Page last updated at 23:33 GMT, Thursday, 8 April 2010 00:33 UK

Labour hit back over National Insurance election row

Brown: 'Tory NI plans not credible'

Labour have hit back over criticism of their plans to raise National Insurance as Conservative leader David Cameron says they are looking "very rattled".

It comes after 13 more business leaders backed Tory plans to curb the rise.

Gordon Brown and Alistair Darling said Tory plans were based on "fantasy" savings. The Lib Dems said Mr Cameron's plans would require a VAT "bombshell".

Mr Cameron said it was the NI rise not Tory plans to make £6bn of "efficiency savings" which threatened the recovery.

In Thursday's other election developments:

On the day Labour's National Executive Committee finalised details of the party's election manifesto, Mr Brown, Mr Darling and Business Secretary Lord Mandelson launched their press conference counter-attack on the Tories.

It followed days of controversy since the Conservatives pledged to block the bulk of the planned April 2011 1% National Insurance rise for people earning more than £20,000.

Tories claim more tax row support

Labour said the Tories were arguing they could make £12bn additional savings by cutting waste, on top of £15bn the government were already carrying out this year - adding up to £27bn, equivalent to half of the education budget.

The Tories say they only need to make £6bn of savings, the other £6bn would be reallocated for spending in some departments.

But Labour said some of the Tories' savings had already been delivered, and others were "not credible", a "fantasy" and were based on "a back-of-envelope set of calculations".

'No blame'

The BBC understands senior civil servants have met to discuss how the Conservative plans could be achieved.

The topic was also the main theme of an interview on BBC Radio 4's Today programme in which Mr Brown said the Conservatives were "misleading" businesses by saying they could afford to curb the rise.

He did not repeat his earlier comment that business leaders who backed Conservative policy had been "deceived" adding: "I attach no blame to business."

But he said the Conservatives had "dreamed up in the last few days" the savings they said they could make.

Nick Clegg and Charles Kennedy

"You cannot effectively get £27bn of savings in one year... without laying thousands of people off and without causing losses of business and loss of jobs," he said.

The Tories have been boosted by more business leaders publicly supporting their promise to curb the rise in National Insurance.

Thirteen more came out in support on Thursday, and one of those already opposing the NI rise, Marks and Spencer boss Sir Stuart Rose criticised Mr Brown for saying business leaders had been "deceived".

"This is an important argument and to insult the collective intelligence of 60-plus chief executives is unhelpful," he said.

At a press conference, David Cameron said Labour had gone from being the "party, supposedly, of business" to having "completely fallen out" with business leaders.

'Extra tax'

The Conservative leader said it was "absolutely crazy" to "insult" business leaders who would lead Britain out of the recession. And he said the government had already identified £11bn of savings to make next year - he thought they should be made this year.

"Why should we have to go on paying taxes for government waste?," Mr Cameron said.

Despite all the sound and fury on National Insurance, they [Labour and the Conservatives] will not fundamentally change the tax system to make it more fair
Nick Clegg

Describing the NI rise as a "jobs killer", he said making £6bn savings was "not a challenging target".

"We have got some of Britain's biggest and most successful business leaders saying, in terms, that the threat to the recovery is not cost savings and cutting out waste, the threat to the recovery is Labour's jobs tax."

But Lib Dem leader Nick Clegg launched his Scottish campaign in Glasgow with his own version of the Tories' 1992 election poster - this time titled "Tory tax bombshell".

He said the Tories would be forced to raise VAT to 20.5% to pay for £13.5bn in tax pledges, which would mean households would have to pay an extra £389 a year.

'Pipe down'

"Despite all the sound and fury between the two old parties - Labour and the Conservatives - on National Insurance, they will not fundamentally change the tax system to make it more fair," he told the BBC's political editor Nick Robinson.

At 6:30 this morning Miriam Clegg asked her husband over breakfast where he was going
Nick Robinson
BBC political editor

Shadow foreign secretary William Hague responded: "[Lib Dem Treasury spokesman] Vince Cable said no chancellor rules out any tax increases but we don't have any plans to increase VAT. I think the Liberal Democrats can pipe down about this now."

Both the Conservatives and Labour say they have no plans to raise VAT but neither have definitively ruled it out.

However, Gordon Brown has made a number of other tax pledges.

On Wednesday, he said he would not raise the basic rate of income tax above 20p and addressing a business audience on Thursday, he said he would keep capital gains and corporation taxes at current levels.

The BBC's Political Correspondent Iain Watson said they were likely to be clear tax commitments in Labour's manifesto, approved by the party's ruling National Executive Committee on Thursday and due to be published early next week.

In Wales, Plaid Cymru officially launched its general election campaign on Anglesey, with leader Ieuan Wyn Jones saying it was time to "burst the Westminster bubble" and have local champions fighting for Welsh communities.

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