Gordon Brown is a fundamentally failed Wizard of Oz Chancellor, whose policies have led to escalating unemployment, record debts, increasing poverty, higher taxes, falling living standards and plumetting competitiveness, according to a ferocious attack by the Conservatives.

George Osborne, the Shadow Chancellor, is taking the battle to Mr Brown’s home territory by compiling a black dossier of his economic failures in an attempt to destroy the “myth” of the Iron Chancellor’s invulnerable economic prowess.

Until now, the Chancellor’s record has appeared so impregnable that the Conservatives have shied away from attacking it, fearing that the criticisms would not be credible and would rebound on them. Mr Brown, who touts his economic record as his qualification for becoming prime minister, will detail his achievements this lunchtime as he unveils what is almost certainly his last Pre-Budget Report as Chancellor.

Mr Osborne, in an exclusive interview with The Times, said, however, that it was now clear that the Chancellor’s economic policies had failed. “We got slightly intimidated by Gordon Brown’s boasts about economic performance and it is only when you take a closer look at them that you realise that rather like the Wizard of Oz, it looks impressive on the outside, but you pull back the curtain and it is just a person pulling on the levers and nothing is really happening,” he said.

According to the Conservatives’ dossier on Mr Brown, Britain’s economy is failing by almost all measures. Economic growth this year is 22nd among the 25 European Union members, and lower than the average of all industrialised economies, and the world as a whole. Unemployment has risen faster than in any other developed nation, up by 300,000 in a year. Britain is one of the few advanced countries where taxes are rising, with households paying £9,000 a year more now than in 1997, but the Government has the largest structural budget deficit of any big country in the EU, including Italy.

Most damagingly for workers, their living standards are falling because prices are rising faster than earnings. Increases in taxes, energy prices and housing costs have left most people with less money to spend than a year ago. Mr Osborne said that the heated economy of Central London and the City had obscured the rest of the country, where people were being squeezed.

“Across the rest of the country, unemployment is rising and real living standards are falling,” he said. “I find this an extraordinary verdict on ten years of Gordon Brown, that inflation is rising more quickly than earnings. So out there, the country does not feel particularly well off, people feel their family budgets are tight, their disposable incomes are falling as they approach Christmas.”

The economic growth figures often cited by the Chancellor have been flattered by the rapid rise in immigration, Mr Osborne said, which had increased the number of workers, but depressed wages for many of those already here. “Perhaps it is not surprising if 600,000 people come into this country in the last 18 months, GDP itself increases, but in terms of how well people feel individually, the answer is they don’t feel particularly well off. It has put pressure on people who are low skilled, which is one of the reasons we have this twin phenomenon of rising unemployment and rising employment.”

Business investment, at 9.5 per cent of GDP, is the lowest since records began in 1965 and research and development spending has dropped to 1.1 per cent of GDP, despite repeated government campaigns to boost it. Growth in productivity, the amount of wealth created per hour worked, has nearly halved under Labour. In the last Parliament of the Conservative Government, it grew by 2.6 per cent a year on average, but since 1997 has grown at only 1.5 per cent. “Gordon Brown himself said that productivity is the fundamental yardstick of economic performance, and productivity growth under Gordon Brown has slumped. So on his own yardstick, he has fundamentally failed,” Mr Osborne said.

The Conservatives are claiming that the Government’s record is vulnerable even on poverty, which it made one of its top priorities. Although measures such as tax credits had helped many people just below the official poverty line (earning less than 60 per cent of average), there were growing numbers of people in deep poverty. Recent reports, and even Cabinet ministers, have given warning that the Chancellor’s complex tax credit system was trapping people in poverty.

“It is remarkable we have 400,000 more people on less than 40 per cent of median income,” Mr Osborne said. “To have more people in entrenched poverty is quite an indictment for a government that says that tackling poverty is its No 1 priority.”

Mr Brown has squandered the economic legacy he inherited from the last Conservative Government, Mr Osborne claimed. He was the lucky Chancellor, who presided over the economy at a time of remarkably benign global conditions, with low inflation and interest rates around the world. The Conservatives say that the Chancellor has escaped criticism for his economic failings because there has been no single moment of crisis, such as the pound plunging out of the Exchange Rate Mechanism, which at a stroke destroyed the Conservatives’ reputation for economic competence.

Instead, say the Tories, there has been the drip, drip of bad policies, with ever-increasing taxes and regulations slowly taking their toll. “We have accumulated a mass of regulation, bureaucracy and unproductive public services, and all of this has led to a slow furring up of the arteries,” Mr Osborne said.

Mr Brown considers Mr Osborne, 35, a flyweight, dismissing him in private as an overgrown public schoolboy. The Conservatives’ attacks are starting to hit home, however, and opinion polls increasingly suggest that the public trust the Tories more on the economy now than they do Labour.

“The longer we see Gordon Brown, the more confident we are that he is not only beatable, but that his record can be subjected to some pretty fierce criticism,” Mr Osborne said. “Ten years of Gordon Brown’s policies are catching up with us.”

Times Recommends

• The playboy and the Tory party leader
• Bin Laden's family tree is impenetrable jungle
• Paul McCartney