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Daily View: National Insurance debate

Clare Spencer | 09:59 UK time, Thursday, 8 April 2010

George Osborne, Vince Cable, Alistair DarlingWhile Labour want to keep a rise in National Insurance planned for April 2011, claiming it is necessary to help repair the hole in the public finances, the Conservatives propopse scrapping what they see as a "tax on jobs". Commentators consider the debate.

The chief executive of the retailer Next Simon Wolfson says in the Times that he supports George Osborne's policy as he believes government savings are possible:

"Have we been brainwashed into believing that savings are possible? Of course not. Everyone knows there are huge opportunities to save money in the public sector. Not least because so much of the waste has been created by Whitehall requirements, rules and restrictions. The appalling public sector productivity figures say it all. In a period during which the private sector has increased productivity by 20 per cent, the public sector has moved backwards. There is something fundamentally wrong with the way that government does business: a one-size-fits-all set of rules is not going to solve the problem."

Martin Kettle in the Guardian calls yesterday's divide between Labour and the Conservatives Gene Hunt Day:

"Clearly the Conservatives are revelling in the willingness of another 30 business leaders to condemn the putative 2011 NICs increase as a tax on jobs. This serves two purposes for the Tories: first by framing the contest as a Tory tax cutting versus Labour higher spending clash and, second, by casting Labour as unfriendly to business.
"Labour is manifestly on the back foot over these attacks. They were destructive arguments for Labour chances in pre-financial crisis times. But they seem rather retro now. Gordon Brown doesn't appear unduly fussed; it's as if he thinks this rather old-fashioned 1980s divide between the two parties will eventually play Labour's way in these very different times."

Cathy Newman in Channel 4 News' Fact Check blog looks at Tory frontbencher Jeremy Hunt's claim that a rise in National Insurance will "cost hundreds of thousands of jobs":

"Firstly, an independent estimate from the Centre for Economics and Business Research. Last year they modelled the effect of a 1 per cent employers' national insurance rise on small and medium-sized businesses, which make up 58 per cent of the private sector workforce. This found that - by 2021 - there would be 57,000 fewer jobs...
"The Labour party, meanwhile, points out that national insurance was increased in 2002 to pay for increased NHS spending - and employment continued to rise."

Andrew Grice in the Independent says the Liberal Democrats are the only ones talking about specific ways of cutting spending:

"The Liberal Democrats deserve more credit. They can afford to talk about cutting big-ticket items like Trident and have a more immediate £15bn hitlist. Vince Cable says he doesn't need his free bus pass until he's 65 and others over 60 should wait too."

Edmund Conway asks in the Telegraph why the Conservatives "seem so scared" of proposing fiscal reform:

"Is it the markets, which are watching their every move eagerly; could it be the public sector workers who will create a fuss the minute their jobs come under threat; or perhaps they fear that, when push comes to shove, Britons are simply not ready for change? No doubt Cameron and George Osborne are sincere in their promise that ultimately they will cut the Government down to size. Until now, though, their proposals have stopped short of their rhetoric."

Links in full

IndependentAndrew Grice | Independent | Nobody will use the 'D' word
TelegraphEdmund Conway | Telegraph | The Tories' policies on economic change falls short
GuardianMartin Kettle | Guardian | Back to the future taxes
IndependentSteve Richards | Independent | Labour forgot how to box clever on 'tax and spend'
IndependentHamish McRae | Independent | Pity the man who must inherit the red box...
GuardianStephen Tall | Guardian | Where's George Osborne? I'm curious
SpectatorPeter Hoskin | Spectator | Is this how Brown hopes to defuse the Tories' NI cut?
Channel 4Cathy Newman | Channel 4 News | Will NI rise cost hundreds of thousands of jobs
Channel 4Gary Gibbon | Channel 4 News | Gordon Brown pledges to keep the 20p basic tax rate
TimesSimon Wolfson | Times | No, Gordon Brown, we have not been deceived

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