Osborne to block national insurance rises
Updated on 29 March 2010
Shadow Chancellor George Osborne pledges to reverse most of the government's national insurance (NI) rise, hours before Channel 4's Chancellors debate.
Shadow Chancellor George Osborne said taxpayers earning between £7,100 and £45,400 would save up to £150 a year under his proposals. Employers would also see their contributions reduced.
Chancellor Alistair Darling announced the one per cent increase in national insurance for employees and employers earning more than £20,000 would come into effect in April 2011.
The rise had been described by business leaders as a 'tax on jobs', at precisely the wrong time.
Mr Osborne said the cost of reversing the government's planned rise in NI would be paid for by cutting £6bn of government "waste".
The Conservatives say some seven out of 10 workers would end up better off than under Labour plans, while nobody would be worse off.
Mr Osborne said savings made in the health and overseas aid budgets would be recycled back to services.
The Conservatives would also not make cuts in ministry of defence budgets until a strategic defence review.
But Mr Osborne said other departments would have to cut back on their waste in areas like administration, procurement and staff sickness.
"Not a single penny will come from the frontline services that people depend on," he said.
For more Channel 4 News coverage of Ask the Chancellors Debate
- Ask the Chancellors
- Chancellors debate economy ahead of election
- Ask the Chancellors: the only debate that really matters
The Institute for Fiscal Studies have already calculated that a faster programme of deficit reduction would require £8bn of extra spending cuts or tax rises over the parliament.
Labour has accused Mr Osborne of making unfunded promises.
A spokeswoman for Chancellor Alistair Darling said: "What George Osborne announced today will put families and business at risk," she said.
"On their own figures, they've made a #28 billion tax promise over the next Parliament, but not a single one of their savings is in the bank.
"It's paid for on a wing and a prayer. The public won't be fooled by this."
Liberal Democrat Treasury spokesman Vince Cable claimed Mr Osborne's proposals were "schoolboy economics".
"When you have a #70 billion permanent hole in the Government's finances, you simply can't propose cutting tax revenue unless you spell out exactly how you are going to pay for it," he said.
"The Tories say they are going to pay for a cut in National Insurance through 'efficiency savings', but haven't a first clue about how these savings are going to be realised.
"Unless they can say how they will realise these savings, the Tory proposals aren't worth the paper that they are written on."
Political editor Gary Gibbon's analysis
In the past David Cameron has ridiculed the idea that you go to the electorate on the basis of promising stuff that'll come from efficiency savings not yet made. But here he is doing just that.
The Tories said in the past that they couldn't identify a lot of cuts until they were in office because you can't know the cost of cancelling various contracts.
George Osborne just repeated that. But he is nonetheless claiming he can make £6bn cuts in areas like this on top of the £11bn in savings the government said it was chasing in the budget last week (there's "not a great deal of overlap" George Osborne said).
George Osborne announced his plans just hours before taking part in a live debate on Channel 4 with Chancellor Alistair Darling and the Liberal Democrats treasury spokesman Vince Cable.
The Ask the Chancellors debate, which will be presented by Krishnan Guru-Murthy, will be broadcast on Channel 4 at 8pm.
