Gordon Brown has survived an attempt by the Conservative party to call a vote of no confidence over his 1997 decision to scrap tax relief on pensions.
MPs in the House of Commons voted by 298 to 233 against a motion criticising the chancellor's handling of occupational pensions following a heated six-hour debate.
Yesterday's vote followed the recent release of Treasury documents, under freedom of information legislation, which indicated that Mr Brown had been warned against abolishing the dividend tax credit – worth some £5 billion a year to pension funds.
Introducing the opposition motion, shadow chancellor George Osborne accused Mr Brown of ignoring warnings from his civil servants that his "stealth tax" would "blow a big hole" in occupational pension funds.
Mr Osborne said that since the tax relief was abolished in 1997, "millions" of people had been left with a shortfall in their retirement funds, while 125,000 had been left with little or no pension at all.
He also accused the chancellor of attempting to "block" attempts to reveal the "truth" about circumstances surrounding his decision.
"In short, the abolition of dividend tax credits was, in the words of the prime minister’s own economic adviser at the time, 'a mad thing to do' and quite 'crackers," said Mr Osborne.
Defending his record, Mr Brown insisted that his decision was "based on the rock of the economy and making the right long-term decisions for the country".
The chancellor, who attacked the pensions legacy Labour inherited from the previous Conservative administration, insisted that his fiscal policies since 1997 had helped boost overall investment, thus resulting in higher assets, income and dividends for pension funds.
"It is on the rock of the economy that occupational pensions and any other services in our country depend," said Mr Brown, who stressed that spending on pensioners had increased by £11.5 billion in real terms since Labour came to power.
The Liberal Democrats, who said that they opposed the abolition of dividend tax credits in 1997, supported the Conservatives' motion against Mr Brown.
"We believe that the government made a mistake and that they should acknowledge it," said Liberal Democrat treasury spokesman Vince Cable during the debate.
Yesterday's vote in parliament came as the chancellor's economic record was subject to further scrutiny after inflation rose above three per cent for the first time since the Bank of England was granted independence in 1997.
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