Mandelson: Business leaders 'deceived' by Tory plans to scrap NI hike

Apparently the 23 business leaders backing the Tory plan have got the wrong end of the stick. Right...

Last Updated: 31 Aug 2010

Some of Britain’s top bosses have caused a political storm today: 23 of them have signed up to a letter sent to the Daily Telegraph, proclaiming their support for the Tory plan to reverse the proposed hike in National Insurance – which they described as ‘an additional tax on jobs [that] comes at exactly the wrong time in the economic cycle’. The list includes corporate luminaries like Sir Stuart Rose, Paul Walsh, Sir Chris Gent, Stelios and Alan Parker, representing some of the UK’s biggest employers. But that hasn’t stopped Lord Mandelson suggesting this morning that they just haven’t understood the question properly…

In the letter, the 23 businessmen (there are no women, interestingly) make their allegiance very clear: ‘We welcome George Osborne's plan to stop the proposed increase in national insurance by cutting government waste,’ it says. They argue that private sector businesses have navigated the recession by cutting costs without affecting service, and it’s now time for the Government to do the same – starting by ‘removing the blizzard of irrelevant objectives, restrictive working practices, arcane procurement rules and Whitehall interference’. They conclude: ‘As businessmen we know that stopping the national insurance rise will protect jobs and support the recovery. Cutting government waste won't endanger the recovery – but putting up national insurance will.’

As you’d expect, the Tories are cock-a-hoop about this ringing endorsement of their big new economic policy. The Government, on the other hand, has been forced to argue that these big business brains have basically had the wool pulled over their eyes. Lord Mandelson suggested today the Tories were ‘peddling a cynical deception’ – that their efficiency savings didn’t add up, and that there was no way they could afford to cut NI without putting up VAT. In other words, Sir Stuart and co just haven't read the small print properly.

However, we’re not sure patronising some of UK plc’s top bosses is really a sensible approach. For one thing, this lot employ more than half a million people between them – so they should be better placed than most to assess the impact on jobs. And is it really that implausible that the Tories can find £6bn of efficiency savings? If anything, it lacks ambition – just yesterday, MT outlined how we could find an entire £70bn of public spending cuts. Besides, the impact on growth from this bone-headed hike could outweigh any tax receipts. These business leaders might have a vested interest in lower NI, but that doesn’t stop it being a daft idea.

In today's bulletin:

Mandelson: Business leaders 'deceived' by Tory plans to scrap NI hike
Ofcom says mobile charges ruling will save us £800m
MT's new book: The Management Masterclass
Editor's blog: Say bye-bye to EMI?
Business in the raw: MT's new charity calendar

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