The politics of proxy: National Insurance or National Interest?

By Andrew Lomas

There comes a time in the life of a school-child when “my dad is better than your dad” loses its lustre as a rhetorical device. Unfortunately, the level of debate coming from the Tories hasn’t undergone a similar development. To Dave and George I can only say this; listing the business leaders who support one of your policies does not a grown up debate make.

The phoney war of politics by proxy started back in January with the publication of a letter by 30-odd economists who agreed with the Conservatives economic plans. Vindication! the Tories roared; some people agree with us! This was followed by another letter, this time from economists supporting the government. Not so fast! seemed to be the government’s reply. More people agree with us!

And so, for a while, the debate descended into how many people agreed with either party. The bleedingly obvious point that election campaigns exist to convince more people to agree with you than disagree with you seemed to pass people by.

So it is on the National Insurance story. Aside from the complete lack of credibility that attends a Tory Party saying in one breath that they want to reduce the deficit faster than the government whilst in the next breath rejecting one of the means of getting the deficit under control, the debate once again seems to be about how many supporters either side can muster rather than the underlying arguments.

The press are falling over themselves because a few business leaders would rather pay less tax; this is hardly a Damascene conversion on their part. Indeed it’s important that we create the conditions in which business and private enterprise can flourish in order to provide the jobs and wealth that give us all a better standard of living. For the record, Labour has been astoundingly pro-business, pro-enterprise and pro-industry over the past 13 years. Corporation Tax has been cut from 33% to 28%. Capital Gains Tax is down from 40% to 18%. Research and Development Tax Credits, introduced by Gordon Brown as chancellor, have gone some way to address the historically low levels of long term-investment these self-same business chiefs, in their wisdom, have presided over. Moreover, the Tories are committed to scrapping plant and machinery Corporation Tax Relief, a policy which (if you permit me to indulge in a little Tory trick here) the Engineering Employers’ Federation have described as “disastrous”.

But who says what is not the main point. The underlying issue is this; having functioning markets and an environment that encourages enterprise is only one side of the coin. New Labour came to office to implement a programme that allied economic efficiency with social justice: we explicitly rejected the 1980s dichotomy of private wealth versus public squalor. The argument today remains the same. Labour have made a decision to raise National Insurance Contributions in order to protect the same public services we’ve spent the last 13 years rebuilding and improving. Given that it’s usually the same businessmen decrying the change in National Insurance that complain about the number of days lost to sickness or the level of skills possessed by their employees, what they have to answer is this: how do you get healthier, better-educated workers if you’re not prepared to invest in the public services that sustain them?

Rather than the self-interest of a few businessmen, we should focus on the millions of people who stand to lose out if the Tories are elected. We should be contrasting our record and vision with that of the Tories; only yesterday, the OECD predicted that the UK economy will outstrip the rest of G7 in terms of second quarter growth this year because of actions taken by a Labour government. Unemployment, business failures, and home repossessions are all lower than in the Tory recessions of the 80s because of positive choices this government has taken. From the school leavers guarantee to the future jobs fund, Labour has the vision and compassion to make sure that the social blight of unemployment doesn’t hit our communities again. Against this the Tories have got every economic call of the recession wrong; the fact that they are relying on the veil of support offered by a few businessmen to mask their wider economic illiteracy only serves to expose the shallowness of their message. In short, the playground politics of the Tories are a function of a series of serious schoolboy errors.