Conservative Diary

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Seven out of ten working people will be better off if Cameron becomes Prime Minister

NIcut ConservativeHome was the first to say that it would happen and tonight it's confirmed; the Tories will reverse the lion's share of Labour's planned increase in National Insurance Contributions (reportedly at a cost of £6bn). We have to wait for details until tomorrow (there's a press conference at 9.30am) but the Conservatives will be able to go into the General Election saying that seven out of ten working people will be better off if Cameron becomes Prime Minister and George Osborne becomes Chancellor. None will be worse off.

The announcement is important for two reasons:

One: The Tories are now in a good position to reaffirm their tax cutting credentials. We already have the commitment to freeze council tax for two years. The commitment to abolish inheritance tax for all but millionaires. A commitment to cut tax for married couples (currently undefined but that might change tomorrow too). And now this NICs tax cut.

Two: We see the Tories rejecting Labour's terms of debate. Too many times in recent years we've seen the Conservative leadership accept Labour's fiscal decisions - eg on the level of spending and the 50p tax band. George Osborne is now saying - in the wake of what we must hope was Labour's last Budget - that we will reduce the budget deficit in our own way. Labour may think that hard workjing families should pay extra tax but the Tories will say that spending cuts should do the heavy lifting. On Today last week George Osborne talked of 80% spending cuts and 20% tax rises. That's quite realistic and necessary if we are not to throttle the recovery. In a must-read letter today (reflecting on his eight year chairmanship of the Public Accounts Committee) Edward Leigh sets out a ten point plan for cutting waste and inefficiency in the public sector. Leigh deserves a big job in any Conservative government to deliver on this. So, too, does John Redwood who, again today, argues that frontline services can be protected while cutting spending by 10% in many departments.

I argued yesterday that George Osborne saved the Tories' electoral bacon in 2007. This NICs change is not the same game changer but it will give Tory activists a powerful new message for the doorstep.

It will certainly make tomorrow evening's Chancellor's Debate (8pm, Channel 4) even more interesting.

Tim Montgomerie

> Policy Exchange made the case against the NI rise last week.


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