‘New’ Labour is reverting to its old ways

AS THE controversy over the Government’s plan to raise employer’s National Insurance contributions next year rumbles on, the attitude of senior ministers towards business, and the economy in general, is becoming steadily more clear.

The business leaders whose joint letter expressing opposition to the policy sparked the debate into life made a point of saying that they did not see the planned increase as a party political issue.

It was, they argued (and rightly so), a matter of plain economic sense that a tax on job creation should not be raised at a time when the economy will still be emerging from recession.

The Conservatives, whose economic argument is much the same, have of course viewed it very much as an opportunity for some party political point-scoring. Labour’s response, however, has a significance far beyond its attempt to neutralise the argument in electoral terms by branding the Tories’ proposal as unfunded.

The decision by Chancellor Alistair Darling and Business Secretary Lord Mandelson to accuse the business leaders of having been “deceived” by the Conservatives, a claim endorsed by Gordon Brown at Prime Minister’s Questions last week, was not only insulting but was itself a form a deception.


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The claim that they were duped is misleading (a) because business organisations have been complaining about the Goverment’s NIC policy ever since it was first announced in the Pre-Budget Report last year (making Shadow Chancellor George Osborne either, depending on your view point, slow off the mark or a master of timing) and (b) because the business leaders were not specifically endorsing the Conservatives’ alternative strategy (since cancelling the NIC increase could be paid for in a variety of ways, not necessarily by the savings identified by the Tories).

So why misrepresent business in this way? The answer is that “New” Labour has reverted to type.

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In an interview on GMTV last week, Mr Brown claimed that: “The Conservative’s policy would take �6billion out of the economy.” On any logical basis, a policy designed (among other things) to avoid a damaging increase in tax on businesses at a time when the economy needs every private sector job it can get should be regarded as leaving money in the economy rather than taking it out.

But Labour prefers to view business as a source of cash to be tapped to support its bloated public sector rather than as the source of the country’s wealth (on which public services ultimately depend) to be encouraged and supported.

The patronising dismissal of serious business objections to the increase in NICs is merely symptomatic of this.

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