Business Leaders Vote Against NI Rise (and for the Tories)

Last Updated Apr 1, 2010 9:06 AM EDT


Looks like the Tories have won over big business bosses with shadow chancellor George Osborne's recent pledge to halt Labour's planned 1p rise in National Insurance contributions.

Today's Telegraph carried a letter from 23 business leaders whose companies employ some 500,000 people in all. Bosses including Kingfisher's Ian Cheshire, Easy Group founder Sir Stelios Haji-Ioannou, M&S's Sir Stuart Rose and Diageo's Paul Walsh called on government to get its own house in order before foisting a "tax on jobs" on the private sector.

The public sector could take a lesson or two on efficiency from the private sector, they argue, and could easily make savings by "removing the blizzard of irrelevant objectives, restrictive working practices, arcane procurement rules and Whitehall interference".

Excessive red tape has long been the complaint of business organisations. The IoD recently estimated the collective cost of regulation at an astonishing £80bn -- compared to £6bn in 2002. Directors estimate their workforces spend a total of 86 hours filling in forms and ensuring they are complaint, says the IoD's Regulation Reckoner 2010.

The British Chambers of Commerce has a more modest figure, estimating the cumulative cost of legislation (EU and UK) will reach a not inconsiderable £25.6bn over the next four years. By its reckoning, next year's NI increase alone will take some £4.7bn annually out of employers' pockets and, along with other regulations, could very well hamper the UK's recovery, according to its "Employment Burdens" report.

But it's the Adam Smith Institute figures that offer the clearest guide to the impact of an NI rise on employers and employees. The short version is that employers and employees would do better under the Tories, but that higher earners are going to pay more NI whoever occupies No.10 next year.

Will the NI, or any single measure, sway you vote? It really depends on what you stand to gain: one entrepreneur said post-Budget that Labour's Entrepreneurs' Relief equates to around £100,000, while curbing the NIC would mean huge savings for the Telegraph's big employers.

Neither party's really touching the big public sector deficit issue, of course, but that's not what this is all about: battle lines are drawn, and business is in the middle. Kingfisher's Cheshire may believe this "isn't a political point, it's a business issue", but I'm not so sure.

(photo: altogetherfool, CC2.0)