Tories: tax break will boost small firm jobs

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Indy Politics

Conservatives today announced tax breaks worth £250 million to new businesses, as the party's leadership sought to put a lid on internal discontent over Europe at their annual conference in Manchester.

Shadow chancellor George Osborne said that waiving the 12.8 per cent employers' National Insurance contribution for the first 10 employees taken on by a newly-established firm could create 60,000 jobs in the first two years of a Tory Government.

The measure formed a centrepiece of a jobs package which leader David Cameron described as "the biggest, boldest programme to get Britain working that this country has ever seen".

In a surprise appearance on-stage on the first day of the Tories' last conference before a general election, Mr Cameron urged activists to "go out and win it", telling them: "We must not let Britain down."

But the flurry of announcements could not drown out the debate over Europe on the fringes of the Manchester gathering in the wake of Ireland's Yes vote on the Lisbon Treaty.

Europhile shadow business secretary Kenneth Clarke was forced to put out a statement ruling out the prospect of him campaigning for ratification of the Lisbon as a member of a Tory Government, after he appeared to suggest that he would consider fighting for the Yes camp.

And London Mayor Boris Johnson increased Mr Cameron's discomfort by openly speculating that a Tory administration could give voters a say on "key parts" of the treaty if it was already in place.

The Tory leader has promised a referendum if any of the EU's 27 member states have not ratified Lisbon by the time the Conservatives win power.

But he today came under pressure from Foreign Secretary David Miliband to spell out exactly what he means when he says he would not "let matters rest" if ratification is complete by then.

Mr Johnson said it would be "bizarre" if Tony Blair were to become EU President without the British people being given a say in the creation of the role. Even if all EU nations approve the Treaty, Mr Cameron will still have to "work out how to give effect to the consultation that I think the people want," he said.

Meanwhile, shadow minister Andrew Rosindell had to issue a statement denying any dissent from Mr Cameron's stance, after he stated publicly that voters wanted a referendum "whatever the circumstances".

The state of grassroots unease over Lisbon was laid bare when shadow cabinet member Greg Clark was barracked at one fringe meeting for backing the leader's position.

The jobs package unveiled under the title Get Britain Working featured tougher checks on Incapacity Benefit claimants which could see them lose £25 a week in state help; a new chain of technical schools teaching vocational subjects in English cities; 10,000 new university places; and a boost to apprenticeship schemes.

Inventor Sir James Dyson was named the Tories' technology tsar, heading a taskforce to explore ways to boost Britain's hi-tech exports.

But the proposals were dismissed as a "carefully packaged con" by Work and Pensions Secretary Yvette Cooper, who said: "The Tories still want to make cuts in a recession that would destroy jobs and, according to respected economists, would actually push unemployment up to five million.

"They are simply rehashing Labour policies without the investment needed to make them work. The Tories don't understand that you can't get people from welfare into work if you destroy the jobs for them to go to."

Mr Osborne said the National Insurance waiver was "another example of the Conservatives being the party of jobs at a time when Labour are the party of mass unemployment".

Aides said that the exemption would apply to the first 10 employees hired by a business during its first year, up to the upper earning limit of £844 a week per employee, or about £44,000 a year. For a new small business with 10 employees on an average salary of £25,000, Mr Osborne calculates this could save up to £25,000 a year.

The proposal was welcomed by the Federation of Small Businesses, which said it would help to create and grow more small businesses to serve as "a catalyst for economic recovery".

Mr Cameron warned his party against complacency and said they needed a convincing win to be able to make the hard choices the country required.

After 12 years of conferences at which policies were debated without ever being put into action, "this time we have a real chance of making a difference", he said.

"Twelve years gone, perhaps just seven months to go, 60 million hopes resting on our shoulders - We must not let Britain down," said Mr Cameron.

And he told activists: "Let this be the week when we don't just let Labour lose the election but we show we deserve to go out and win it.

"The problems this country faces are so severe, the crisis of our public finances so deep, that we need a strong and positive mandate for the changes we know our country needs and we know people are crying out for.

"This is not some week of celebration, not some week of pointing out Labour's failures.

"It is the week we should square up and look at the British people in the eyes and say: we know how deep the problems are; we know how difficult some of the solutions will be; but we are ready, together with you, to take this country through some tough times but to better days ahead.

"With that, let us go to work."

Responding to the proposed National Insurance tax break, Liberal Democrat treasury spokesman Vince Cable said: "The numbers Mr Osborne thinks this policy would help seem to have been plucked out of thin air.

"Many small businessmen will be shocked to learn that the Tories believe a start-up business has a wage bill of a quarter of a million pounds.

"What is most worrying is that this tax break for new businesses would mean that they will be able to undercut existing small companies who are already struggling.

"All small businesses need a helping hand at this time."

Treasury Chief Secretary Liam Byrne condemned the new Tory policy as "gimmick-driven".

He said: "The Tories opposed every single measure we put in place to help small businesses.

"Now they come up with a policy which poses more questions than it answers, notably how would it be paid for, when they already have so many unfunded tax and spending promises?

"The bills are racking up at Tory Party conference - tomorrow George Osborne must tell us how he'll pay for them all.

"Businesses could also close and reopen to take advantage of these proposals - another hole in this gimmick-driven policy."