Tory plans to shelve NI rise get SME stamp of approval

Battle of the letters rumbles on, as SMEs say 'no' to NI rise too. No surprise there then.

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Last Updated: 31 Aug 2010

First they managed to persuade prominent business leaders, including the likes of Sir Stuart Rose, to back their plans to ditch Labour’s NI hike, and now the Tories have managed to elicit similar support from more than 400 SMEs too. Not bad going.

Not to be outdone, Labour has enlisted the help of a bunch of eminent economists who have signed another letter warning that the Tories’ plans to make the public sector cuts necessary to prevent the rise in National Insurance may cause the UK to plunge back into recession.

The Conservatives revealed their trump card (the letter signed by their SME chums) just hours after the Labour party claimed that 58 leading economists warned that the Tories' plans could put the UK’s economic recovery on the line. According to the Telegraph, signatories include Labour peer Lord Layard and Sir David Hendry, among others. They are arguing that the Tories’ proposed £6bn efficiency savings this year are ‘just a cut by another name’ and warned that ‘this is not the time for such a destabilising action.’ Strong words indeed.

Naturally, the SMEs who signed the letter supporting the Tories’ plans, disagree. ‘We believe that the government's proposal to increase National Insurance, placing an additional tax on jobs, comes at exactly the wrong time in the economic cycle,’ the letter said. The SMEs also reckon that ‘cutting government waste won’t endanger the recovery - but putting up National Insurance will’.

This takes the number of small, medium and large businesses signed up to support the Tories’ plans up to around 500 – a pretty impressive feat. And they may have a point – an NI hike could dissuade small companies from taking on new members of staff at a time when the government is trying to kick-start the economy.

Detractors point out – not unreasonably – that entrepreneurs are not generally known for their enthusiasm for tax rises, so the fact that they have signed up to this campaign is tantamount to a statement of the bleedin’ obvious.

Even so, it looks like the Tories have got the upper hand on this one. Who would you believe – a letter from business leaders who create jobs and wealth in the real world, or one from a group of economists? Hmm…

The so-called battle of the letters has been rumbling on since February and looks set to continue for a while yet. Here at MT, we can’t help reflecting  that it’s funny how none of these letters ever seems to get delivered by the traditional means of the postman’s sack – no wonder the Royal Mail is in such a state.

 

 

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