Page last updated at 03:17 GMT, Friday, 2 April 2010 04:17 UK

More executives back Tory National Insurance plans

Sir Stelios Haji-Ioannou, Justin King and Sir Stuart Rose
Sir Stelios Haji-Ioannou, Justin King and Sir Stuart Rose signed the letter

Another 14 top executives have backed the Conservatives' pledge to cancel the planned rise in National Insurance (NI) contributions.

The bosses said they supported the Tories' position after 23 others wrote to the Daily Telegraph warning the increase would endanger the recovery.

The British Chambers of Commerce, the CBI and five other organisations also praised the Tories' stand.

Labour said the Tories' backers were victims of "cynical deception".

The two parties have been exchanging blows over whose tax plans are better for the economy - just days before Gordon Brown is expected to call the general election.

The fight was sparked by the publication of a letter by 23 company bosses - including the heads of Marks and Spencer, Sainsbury's and Diageo - backing the Tories' pledge to scrap part of the planned NI increase should they win power.

The executives, who emphasised they were speaking in a personal capacity, said the tax rise - due to come into effect in April 2011 - would hit business and jobs.

On Thursday evening, the Daily Telegraph disclosed that 14 more executives - including McLaren boss Ron Dennis, HMV chief executive Simon Fox and entrepreneur Brent Hoberman, a member of Mr Brown's Business Council for Britain - also endorsed the Conservative position.

A number of the 37 backers have links to the Conservatives, some donating money to the party in the past, although others have no previous connections with the party.

Recent proposals by the Conservatives to reduce the negative impact of the rise on companies and their hard-working employees deserve some credit
Letter from business organisations

Tory leader David Cameron said the intervention was a "very significant moment" while shadow chancellor George Osborne claimed the "business community had come together to reject Labour's tax on jobs".

"Gordon Brown now finds himself increasingly at war with British business - he is part of the problem not the solution," he said.

Labour said the businessmen had been taken in by its opponents but several of the signatories hit back, saying such claims were "patronising".

Seven business organisations - representing both large and small firms - also joined in the dispute by backing the Conservatives' position.

'Negative impact'

In their own letter, the organisations said they "applauded the public stand" taken by the businessmen in criticising the NI rise, describing it as "clear and unequivocal tax on jobs".

"Britain's leading business organisations, representing hundreds of thousands of companies and millions of employees, stand with them in their fight," they wrote.

Lord Mandelson: "Mr Cameron and Mr Osborne are peddling a deception"

"Recent proposals by the Conservatives to reduce the negative impact of the rise on companies and their hard-working employees deserve some credit.

"Given that all political parties are counting on the private sector to drive future economic growth, it is only right to look for ways to improve the business environment through cost savings across the public sector."

Adam Marshall, from the British Chambers of Commerce, said the organisations accepted difficult decisions had to be taken to cut borrowing and they were "ready to have a conversation" with government about how to do so.

But he told the BBC a National Insurance rise was like an "iceberg" for businesses.

'Not painless'

The Tories have said they will pay for the tax pledge by cutting about £6bn in government waste and bureaucracy in 2010-11.

Labour say its opponents' sums do not add up and the pledge does not square with the Tories' long-stated desire to make cutting the deficit its number one priority in government.

Business Secretary Lord Mandelson has said the Tories cannot achieve their plans without increasing VAT, comparing shadow chancellor George Osborne to "a kid in a sweet shop, who thinks he can just grab sweets from every jar without paying for them".

A rise in employers' NI is a tax on jobs
Tio Terry

While insisting that "no-one wants a war of words", he said ministers were right to robustly defend the tough decisions being taken.

"Of course there are some in business who are going to support what appears to be a pain-free tax cut. I mean, who wouldn't, if offered that?

"But the point is, this is not pain-free and Mr Cameron and Mr Osborne are peddling a deception."

Lib Dem Treasury spokesman Vince Cable said the National Insurance increase was "damaging" but argued the grave nature of the UK's finances meant no "credible" opposition party could reverse it.

"We are all in favour of efficiency in government but they themselves [the Conservatives] have ridiculed suggestions from the Labour government that you can make large scale, easy savings in that way."

BBC Political Editor Nick Robinson said the Tories regarded the business leaders' letter "as a pre-election coup" but it was "impossible for anyone to know whether the government or the Tories will realise the savings they're aiming for".

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