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Hardly surprising if business prefers tax cut to waste

Posted on 1 April 2010 | 11:04am

I rather enjoyed Peter Mandelson’s description of George Osborne as a schoolboy charging round the sweetshop taking sweets from every jar without a clue as to how he is going to pay for them when he gets to the counter.

He intends to reduce the deficit dramatically, cut taxes and protect frontline services. Mmmm. Sounds fine. And the tax cut element is all going to be paid for by ‘efficiency savings’ which David Cameron once described as a ‘trick’ used by politicians making promises they didn’t know how to fund.

Cameron, sounding more commentator than leader this morning, describes the intervention of a group of senior businessmen protesting at the planned National Insurance rise as a ‘significant moment in the campaign.’ I don’t blame him for that. There are some big business names on the letter to the Daily Telegraph, and he knows they probably carry more economic credibility than he or George Osborne do. But is it that significant? I would be very surprised to find any businessman in the land who would say ‘yes please’ to a proposed rise in National Insurance Contributions. Likewise, the vast bulk of them, presented with the choice between a tax cut or wasteful public spending will go for the tax cut every time.

So what the Tories have persuaded them to sign up to is a letter which says they would prefer cuts in wasteful spending to a rise in NICs. So would I. The question then is whether Cameron and Osborne really can make the ‘trick’ savings they promise, on the timescale set out, whether they can reduce the deficit to the extent they say it needs to be reduced to prevent Britain becoming Greece, (the gap between problem as analysed and deficit reduction as announced is enormous), whether they can fund all the spending commitments they and their colleagues have made, (gap between promises made and cash allocated is similarly gigantic) and whether they can do so whilst still implementing their Number One tax priority – a cut in inheritance tax for the richest families in the country.

So would people vote for a NICs cut? Yes. Would they vote for the eradication of waste in the public sector? Yes. But the Tories have not convincingly set out how any of the above would happen.

And I suspect some of the names on the list would also agree with the proposition that the Brown-Darling approach to the international crisis was the right one, and to a great extent prevented a crisis from becoming a calamity.

Their letter starts at the here and now. Fair enough. But we would not be here now if Cameron and Osborne had been making the calls back then. GB and AD have shown steady economic management in good times and bad. There is a still a credibility gap the Tories have not filled.

* Buy The Blair Years online and raise cash for Labour

  • Charlie

    There are credibility gaps in both Parties’ Deficit reduction plans……Labour’s relies to a large extent on an unprecedented growth rate which is unlikely to be helped by massive rises in both Employers and Employees NIC

  • Holly McArdle

    I would vote for a Lib-Lab coalition in which Vince Cable and Ming Campbell were involved but I don’t know how to vote for that!

  • Joanna Peel

    If you want to read an exercise in vacuousness, get today’s Financial Times. The world’s leading business paper in many ways, doing an interview with the man who wants to run the country within a few weeks, and he has nothing to say. I have no doubt they asked the questions but the answers are so woolly as to be without substance or meaning. My favorite bit is where it says he has a picture of himself with Angela Merkel – that’s the one who doesn’t want to see him

  • Carl R

    Did you hear Cameron on R4 this morning? Have you noticed how he sounds posher when he is interrupted? He hates being interrupted, esepcially by a woman I think

  • Alan Quinn

    How many of these businesses have switched production from the UK to overseas? I’m thinking of M&S, Mothercare and Next specifically. It’s OK to switch suppliers to low cost areas with no social provision and in the process see UK suppliers go under? The government then picks up the bill with redundancy costs, job seekers allowance etc?
    So it’s right that the taxpayer picks up the redundancy bill with all the costs to local areas that a factory closure entails but when the shareholders have to pick up a lower margin it’s wrong?

  • Nick

    For all of A.C’s increasingly frantic pedalling [the clock is truly ticking], the fact remains that of the hundreds that have taken place, no opinion poll shows Labour polling anything better than 31%. Another one today puts them at 28%- Michael Foot territory. All polling evidence these last 5 years shows that the more the public see of David Cameron- the more they like him. The reverse is true of Gordon Brown.

    [Incidentally, didn’t you just love Brown’s clunking comment on a routine trip to Kent last week? ” I have been to Kent many times, and always enjoy my time here”. Oh dear !]

    Its time for change.

  • Charlie Reynolds

    Compare and contrast:

    Tories will stop a tax on jobs which raises tax on incomes and business and pay for it by cuts in government waste this year as highlighted by 2 businessmen charged with finding waste by the current government.

    Gordon Brown lies about immigration figures to try to recover the core vote in East London which has gone to the BNP because anytime anyone raised dealing with the effects of immigration Labour cried ‘racist’.

    I get the principles of the 2 parties loud and clear.

    Let’s have more Mandelson on TV. Perhaps you could stand by his side too? Oh yeah – and get Tony too. It’s the dream team……..

  • Patrick James

    All the Conservative party are doing is saying:

    “vote for us and we’ll give you a few quid”

    but they are not saying where that few quid will come from.

    If they hand out money in one place they must take it away from another.

  • Jamie Edwards

    I’d like to think you’re a smart person.

    Do you really, truly believe that a tax on jobs is intuitive given the situation, as well as the pending public sector job losses?

  • Chris lancashire

    Scoff as much as you like but leaders of trusted companies coming out against the NI rise is a serious blow to New Labour. These leaders may be more trusted than Cameron/Osborne, unfortunately they are a lot, lot more trusted than Mandelson/Darling.
    And yes the letter does start at the here and now and yes, we wouldn’t be here if Brown hadn’t made such an awful mess of the economy.

  • Robert Jackson

    I love your restatement of Mandy Rice-Davies’ “He would say that, wouldn’t he?” as “We’d all say that, wouldn’t we?”.

    Keep the pin point sharpened, Alastair, please.

  • dc

    The tories seem to be controlling the media well on this issue and i think it may be a bit costly for them. the only good thing is is it is at the start of the campaign and lots can change.

    they need to raise their game though. having watched the interview of cameron and tghe gay times where he had to ask for a second go at the interview… we cant take the risk that he will mess up the country and public services because you dont get a second chance at that!

  • Stan Rosenthal

    Peter Mandelson’s image of Osborne running around a sweetshop raised a smile but doesn’t really hit the spot as an answer to the Tory attack on our NI tax hike.

    The crucial thing about this is that it’s designed not to affect the recovery in the vital next 12 months (being scheduled for April 2011) and can be presented as a small price to pay (the cost of a bottle of whiskey a month) at the right time to help keep our front line services going through the debt repayment period.

    With a hard-hitting response along these lines we can turn this campaigning minus into a plus.