thetorydiary

It was back in 2008 that George Osborne first announced Tory plans for a fuel duty stabiliser - an idea which was first proposed by Andrew Lilico.

The idea is simple: when the oil price is high, the fuel duty will be lowered, and vice versa.

And little would George Osborne have known in 2008  that the 2010 general election would be fought at a time when the price of petrol would be hitting an all-time high at £1.20 a litre - nearly £6 a gallon in "old money".

And today's Telegraph suggests that right now the introduction of the fuel duty stabiliser would probably see the price of petrol at the pump today being reduced by 10p a litre under the Conservative plan:

"The move will be funded from the increased taxes the Government raises from other levies on oil companies when wholesale prices rise... However, it is likely to prove controversial when oil prices fall as fuel duty will rise again."

"The details of the scheme – including the price at which petrol will “stabilise” – will be the subject of a consultation launched soon after a Conservative election victory. It is expected to be launched within months if Mr Cameron is successful.

"Last night, a senior Conservative source said: “We are very straight with people. This is not a tax giveaway – instead it is a sensible, balanced policy that protects families from big increases in the oil price. When the oil price rockets, the tax falls and the petrol price at the pump stays stable – and vice-versa when the oil price falls.”

The public anger at the cost of petrol should not be underestimated and this policy provides another popular doorstep-ready policy for Conservatives to take to the electorate.

Jonathan Isaby

Last week saw 37 leading businessmen backing the Conservative position in opposing Labour's rise in national insurance. 

At today's PMQs, David Cameron said that a further 30 business leaders had today added their support to the message that original letter which stated that the rise in NICs was "an additional tax on jobs" and that "stopping the national insurance rise will protect jobs and support the recovery".

It is good to see further momentum gathering behind the position which David Cameron and George Osborne have consistently backed; Transport Secretary Lord Adonis was certainly squirming on the Daily Politics earlier when he was unable to answer Andrew Neil and name one person running a leading FTSE company who backed the Government's position. As PoliticsHome reported, he desperately prayed in aid the name of Labour peer Lord Sugar.

The full list of the latest backers of the Conservative line is as follows:

1. Kirby Adams, Chief Executive, Corus
2. Surinder Arora, Chairman, Arora International Hotels (Sofitel)
3. Stefan Barden, Chief Executive, Northern Foods
4. Robert Bensoussan, Executive Chairman, LKBennett
5. Simon Blagden, Chairman, Fujitsu Telecommunications (Europe)
6. Tony Brown, Chief Executive, Beales
7. Chris Dawson, Founder and Managing Director, The Range
8. Sir John Egan
9. Ralph Findlay, Chief Executive, Marston's plc
10. Stephen Goodyear, Chief Executive, Young & Co's Brewery PLC
11. Anthony Habgood, Chairman, Reed Elsevier
12. Andy Harrison, Chief Executive, easyJet
13. Peter Harrison, Chief Executive, Furniture Village
14. Grant Hearn, Chief Executive, Travelodge
15. Peter Hindle, Chief Executive, Jewson
16. Neil Hornby, Chairman, Hornby plc  and  Umeco plc
17. Luke Johnson, Founder of Risk Capital Partners and Chairman of Royal Society of Arts
18. John King, Chief Executive, House of Fraser
19. Richard Kirk, Chief Executive, The Peacock Group
20. Simon Lockett, Chief Executive, Premier Oil Plc
21. Rick Medlock, CFO, Inmarsat Plc
22. Mike Norris, Chief Executive, Computacenter
23. Tony Pidgeley,  Group Chairman, Berkeley Group Holdings Plc
24. Jamie Ritblat, Chief Executive, Delancey
25. Nick Robertson, Chief Executive, ASOS
26. Tim Steiner, Chief Executive, Ocado
27. Michael Turner, Chief Executive, Fuller, Smith & Turner P.L.C
28. Tom Wells, Chairman, Charles Wells Ltd and Muntons plc
29. Nick Wheeler, Founder, Charles Tyrwhitt
30. Bob Wigley, Chairman of Sovereign Reversions plc

4pm Thursday update:

A further thirteen business leaders have today added their names to the letter.

