Small business backs Conservative plans on NIC

Some 415 small and medium-sized firms yesterday joined the 104 big companies who had already endorsed the Tories’ pledge to reverse most of the rise in national insurance contributions (NICs) due to take effect in April next year.

Conservative Campaign Headquarters admitted that some of this number had been sought from Tory-supporting business owners, but party officials claimed that the vast majority had been sent in spontaneously.

This added to the Tories argument that this level of backing undermined those claims by the Business Secretary Lord Mandelson that the party had won plaudits only from big companies.

The 415 smaller firms, including retailers like flower shops and dry cleaners as well as small manufacturers, signed a letter saying that halting the NICs increase would “protect jobs and support the recovery”. Backing the Tory plan to find the money needed through £6bn of government efficiency savings, they added: “In the last two years, businesses have cut costs without undermining the service they provide to their customers. It is time for the Government to do the same. As taxpayers we would welcome more efficiency in government. As businessmen and women we know that stopping the national insurance rise will protect jobs and support the recovery. Cutting government waste won’t endanger the recovery – but putting up national insurance will.”

Philip Hammond, the shadow Chief Secretary to the Treasury, said: “Over 400 small and medium businesses have come out in support of our proposals to cut waste and stop Labour’s job tax which would kill the recovery. Once again, Gordon Brown’s war with British business puts him on the wrong side of working people. And Lord Mandelson’s desperate dismissal of Britain’s business leaders as ‘metropolitan’ chief executives is wide of the mark.”

Labour immediately hit back by trumpeting a letter signed by 58 economists warning that the £6bn of spending cuts the Tories need to fund their move on NICs could push the economy back into recession. They included Lord Layard, Lord Peston, Lord Skidelsky and Sir David Hendry. They said: “This is not the time for such a destabilising action. Only when the recovery is well under way, will it be safe to have extra cuts in government expenditure. The first step is to make sure growth returns and tax receipts recover. Rash action now could imperil not only jobs but also the prospects for reducing the deficit.”

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