Brown is marking his own exams, say Lib Dems

Gordon Brown is "marking his own exam papers" on the Labour government's tax and spending policies - and should be subject to the Treasury equivalent of an Ofsted school inspection, the Liberal Democrats said yesterday.

In an attempt to hoist the austere chancellor by his own petard on the eve of today's pre-budget report, Vince Cable, the Lib Dem Treasury spokesman, warned that Mr Brown's credibility on fiscal policy is on the line because of economic uncertainties at home and abroad.

Mr Brown will be upbeat today in pledging more help for science, education and better work-life balance as part of his claims to be Labour's strategic thinker, preparing Britain for long-term economic challenges from Asia. Voters will be offered an much improved childcare package.

But many economic analysts and international bankers have begun to question his repeated claims that he will not breach his self-imposed "golden rule" to balance taxes and spending over the economic cycle.

Because he is in danger of breaching his rule and borrowing too much for non-investment purposes, Mr Brown is suspected of wanting to use today's PBR to escape the trap. He could do so by announcing that the point where growth slows in the UK's economic cycle will end later than the 2005-06 date most experts expect. "I would not define that as cheating, but it is definitely moving the goalposts," said Mr Cable, former chief economist at oil group Shell.

Conservative critics go further, arguing that taxes will have to rise or spending growth be curbed - or both - after the coming election to fill the feared "black hole" in the Treasury books.

During yesterday's Commons debate, Oliver Letwin, the shadow chancellor, accused Mr Brown of ignoring the "reality behind the myth" and gradually drowning his Tory predecessor Kenneth Clarke's dynamic 1997 economy legacy in a tide of regulations, taxes and public sector jobs.

At a press conference, Mr Cable was more flattering but accused Mr Brown of "control freakery" over policy details and of focusing "his preoccupations increasingly elsewhere" - a hint at prime ministerial ambition.

Speculation that today may see Mr Brown launch his own agenda for a "progressive consensus" is being fuelled by yet another new book, Brown's Britain.

Mr Cable said yesterday: "If there is a [spending] black hole it is probably a very small one. It is not an economic problem, but an issue of credibility because the government sets the targets. If it cannot meet them its credibility is seriously weakened."

His remedy is one that is also finding favour in the City and seeks to copy Mr Brown's own strategy in 1997 when, on taking office, he handed control of interest rates to a new, highly visible monetary policy committee at the Bank of England.

The Lib Dems do not want to hand over political control of tax policy - one of the core functions of any government - to unelected experts. They do want a more transparent and independent way of making sure Mr Brown is obeying his own rules by giving a high-profile panel at the National Audit Office the right to assess Treasury performance when and how it wishes.

"Gordon Brown can no longer get away with setting the fiscal tests and marking them himself," Mr Cable said. "What is needed is the equivalent of an Ofsted inspection. The chancellor must restore credibility in fiscal policy and open it up toindependent evaluation of the fiscal rules by a body accountable to parliament, like the NAO."

The NAO audits Treasury figures as part of its wider role as spending watchdog, but only at Mr Brown's instigation. Under the Cable model, key NAO officials would be able to say if they thought Mr Brown was engaged in technical manipulations.

In a tilt towards Mr Cable's pro-market instincts, Charles Kennedy, Lib Dem leader, attempted to square economic liberalism and low taxes with his own traditional preference for "social justice, opportunity and fairness," saying: "Moderate taxation in a liberal and democratic society can be a force for good - provided it is well spent."

· Mr Kennedy's attempt to set up a committee to examine the conduct of Tony Blair and parliament in "matters of war and peace" won just 68 votes against 443 at the end of the six-day Queen's Speech debate in the Commons last night.