Cameron came close to saying it last week in an interview with Sky News. And George Osborne confirmed it yesterday (cited in The Telegraph):

“The plans we set out involved around 80 per cent of the work coming from spending restraint and about 20 per cent from tax increases... The tax increases are already in place, the plans do not include an increase in VAT.”

This is a significant commitment from the Shadow Chancellor. Labour hope to scare voters with the threat of a large VAT increase if the Tories win. Cameron and Osborne have attempted to strangle this attack at birth.

The commitment means that spending cuts will have to be significant in years two, three and four of any Tory government. At the weekend George Osborne said that year one cuts would not exceed £6.5bn. Policy Exchange has warned that mortgages could cost £1,400 more per year if the deficit isn't cut.

Tim Montgomerie

There is an interview with George Osborne in today's Guardian, in which he makes the charge that Gordon Brown's only real claim to remain in office - that he is the man who can secure the recovery - has collapsed just a few days before the start of the campaign. This is of course a reference to the backlash against Labour's plans to increase national insurance.

But it is the following paragraph from Patrick Wintour and Nick Watt's report which is most newsworthy:

"In the interview, the shadow chancellor also disclosed, for the first time, that he would not reduce public spending by more than £6.5bn in the current financial year. He said £6bn would come from efficiencies, and £500m from cuts to child trust funds and working tax credits for the better off. There would be no further "in year" cuts in his emergency budget, scheduled within 50 days of a possible Tory victory, he said."

Mr Osborne also uses the interview to point out that scrapping Labour's rise in NICs will save the public sector £600 million, whilst promising to set out the Conservative plans to recognise marriage in the tax system in detail before the election.

Jonathan Isaby

> Yesterday, Tim Montgomerie argued that George Osborne had triumphed in the last seven days, enjoying his second best week since becoming Shadow Chancellor.

Yesterday saw a letter to the Daily Telegraph from 23 leading businessmen in support of Conservative plans to stop the Government's proposed rise in national insurance.

The story not only makes the Telegraph splash again this morning but also takes pride of place on the front of today's Guardian, under the headline "Labour and business fall-out".

The Guardian suggest that Labour's "intermittent 14-year love affair with business" is now at risk, with Lord Mandelson accusing those supporting the Tory position on this issue as having been "deceived".

But far from being deceived, an increasing number of business leaders are throwing their weight behind David Cameron and George Osborne's pledge to reverse Labour's rise in national insurance (a position which, as I note elsewhere on the site this morning, Gordon Brown used to describe as "a tax on ordinary families").

As the Telegraph reports:

"In an open letter, the British Chamber of Commerce, the Confederation of British Industry and the Institute of Directors joined forces to welcome Mr Cameron’s move to cut government waste rather than increase the tax."

"Yesterday another 14 company chiefs added their names to the protest. Among them were Richard Caring, the former Labour donor and restaurant entrepreneur, Ron Dennis, the boss of Formula 1 team McLaren, Simon Fox, the chief executive of HMV Group, and Brent Hoberman, the co-founder of lastminute.com.

"Mr Hoberman – like Sir Stuart Rose, of M&S, and Diageo chief executive Paul Walsh, who signed the original letter – is a member of Mr Brown’s own Business Council. The protest is a significant blow to the Prime Minister, just weeks before the general election."

As Shadow Chancellor George Osborne concluded last night:

“Gordon Brown finds himself increasingly at war with British business – he is part of the problem, not the solution. Rebuilding the economy cannot be done by government alone. It’s going to involve working with business big and small to create the jobs that so many Britons desperately need.”

2pm update:

The Telegraph has published a full list of all the businessmen back the Tory policy on National Insurance.

3pm update:

David Cameron has reacted to the latest backers of his policy, saying:

"This is an impressive list of businesses. I think this is the week that Labour got themselves on the wrong side of working people in Britain and the wrong side of British business."

