Tories to stop national insurance rises

George Osborne

The Conservative Party has pledged to protect 70% of workers from next year’s planned national insurance hike if it is voted into power at the general election.

In his 2008 pre-Budget report, the chancellor Alistair Darling announced that national insurance contributions would rise by 0.5% from 2011 for anyone earning more than £20,000 a year.

However, George Osborne, shadow chancellor for the Conservative Party, told journalists at a press conference today that his party would stop “Labour’s tax rise on working people”.

A Conservative government will stop the national insurance increase altogether for everyone earning under £35,000, Osborne announced. To do this, it will raise the primary threshold at which people start paying national insurance by £24 a week, and the upper earnings limit by £29 a week.

“Compared to life under Gordon Brown, every national insurance payer earning between £7,100 and £45,400 will be up to £150 better off,” he says. “Under the Conservative Party seven out of 10 working people in Britain will be better off than under Labour - and nobody will be worse off.”

The planned increase in national insurance contributions has been heavily criticised by business groups. The Confederation of British Industry warned it could hold back job creation and growth, while the Small Business Federation has called it "an attack on jobs".


Today, Osborne referred to the rise as “the economics of the madhouse”. He argues that raising national insurance contributions will not only hurt consumers - especially those on low incomes - but would also cost businesses and could damage the UK’s chances of successfully steering out of recession.

Osborne also hit out at last week’s Budget, in which Darling said immediate cuts to spending would be "wrong and dangerous".

The shadow chancellor responded today by saying: “According to Gordon Brown's logic, carrying on wasting money is crucial to securing the recovery. We think this is wrong.

“If we know the government's wasting money, why don't we stop it now? Why don't we reduce borrowing now, create confidence now, protect our country's credit rating now?”

Savings to be made

Osborne says the Tories have identified £6 billion of cost-savings that could be made by government departments this year without reducing the quality of front-line services. In comparison, Labour says it has identified £11 billion of savings, but these will not be implemented until 2012/13.

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“Part of the £12 billion of savings will be found in the health service and in overseas aid,” says Osborne. “We have made explicit commitments to protect these budgets, and so the money saved will be reinvested onto the frontline.”

Existing Tory plans for the Ministry of Defence budget are currently subject to a strategic review but will remain unaltered this year.

He adds: “The other government departments together represent just over half of total departmental spending. So we are expecting them to find, together, £6 billion of savings from the waste that even the government now admits exist - and which the government's own efficiency advisers tell us can be found.”

The Conservative Party has already announced plans to make savings by cutting child trust fund payments to the better off and stopping people with incomes over £50,000 receiving child tax credits.