Brown defiant over his raid on pensions

He came to the Commons to answer a motion of no confidence tabled by the Tories, who wanted him to justify his decision to target retirement funds in 1997.

But a show of force by Labour loyalists coupled with his own combative performance saved him from a parliamentary humiliation.

He began the day on the defensive, dogged by attacks on his character from within his own party and the announcement that inflation overshot the Treasury target last month.

Labour MPs have been rattled by polls giving Tory leader David Cameron a strong lead if Mr Brown is in charge.

A Populus poll for the Times yesterday put Labour on just 29 per cent, its lowest rating since Tony Blair became Labour leader in 1994.

Shadow Chancellor George Osborne called the debate after the Treasury slipped out documents which revealed Civil Service doubts about Mr Brown's decision to scrap dividend tax credits in his first Budget.

The move a decade ago is widely credited for contributing to the crisis that has gripped the pensions industry, leaving millions in doubt about the value of their retirement pots.

But Mr Brown told MPs it was one of three major policy decisions taken in 1997 that established economic stability and allowed ten years of uninterrupted growth.

He said: "The strength of our argument is...upon the rock of the economy and making the long-term decisions that are the right decision for the country.

'It is upon the rock of the economy that occupational pensions and any other services depend in our country.

"I say to this House I do not apologise for the three long-term decisions that I took in 1997 in the interests of stability and growth in this country. The first was to make the bank of England independent - opposed by the Conservatives.

"The second was to build a fiscal framework for this country that has allowed us to double public investment - opposed by the Conservatives.

"The third was to remove the bias against long-term investment in our economy, a bias recognised by the previous Chancellor and to that end we cut corporation tax by two pence in the pound."

Mr Brown claimed the value of pension funds was now double what it was in 1997. And he taunted the Tories for their failure to pledge to restore dividend tax credits.

But the Tories were dismissive, accusing Mr Brown of orchestrating "the great British pension theft".

Mr Osborne described the scrapping of tax credits as Mr Brown's "first and worst stealth tax" that cost pension funds £100billion.

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."

He said it 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 all but a third of the remaining final salary schemes are closed to new members, he said.

He urged Labour MPs to back a Tory move in the Commons today to create a £30million-a-year "pensions lifeboat" for those who lost out when their company schemes failed.

He said: "The great British pension theft was his crime. The Chancellor has raided the retirement hopes of millions. We have no confidence in his management of pensions. We have no confidence that he has the answers for the future."

There were few Cabinet ministers on the frontbench to back Mr Brown, but the backbenches were packed with Labour MPs who repeatedly jeered Mr Osborne.

Earlier Tony Blair used his monthly press conference to lavish praise on Mr Brown, describing him as the best Chancellor since the Second World War and endorsing his decision on dividend tax credits.