminded Mr Brown of his statement on Monday that he would have called off the election even if the polls had suggested that he was heading for an easy victory. He asked whether Mr Brown expected anyone to believe that, before adding: “You are the first Prime Minister in history to flunk an election because you thought you were going to win it.”

Mr Cameron told the Prime Minister that he was “losing his moral authority” as well as his political authori-ty.Mr Brown responded by listing the Government’s achievements and attacking Tory plans, but Mr Cameron told him: “If you’ve got some questions about our policy, find a bit of courage, discover a bit of bottle, get in your car, go down to Buckingham Palace and call that election.”

Mr Darling rejected claims that he had stolen Conservative proposals and said that he had set out a “long-term” vision for the country. “I don’t think anybody has a monopoly on one particular idea or another,” he told Breakfast on BBC One.

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