Page last updated at 17:04 GMT, Friday, 2 April 2010 18:04 UK

Cameron says Labour on 'wrong side of working people'

Mr Cameron said other taxes would not rise if NI was cut

Tory leader David Cameron says Labour has got itself "on the wrong side" of working people and companies over proposed rises to National Insurance.

His remarks came as 14 business leaders added their support to a Tory pledge to cancel part of the planned rise in National Insurance (NI) contributions.

Labour has suggested the Tories' policy can only be afforded if VAT is raised - a claim denied by Mr Cameron.

Another business chief has backed the Tories' stance, the party says.

A Conservative spokesperson issued a quote from Stefano Pessina, executive chairman of Alliance Boots, saying he believed increasing the tax "was not helpful at this time".

"The most important thing is to defend people's jobs for social and economic reasons.

"If companies are obliged to cut jobs because the government charges a new tax then we will have a boomerang effect because people will not be able to spend, and this will exacerbate things," he said.

Twenty-three other executives had supported the Tory pledge a day ago.

Ross Hawkins
Ross Hawkins, BBC News

This is not the story the Labour party would want voters dwelling on over the Easter weekend, with a formal start to the general election campaign expected within days.

Three members of Gordon Brown's Business Council for Britain are among the 37 signatories, as is one former Labour donor.

Not all of the names will come as a surprise though. Eight have donated money as individuals to the Conservatives before and over a dozen of them have previous links to the party.

Labour can take some solace from the fact the letter at the heart of the story does not endorse the entire Conservative policy platform - only its position on National Insurance.

The Liberal Democrats say the Conservatives cannot claim they will scrap most of the National Insurance rise without a good plan to fund the policy.

Labour says the Tories cannot reduce tax revenue and claim they are dealing with the deficit.

But David Cameron is using this as an opportunity to attack - claiming Labour is at war with big business.

The company bosses - including the heads of Marks and Spencer, Sainsbury's and Diageo - showed their backing in a letter published in the Daily Telegraph on Thursday.

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.

As the number grew to 37, Mr Cameron said: "This is an impressive list of businesses.

"I think this is the week that Labour got themselves on the wrong side of working people in Britain and the wrong side of British business."

If they win the election, the Conservatives plan to scrap the planned April 2011 National Insurance rise for anyone earning less than £45,400 a year, which they say would save people £150 a year on average and also reduce the tax burden on firms.

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

Labour said the Conservatives could not afford not to put up NI by 1%.

Mr Cameron dismissed Labour's criticism, saying he would put his faith in successful businessmen rather than the prime minister and chancellor.

He also said there were no plans to raise other taxes, as Labour had suggested a rise in VAT would be needed if NI was cut.

"We don't have plans to put up other taxes.

"You can never rule out forever and a day [regarding] other taxes... but our plans involve public spending reductions because we think the government has got the balance wrong," Mr Cameron said.

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

"They're wasting money today so they can put up taxes tomorrow. We say stop the waste today so you don't have to put up taxes tomorrow."

David Frost, director general of the British Chambers of Commerce, said the issue was not about supporting David Cameron, but about supporting business.

"This is very much the wrong tax, hitting the wrong people, at the wrong time. If we are to get out of this recession and have some real growth - the only way that that will happen is through business.

"If we make it more expensive to employ people, more expensive for companies to run, then it will simply harm any recovery that we may have," he told BBC News Channel.

The Liberal Democrats have accused both Labour and the Conservatives of hiding the truth about forthcoming spending cuts.

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."

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