NI row: A war of letters

By Ian Dunt

Alistair Darling and George Osborne have become embroiled in a war of letter in the ongoing row over tax rises on national insurance.

This afternoon, the chancellor wrote to his counterpart in the Conservative party, suggesting he had lost his credibility over the affair.

“You have spent the last week making expensive promise after promise,” Mr Darling wrote.

“And you are now suggesting you will make yet more promises for married couples in the days ahead. However, you still have not provided any credible detail about how you would pay for them.

“Today your economic strategy descended further into chaos.”

Mr Osborne hit back in the early evening, accusing Mr Darling of collapsing in “a heap of contradictions”.

“In the morning, you attacked our efficiency plans on the grounds that they would reduce public sector headcount – but by lunchtime your own Treasury minister, Stephen Timms, admitted that your own spending plans meant that ‘there will be some job losses’,” the shadow chancellor wrote.

“On Monday April 5th you told the Today programme that there would be ‘no’ job losses as a result of your National Insurance rise, an assertion that flies in the face of economic logic and the views of over 80 leading business figures.”

The latest stage of the spat was sparked by new details of the efficiency savings the Tories are relying on to fund the tax cut.

Sir Peter Gershon, the Tories efficiency advisor, told the Financial Times that £2 billion of the £6 billion the party plans to cut in waste over the next year would come from recruitment.

Experts told the newspaper such a saving would imply 40,000 public sector jobs being lost, although the party said the savings would be made from a recruitment freeze rather than job losses.

“I can’t think of a previous opposition that’s been as specific in terms of what it would do in the first year,” David Cameron told the Today programme this morning.

“We are saying we need to go further and faster on public spending than Labour.”

Mr Darling seized on the interview as proof the Tory party was in disarray over the issue.

“So it is now clear from the interview on Today – and he was unable to deny this – that additional heavy cuts will have to be made in public sector spending and jobs from this year onwards and that tens of thousands of jobs will be lost not just in the public sector but in the private sector as well where they depend on government contracts,” the chancellor said.

Tory plans look to save £12 billion in government waste over the next year, with half being re-spent by government departments and the other half going towards paying for the deletion of the NI tax rise.

The revelations come a day after Labour’s economic team tore into the Conservative proposals, saying they were just a hastily written “flimsy” four-page press release.

Today’s news helped the incumbents shift the terms of the debate. Labour found itself on the back foot on the issue since it hit the headlines, with a seemingly endless procession of business leaders emerging to back the Conservative plans.

There was another piece of good news for the government when Dragon’s Den star James Caan backed Labour over the NI row, despite previously criticising the tax rise.

Both parties are desperately trying to gain control of the issue. The Tories have been winning the fight for several days now, but Labour’s refusal to back down suggests it believes the party’s calculations do not add up.

Nevertheless, analysts are bemused by Labour’s insistent concentration on the issue. Traditional election tactics stress the need for parties to campaign on their own agenda, not those of their opponents.

The Conservatives made announcements on curbing excessive public sector pay today, along with proposing a more robust system against benefit cheats.