Political Monitor

Excerpt from Political Monitor for APSCO for the week 29/3/2010

What's being said in Government

Government, Opposition & Business in National Insurance rise row

A row over National Insurance rises has escalated after business leaders said claims they had been "deceived" into backing Tory plans were "patronising". Chancellor Alistair Darling accused the Tories of "peddling a deception" after 23 top bosses backed proposals to curb National Insurance increases.

Mr Darling said the bosses should take a "long hard look" at the Tory plans, rather than accepting "flimsy advice".

But two of them hit back instantly, accusing Labour of a "tax on jobs". Next boss Simon Wolfson, a longstanding Conservative supporter, said in a statement: "Of course we have not been deceived. The principle is a very simple one. It is question of, do we pay for government profligacy through increased taxes or do we urge them to save money in a way that businesses have?"

In a letter to The Daily Telegraph, 23 senior businessmen endorsed George Osborne?s pledge to halt the increase for those earning less than £45,000 if the Conservatives win the election. Nine of the 23 signatories to the letter run FTSE 100 companies and a further five are in the FTSE 250. Between them they employ more than 500,000 people.

Business Secretary Lord Mandelson said the Conservative plans were a "cynical deception" that could not be achieved without increasing VAT, as he said the Conservatives had done after winning elections in 1979 and 1992.

He said shadow chancellor George Osborne was "like a kid in a sweet shop, who thinks he can just grab sweets from every jar without paying for them".

"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?," said Lord Mandelson.

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

The full list of signatories of the letter: Sir Anthony Bamford (JCB); Bill Bolsover (Aggregates Industries); Dominic Burke (Jardine Lloyd Thompson); Ian Cheshire (Kingfisher); Neil Clifford (Kurt Geiger); Mick Davis (Xstrata); Aidan Harvey (Tullow Oil); Lord Harris (Carpetright); Justin King (Sainsbury's); Sir Chris Gent (GlaxoSmithKline); Ben Gordon (Mothercare); John Lovering (Mitchells and Butler); Graham Mackay (SAB Miller); Alistair McGeorge (Matalan); Nicolas Moreau (Axa UK); Stephen Murphy (Virgin Group); Alan Parker (Whitbread); Sir Stuart Rose (Marks and Spencer); Paul Walsh (Diageo); Joseph Wan (Harvey Nichols); Simon Wolfson (Next); Zameer Choudrey (Bestway Cash and Carry); Sir Stelios Haji-Ioannou (easyGroup)

What's being said Opposition

Conservatives to reform IR35

Mark Prisk, the Conservative Shadow Business Minister, has announced that a Conservative Government would undertake a full review of small business taxation, including IR35. The aim will be to provide a simpler and clearer tax regime.

Mark Prisk said: "For the last 13 years, Labour have constantly meddled with the tax rules for freelancers and self-employed, IR35 has especially proved to over-complex, uncertain and often unfair".

Prisk claims that IR35 has cost business £73 million over 10 years, adding. "This is why a Conservative Government would mandate the independent Office of Tax Simplification to undertake a fundamental review of current arrangements with the aim of providing a clearer, lasting and fairer tax regime".

The full press release can be viewed here:

http://www.conservatives.com/News/News_stories/2010/03/Conservative_tax_reform_to_aid_self_employed.aspx

What's being said by Stakeholders

Thousands of jobs at risk claims CBI

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About 17,000 people working in the financial services industry will have lost their jobs in the first half of this year, according to a report by the CBI. The findings were published as fears grew of a new surge in unemployment across businesses generally. The latest survey of financial service companies by the CBI and PricewaterhouseCoopers showed that banks, building societies and life insurance companies had cut staff aggressively in the first three months of the year.

Ian McCafferty, chief economic adviser at the CBI, said: "We forecast 10,000 cuts in the first three months of the year and 7,000 in the three months until June."

The CBI?s warning for the financial sector came days after Jean-Paul Gauzès, the French politician, said that he would not be "sad" if thousands of British hedge fund jobs were cut as a result of new investment rules that he would like to introduce in Europe.

The survey confirmed that while lending to individuals had risen slightly, lending to companies was down over the first quarter of the year. Mr McCafferty said that constrained credit remained "a worry for the broad economic outlook". There was also concern that regulation would hamper growth as businesses geared up for reform of the financial services sector.
Widespread cost-cutting helped to push up company profitability for the third consecutive quarter, the CBI said, the gauge of profitability rising to 16, up from 14 in December.

Businesses were even more upbeat about the outlook for profits in the coming quarter: the index jumped to 34, up from 0 in December. They reported increased confidence that the volume of activity would pick up in the next three months, although the CBI expected it to remain well below pre-crisis levels.

The full report is available at:

http://www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/faa89ceec6d48e05802576f000589705?OpenDocument

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