Gordon Brown will seek today to halt David Cameron's early momentum in the General Election campaign amid Labour jitters over Tory and business attacks on the Government's decision to raise national insurance contributions (NICs).
He will try to demolish Mr Cameron's claim that he could reverse the 1% increase in NICs, due in a year's time, by finding £6bn of government efficiency savings.
Mr Brown will tell a London Press conference that his Government is already securing £35bn of such savings over three years. He will argue that the Conservatives' figures do not add up as they would need to raise £6bn each year, not make a one-off saving, to prevent the NICs rise, and will accuse them of “giving up” on their plans to cut the £167bn public deficit.
But the rift between Labour and the business world grew wider yesterday as another 30 bosses backed the Tories' stance on NICs, taking the total number to 68. Mr Brown suffered a further backlash after claiming yesterday that businessmen had been “deceived” by the Tories' policy.
Last night the Tories broadened their attack, suggesting that a re-elected Labour government could extend the 50p top rate of tax on earnings above £150,000, lower down the income scale.
The Labour manifesto, to be approved today by a joint meeting of the Cabinet and the party's national executive committee, will include a promise not to raise the 20p basic rate of income tax. Mr Brown told Channel 4 News: “The income tax rate has come down from 23p to 20p and we've kept it at 20p and that is what we will pledge to do in our manifesto.” The promise may also apply to the existing 40p and 50p rates.
A Tory spokesman said: “Gordon Brown is being deceitful — he is effectively raising income tax with his jobs tax. Labour had a pledge not to raise the top rate of tax in their last manifesto and Gordon Brown broke it so why should anyone believe him now?”
The Conservatives are delighted that the spotlight has remained on their flagship pledge last week to stop the NICs rise hitting all employers and workers earning up to £35,000 a year. Mr Brown accused the Tories of “misleading people”, including the businessmen who have rallied behind their policy. He told GMTV: “I think they have been deceived because the big issue at the moment is can we sustain the recovery.”
But businessmen queued up to criticise the Government. Luke Johnson, founder of Risk Capital Partners, dismissed Mr Brown's claim that the Tories would take £6bn out of the economy as “economically illiterate”. He said: “The great challenge society faces is unemployment. The only cure is for the private sector to create new jobs. National insurance is a stealth tax on jobs.”
Paul Walsh of Diageo, said: “National Insurance is a tax on jobs and at a time when we need businesses to create economic growth, we should be cutting waste rather than risking the recovery.”
Richard Reed, whose Innocent Smoothies firm was visited by Mr Brown yesterday, said the NICs increase would make him “look more carefully at our payroll”.
But Tesco refused to join the criticism. An executive said that it would not oppose “whatever measures are considered right” to put the public finances back in order.
The row dominated the final session of Prime Minister's Questions. Amid heated exchanges, Mr Cameron attacked a “jobs tax that will kill the recovery”.