Separate reports from two right-wing think tanks have warned that Gordon Brown is squandering the economic legacy inherited from the Conservatives.

A study from the Bow Group said that positive labour market trends that began in the early 1990s have been slowing in recent years.

And a Centre for Policy Studies report, written by Ruth Lea, concluded that the public finances are now "nowhere as near as healthy as they were in 1997".

Nicholas Hillman, who worked as senior research officer for shadow pensions secretary David Willetts until 2003, said in the Bow Group pamphlet that the government's main welfare-to-work initiatives "have changed less than ministers claim".

He also argued that the fall in the unemployment level has been accompanied by "a major increase in the number of people who are 'economically inactive', which severely impacts on levels of labour market participation".

Hillman said that both the last Conservative government and the current Labour administration had reduced unemployment.

"Although the rate of decline has slowed in recent years, this is a real achievement," he said.

"But, at the same time, there has been a steady increase in the number of economically inactive people, who are neither in work nor officially unemployed.

"Since 1992, the total number of economically inactive people has risen to nearly 7.9 million.

"In 1992, there were 2.6 economically inactive people of working age for every one unemployed person. By the end of 2004, there were 5.6 economically inactive people for every one unemployed person."

Hillman added that it was "very odd" that the number of economically inactive people has grown, rather than fallen.

"On current policies, the government is unlikely to meet many of its targets, such as the new aspiration of an employment rate of 80 per cent," he added.

Golden legacy

Meanwhile, Lea argued that Labour was fortunate to inherit a "golden legacy" from the Conservative government when it took office in 1997.

She warned that current policies "have hindered rather than helped business and have undermined competitiveness with the result that, today, the economy is not performing as well as it did under the [John] Major government".

Lea also argued that between 1992 and 1997 the Conservative government "got a real grip on public spending".

But, since 2000, Brown has proved an "old-fashioned tax and spend Labour chancellor", she claims.

"The public balances are now nowhere as near as healthy as they were in 1997 with a structural black hole in the current budget balance that will have to be addressed at some point by either taxes or slower spending growth."