Darling 'using Lib Dem air tax'

Mr Cable was responding to Mr Darling's pre-budget report.

Chancellor Alistair Darling has been accused of "adopting" Liberal Democrat plans on aviation taxation.

Vince Cable, the party's treasury spokesman, "congratulated" Mr Darling for his pledge to switch green air taxes to flights, not passengers.

He said confidence in the authority of government "collapsed" following the Northern Rock bank crisis.

He added that Mr Darling was the "first chancellor since 1866" to preside over a run on a bank.

In his response to the pre-Budget report, Mr Cable also claimed spending on the NHS fell well short of increases recommended by a government commissioned report.

Patient care

He honed in on Mr Darling's plans to slow the rate of growth in NHS spending in England over the next three years to 4% a year over the rate of inflation - meaning a budget rise from £90bn this year to £110bn in 2010.

In his 2002 report, ex-banker Sir Derek Wanless said the NHS budget would need to grow by between 4.4% and 5.6% a year in the four years after 2007-08.

Mr Cable said Sir Derek had "argued that 4.4% growth was the absolute minimum required to sustain improvements in patient care".

"And that was on the assumption that the maximum degree of health service reform was achieved, which it clearly has not," he said.

Fixed rate mortgages

Mr Cable pressed the chancellor to predict the risk of a recession in the UK, following predictions by the US Federal Reserve ex-head Alan Greenspan that the chances were approaching 50% in America.

Millions of families were being "squeezed" by a combination of reducing disposable incomes and higher interest rates as a result of moving from fixed rate mortgages, Mr Cable said.

"Council tax is due to rise by 5% a year across the UK," he said.

"This is a tax which bears disproportionately on low income families and pensioners."

Accusing Mr Darling of trying to keep up with the Conservative plans to exempt estates under £1m from inheritance tax, Mr Cable asked why he had failed to see the need for reform of council tax, which he described as "extremely regressive".

Non domiciles

He called for a simplification of the "complicated system" of tax credits.

And he said there was "little merit" in placing a levy on so-called "non domicile" taxpayers - as the Tories had proposed a £25,000-per-year charge - because it would be "extremely unfair" to immigrant workers on modest incomes.

Mr Darling said the Lib Dems were overlooking "the fact that over the last few years we have established a very strong and stable economy".

He said he would like more fixed rate mortgages because it would benefit people and the economy.