Pro-Tory letter prompts govt spat

By staff

Peter Mandelson’s comment that the business leaders backing Tories’ national insurance (NI) policy have been decieved prompted a spat with the government today.

Bosses from some of Britain’s biggest businesses had backed Conservative plans to scrap the planned rise in (NI) contributions.

The leaders of 23 companies, including Sainsbury’s, Marks and Spencer and Easyjet all signed a letter of support to the Daily Telegraph saying they welcome the plans to undo a one per cent increase if the Tories win the election.

The letter said: “The government’s proposal to increase national insurance, placing an additional tax on jobs, comes at exactly the wrong time in the economic cycle. In a personal capacity, we welcome George Osborne’s plan to stop the proposed increase in national insurance by cutting government waste.”

It went on to say that the private sector has increased productivity by 20% in the last few years while public sector productivity has fallen, and says economic recovery would be improved by cutting red tape and government waste.

It concluded: “Cutting government waste won’t endanger the recovery – but putting up national insurance will.”

Shadow chancellor George Osborne pledged to scrap Mr Darling’s one per cent rise in national insurance contributions which will come into effect next April, calling it a tax on jobs.

But later comments by business secretary Peter Mandelson suggesting the business leaders had been decieved prompted bosses at Next and Kingfisher to brand the business secretary “patronising”.

Next boss Simon Wolfson, a longstanding Tory supporter, said in a statement: “Of course we have not been deceived.

“The principle is a very simple one. It is a question of, do we pay for government profligacy through increased taxes or do we urge them to save money in a way that businesses have?”

Earlier in the day, Liam Byrne, chief secretary to the Treasury, said the Conservatives’ plans were unfunded.

He said: “We are already making the efficiency gains that the Tories claim will pay for their tax cuts.

“Britain needs a serious deficit reduction plan, not Tory double-counting.”

The Liberal Democrats Treasury spokesman, Vince Cable said: “What is utterly unconvincing about Tories’ proposals is that they rely on efficiency savings they themselves have ridiculed.”

The one per cent rise in NI contributions will apply to those earning more than £20,000 a year and is part of a £19 billion tax-raising plan by the government in order to cut borrowing by half in four years.

The full list of signatories:

Sir Anthony Bamford, Chairman, JCB
Bill Bolsover, Chief Executive, Aggregate Industries
Dominic Burke, Chief Executive, Jardine Lloyd Thompson
Ian Cheshire, Chief Executive, Kingfisher plc
Neil Clifford, Chief Executive, Kurt Geiger
Mick Davis, Chief Executive, Xstrata plc
Aidan Heavey, Chief Executive, Tullow Oil plc
Lord Harris of Peckham, Chairman and Chief Executive, Carpetright plc
Justin King, Chief Executive, J Sainsbury plc
Sir Christopher Gent, Chairman, GlaxoSmithKline plc
Ben Gordon, Chief Executive, Mothercare plc
Sir Stelios Haji-Ioannou, Founder and Chairman, easyGroup
John Lovering, Chairman, Mitchells & Butlers plc
Graham Mackay, Chief Executive, SABMiller plc
Alistair McGeorge, Chief Executive, Matalan
Nicolas Moreau, Group Chief Executive, AXA UK
Stephen Murphy, Chief Executive, Virgin Group Ltd
Alan Parker, Chief Executive, Whitbread Plc
Sir Stuart Rose, Executive Chairman, Marks & Spencer plc
Paul Walsh, Chief Executive, Diageo Plc
Joseph Wan, Group Chief Executive, Harvey Nichols
Simon Wolfson, Chief Executive, Next plc
Zameer Choudrey, Chief Executive, Bestway Cash & Carry