Osborne pledges to reverse NIC rise

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The Conservatives have pledged that reversing the national insurance increase proposed in the pre-Budget report for 2011 will be their top tax-cutting priority but stopped short of making this a manifesto commitment.

George Osborne, the shadow chancellor, seized on the “tax on jobs” as a politically welcome antidote to Labour’s attacks on the Tories as the party of the rich. In a rhetorical foretaste of the general election battle, Mr Osborne claimed the pre-Budget report left the Tories as the only true party of aspiration, in contrast to Labour’s bid to “set one part of the country against another” to create political dividing lines.

“The message to aspiring families from these tax changes is pretty clear. If you want to get on in life, if you want to own your own home, if you want to save for a pension or leave something for your children, then the Labour party is not for you any more,” Mr Osborne told MPs. “All that work they did to drag their party on to the centre-ground of British politics ... is gone.”

The aspirational focus of the Tories’ rhetorical assault against Alistair Darling’s “pre-election report” reflected their belief that Labour had disarmed one of its own potentially most effective electoral weapons. Gordon Brown’s recent “playing fields of Eton” attacks on the Conservatives’ privileged backgrounds have stung, exacerbating concerns about the party’s softening opinion poll lead.

But Mr Osborne made it clear that he believes this “class war” attack has been neutered by the tax rise. “This is Labour’s tax on jobs at the worst possible time. Of all their tax rises, this is the one that the Conservatives will try hardest to avoid. Our priority must be to stop Labour tax rises on the millions of working people on average earnings,” the shadow chancellor said. “Now we know what Labour’s class war means – a tax on anyone earning over £20,000.” One senior Tory dubbed the national insurance increase “the tax rise on the many, not the few”, in a subversion of the prime minister’s claim to act for the majority.

In terms of the broader economic strategy, the Tories focused on attacking the government plans, rather than setting out their own alternative vision. Conservative officials latched on to the hostile reaction to the pre-Budget report from employers’ groups, asserting that it undermined the government’s claims to have a strategy for growth.

Mr Osborne lambasted the “economic disaster that Labour has visited upon the country,” while warning that the “terrible borrowing figures” will get “even worse if the government’s heroic growth forecasts turn out to be wrong again”. There was “nothing [in the pre-Budget report] to reassure international investors”, he said.

He lampooned Mr Darling’s failure to specify spending cuts, while pledging more money for certain frontline services, as “achieving the previously impossible scientific trick of ringfencing a black hole”.

But Mr Osborne steered clear of detailed commitments about how an incoming Conservative government would handle post-election tax increases and spending cuts. The Tories’ sole spending commitments beyond April 2010 are to protect health and overseas aid budgets.

The lack of detail on where the spending axe will fall left timing as the main point of political differentiation. The Tories reiterated their determination to make immediate spending cuts to tackle the public sector deficit. “We will start in 2010, both to get the deficit down more quickly and to send a signal to the markets and to business that it’s safe to invest in Britain,” said Philip Hammond, the shadow chief secretary to the Treasury.

Both rival parties claimed this was a strategic error, suggesting this will be a serious point of contention at next year’s election. “Darling was looking to draw dividing lines and the Conservatives have difficulties on several fronts,” Vince Cable, the Liberal Democrat Treasury spokesman, said. “They’ve fallen into this trap of deciding in advance they’re going to start slashing spending come what may.”

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