Brown pressured to rule out increase in national insurance

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Indy Politics

Gordon Brown has been forced on to the defensive over taxation pledges in Labour's forthcoming election manifesto.

The Chancellor refused to rule out raising national insurance contributions (NICs). The manifesto next week will repeat the commitment at the last election not to raise income tax, but it is expected to remain silent on NICs.

NICs were last raised by 1 per cent after the 2001 election to fund higher spending on the health service. However, no mention of the plan was put in the 2001 manifesto.

Those attending the high-level meeting with Tony Blair, Gordon Brown and Labour chiefs to approve the manifesto in London on Wednesday signed an agreement promising not to disclose its contents. However, it has emerged that the manifesto will make no commitments about NICs, raising suspicions that Mr Brown could raise NICs again, if - as many economists predict - he will be forced to raise taxes to fill a £10bn "black hole" in his finances.

Challenged about Labour's tax plans, Mr Brown said: "When we come to publish our election manifesto, I will make our tax pledges clear."

He added: "All the promises we make at the election will be promises that we will keep during the next parliament."

The Tories seized on his remarks to say that Labour was storing up another "tax bombshell'' for after the election. Mr Brown hit back, saying that Nick Herbert, adopted as the Tory candidate at Arundel and South Downs, had heightened suspicions that there was a secret strategy by the Tories to impose deeper cuts on public spending if they are elected.

Mr Brown insisted that all his spending plans were affordable and brushed aside the predictions of economists, saying he had been proved right in the past and would be again.

However, there are spending problems which Mr Brown will have to confront before the next five-year parliament is due to end. Spending on the NHS is due to rise until 2008, but there is no commitment about what will happen to spending on the health service after that.

Some ministers believe it will be possible to shade spending downwards on the NHS after 2008 because by then Britain will have restored chronic health underfunding and will be spending close to the European average. Mr Brown is expected to refuse to make any commitments next week beyond his three-year spending totals. The Prime Minister has insisted that Labour will not "go back" to its old ways by copying the Liberal Democrats with a commitment to raise the upper rate of tax to 50p in the pound for those earning more than £100,000. Mr Brown has managed to redistribute wealth in other ways, including limiting many benefits by means-tested tax credits.

Mr Brown is also committed in the Budget "red book" to a hike in the tax burden from 36.3 per cent of GDP to 38.5 per cent of GDP by 2010. It is estimated that could net the Chancellor an extra £35bn in tax receipts.

The rise is being planned because Mr Brown does not intend to raise thresholds for the upper tax level of 40p in the pound in line with inflation. It will mean more lower- and middle-income earners will be drawn into the higher rate of tax, which is known as "fiscal drag".

Mr Brown will defend the decision to raise the tax burden by pointing out that it will still be lower than the peak in 1984-85 under Margaret Thatcher when the taxman took 38.9 per cent of GDP in tax.

The Tories issued a list naming 200 MPs, including 27 ministers, associated with groups who want taxes raised to meet higher spending commitments.


Jamie McHale, 21, Glasgow, Physiology student

Voted Labour in 2001; may vote Lib Dem

"When it comes to finances, I trust Labour. If they say they won't raise taxes, I believe them, they'd lose a lot of credibility if they did. I don't believe Conservative spending pledges. Where's the money for services going to come from if they cut taxes? I'm swung towards the Liberal Democrats because they're aren't putting down other parties. They present their policies through positive campaigning, which inspires more trust. I don't want to vote for the lesser of two evils; I want to vote for a party that stands on its own two feet."

Tessa Woolfson, 25, Manchester, Doctor

Voted Labour in 2001, will vote Labour again

"I trust Tony Blair. Much of what he promised he has been able to follow through on. People say he can't be trusted because of issues like top-up fees, but the Government brought them in because universities needed the funding. I accept taxes are likely to rise to be able to fund all the improvements Labour is trying to introduce. Blair's style is far more sincere than Howard's, who I distrust. The Liberal Democrats and the Conservatives are similar insofar as they aren't likely to be voted in so can make promises more easily."

Amol Rajan, 21, Tooting, south London, English student, Cambridge

First-time voter; will vote Lib Dem

"I don't trust Labour, because when you have a party as dependent as Labour are on presentation rather than policy you cannot take what they say at face value. I suspect they will raise taxes in some way, by stealth if necessary, to continue their spending programmes - although I wouldn't mind paying higher taxes. I trust Gordon Brown a great deal more than Tony Blair. I don't trust Michael Howard or his appraisal of where £35bn savings can be found, but see no reason to distrust the Liberal Democrats."

Nick Reeve, 21, Manchester, Advertising temp

First-time voter; undecided

"As a general rule I don't trust any politicians - but this current crop are stinkers. I'm thoroughly disillusioned with both the Government and the Opposition.

"I don't trust Labour because of their spin-doctoring. The only exception to the rule is Gordon Brown, whose record as Chancellor speaks for itself. My one reservation is stealth taxes; I can well believe Labour will sneak in higher taxes somehow after the election. People will always associate the Conservatives with the decline of public services.They can't be trusted in government."

Rosie Spencer, 19, Southgate, north London, Dance student, Middlesex University

First-time voter; will vote Lib Dem

"I don't trust Michael Howard in the slightest. You can see the insincerity on his face when he speaks. He doesn't want to tell you about the Conservatives; he's just slagging off Labour and trying to score points. If the Conservatives came in they'd probably run a more elitist system. I think Labour have been doing a fairly good job - but they said they wouldn't introduce top-up fees and did. I'll vote for Charles Kennedy. People like him and trust him on a personal level."

Judy Bernstein, 18, Golders Green, London, Sixth-form student

First-time voter; will vote Lib Dem

"It's difficult to place trust in a leader who so clearly betrayed trust over tuition fees and the Iraq war - and even Gordon Brown was in the war cabinet - brought in fees and damaged the NHS. If we want good public services it is inevitable taxes will rise. People would rather politicians were honest and instead of sneaking up national insurance and council tax, told top earners to pay slightly more. Charles Kennedy is more trustworthy, with genuine belief in making things better rather than being a career politician.''