Gordon Brown and David Cameron clashed repeatedly over the recession at their first Prime Minister's Questions of the new year, with the Tory leader telling Mr Brown his VAT cut had been an “expensive failure”.

Mr Brown retorted that Mr Cameron was a “do nothing” leader and that the Conservatives would “leave people defenceless” in the face of recession. The Prime Minister said that the VAT cut meant an extra £5 in consumers' pockets each week which made an important difference to most people, even if “it may not matter to the people on the opposite bench”.

Mr Cameron said the VAT cut had been “condemned by retailers, attacked as ‘fatuous’ by the former trade minister, and ridiculed by shoppers. Worse than that, it is adding £12.5 billion to Government debt”.

Mr Brown claimed the Conservative Party was divided on the issue, quoting Kenneth Clarke, the former Tory Chancellor rumoured to be returning to the Shadow Cabinet, who had supported the VAT cut.

The Prime Minister accused the Conservatives of being “out of touch with the rest of the world” and insisted that the Government was providing “real help now” to struggling companies through plans to secure lending to small businesses, announced earlier. “We won’t walk by on the other side,” he said.

David Cameron claimed the Government had copied Tory policies and that Gordon Brown was “running round like a headless chicken” making “one bogus announcement after another”. He challenged the Prime Minister to retract his claim he had abolished boom and bust and, responding to Mr Brown’s “do nothing” jibe, said the Government was “achieving nothing”.

Mr Brown hit back: “Nobody is copying the Conservative party economic policies. No-one except him is proposing we cut public spending at this time”.

In a session dominated by the economy, Mr Brown was also asked about the conflict in Gaza. The Labour backbencher Jeremy Corbyn suggested that Israel may have been involved in war crimes in its military action in Gaza. The Prime Minister said Britain was working hard to resolve the situation and had played a key role in negotiating the UN resolution.

The Prime Minister was asked why the ministerial register of interests had not been published, after The Times revealed it has been delayed for 18 months, and responded that it would be published.

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