Business will welcome Tories’ NI tax cut

Conservative election strategists are planning to restore the party's appeal on economic issues today with a pledge to reverse increases in National Insurance contributions that Labour has scheduled for next year. The Tories will halve Labour's planned one per cent rise in NI contributions for low and middle-income earners.

The initiative is part of an effort to restore the polling fortunes of George Osborne, the Shadow Chancellor, who is widely viewed as a drag on the Conservatives’ election campaign.

The announcement comes on the day Osborne meets Alistair Darling, the Chancellor, and Vince Cable, the Liberal Democrats’ Treasury spokesman, in the first television debate of the imminent election campaign.

David Cameron and Osborne will present the proposed tax cut today as the centrepiece of their election campaign. The Tories
plan to offer it as evidence that they are sensitive to working people struggling to make ends meet. Any shortfall in tax receipts would be met by spending cuts.

Labour and the Lib Dems are set to argue that if the reduction is to be funded by a fall in spending, the effect on public services will be even more savage than many voters already fear from a Conservative government committed to an accelerated reduction of the £167 billion UK budget deficit. Currently, National Insurance contributions commit £97 billion a year to the Treasury.

Osborne will argue that his tax plans will make seven out of 10 working people better off than under Labour.

Cutting the hike in NI contributions is likely to be welcomed by the business community. Richard Lambert, CBI Director-General, warned late last year that Alistair Darling "made a serious mistake imposing an extra jobs tax at a time when the economic recovery will still be fragile".

David Cameron picked up the refrain when he told the BBC Politics Show: "Remember it's a tax not just on people's incomes but it's also a tax on every business who employs anybody or thinks of employing anyone new.”

Labour, meanwhile, is preparing to announce a so-called "People's Bank" that will offer mortgages to low-income earners. According to the Guardian, Lord Mandelson will say the Post Office Bank - its formal title - will help first-time buyers by launching new mortgages at up to a 90 per cent of the property's value. ·