Tories target chancellor in euro row

Portillo and Hague: Labour says they are split

Chancellor Gordon Brown has refused to be drawn into commenting on Northern Ireland Secretary Peter Mandelson's speech that businesses would suffer while Britain remained outside the euro.

Tories sought to exploit what they say are cabinet divisions over euro policy following Mr Mandelson's unauthorised speech earlier in the week.

But Mr Brown said only that every Cabinet minister had been out "arguing the case" on the euro, before turning his fire onto the Conservative tax guarantee.

On Wednesday, Prime Minister Tony Blair rejected Tory attacks in the Commons that Mr Mandelson had revealed a secret government

'Confide in MPs'

Challenging Mr Brown at question time in the House of Commons, shadow chancellor Michael Portillo told him to "confide" in MPs and reveal how he felt about Mr Mandelson's remarks.

Gordon Brown: Ministers deny rift

But the Chancellor brushed aside the attack and accused Mr Portillo of "driving a coach and horses" through the Tory guarantee to cut taxes by calling for more spending on health, education, police and roads.

"Peter Mandelson and the whole Cabinet have been arguing the case in every region of the country," he said to Tory jeers.

"What you should face up to is that in your call for extra spending today on transport, on crime, on health, on education - which is exactly what you are implying by the statement you are making - you are driving a coach and horses through the politically driven tax guarantee that you say you support."

In heated exchanges, Mr Portillo accused Mr Brown of being unable to maintain eye contact during despatch box battles.

"You can never look me in the eye when you answer one of my questions," he told Mr Brown.

"I wonder why it is that you find it so difficult to maintain eye contact?

"Could it be because after three years of non-delivery, Labour voters in Labour heartlands know that you have let them down?

"Could it be they know you have wasted £7 billion on fraud which has been identified by Frank Field, the Labour MP for Birkenhead?"

But the chancellor retorted that the real split was between Mr Portillo and his party Leader, William Hague.

"A Leader of the Opposition who is always saying the economy is doing badly, a Shadow Chancellor who's admitting it is doing well, a Leader of the Opposition who wants the politically driven tax guarantee, a Shadow Chancellor who does not, a Leader of the Opposition who is at odds now on all the major economic issues with the Shadow Chancellor," he said.

"I know who you are shadowing and it's certainly not me."

In his speech to trade unionists in Belfast, Mr Mandelson said: "As long as we are outside the euro, there is little we can do to protect industry against destabilising swings in the value of sterling as they affect Europe - the largest market where we have to earn our living."