He has also dismissed Labour claims that blocking the NI rise would mean a rise in VAT:

"We don't have plans to put up other taxes. You can never rule out forever and a day [regarding] other taxes... but our plans involve public spending reductions because we think the government has got the balance wrong... They're wasting money today so they can put up taxes tomorrow. We say stop the waste today so you don't have to put up taxes tomorrow."

Jonathan Isaby

Following yesterday's NICs announcement CCHQ have supplied me with a full list of Tory tax pledges.

National Insurance Contributions. Seven out of ten working families will be £150 a year better off under a Conservative government.

Council tax. Council tax, in partnership with local councils, will be frozen for two years, paid for by reducing unnecessary Government spending, for example on consultants and advertising. Councils who can keep tax increases to 2.5% will be given that increase by central government, allowing them to freeze the public’s bills.

Inheritance tax. Conservatives will raise the inheritance tax threshold to £1 million, taking the family home for the vast majority of people out of Inheritance Tax altogether. This will be funded by charging a flat-rate levy on all UK residents of foreign origin who are tax-domiciled offshore.

Levy on banks. Since November the Conservatives have been calling for international agreement on a bank levy, similar to the plan later announced by President Obama or the tax introduced in Sweden. There is already international support for such a levy.  In America, President Obama has announced plans for a ‘responsibility fee’, designed to recover over $100 billion of public money paid out under the Troubled Asset Relief Programme (TARP). And in Sweden, banks and other credit institutions have been paying a ‘stability fee’ since 2009. Conservatives have now announced that a Conservative Government will definitely introduce a levy on banks to compensate taxpayers for their support, and to help protect them in the future.

Marriage in the tax system. Conservatives will recognise marriage in the tax system and will specify how before polling day.

The couple penalty. Conservatives will end the couple penalty in the tax credits system that currently pays couples more if they split up. We will pay for it from savings made through our radical programme of welfare reform.

Carbon levy. Conservatives will replace the Government’s ineffectual Climate Change Levy – a tax on energy use, not emissions – with a new Carbon Levy which would distinguish properly between high and low carbon production of energy.

Corporation tax. The headline rate of corporation tax will be reduced from 28p to 25p as a first step to lower business taxes, funded by a reduction in complex allowances.

Small business taxation. The small companies’ rate of corporation tax will be cut from 22p to 20p, paid for by removing complex new investment allowances.

Tax simplification. Conservatives will create an Office of Tax Simplification. It will become an independent and permanent voice on tax law, operating in a similar way to the National Audit Office, which will create a sustained and powerful institutional pressure for the simplification of the tax system.

Tim Montgomerie

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.

Yesterday Tim asserted that the Conservatives would pledge to call a halt on the 1% rise in National Insurance Contributions Labour have planned to take effect in 2011 - and reports in today's newspapers also confirm this intention.

However, there is disagreement as to how much this will cost  - and indeed the question remains as to how it will be funded.

The Independent reports:

"It would deprive an incoming Cameron government of about £7bn a year of revenue and, to have a credible platform, the party would have to spell out how that would be found.  Mr Cameron and the shadow Chancellor George Osborne have said that halting the 1 per cent increase in NICs is their top priority but have said they cannot guarantee to do so. It is due to take effect in April 2011.

"Conservative insiders said yesterday that following Wednesday's Budget, the party leadership appeared increasingly confident of being able to make such a pledge. Various options for how to pay for it are said to be under consideration. Officially, the party insisted that no decision had been made. "We are straining every sinew to do it – but we are not there yet," said one source."

But the Times puts an even bigger figure on the cost of cancelling the rise in NICs:

"An incoming Tory chancellor would have to find nearly £10 billion to fill the hole that the cancellation would leave. David Cameron and Mr Osborne want to cancel the increases but any move not fully costed would prompt claims that they were preparing to raise VAT. Options include cancelling half the planned rise, or to relieve employers but not employees, or vice-versa.

"The party’s leadership issued private reassurance that it could fund the reversal of national insurance. It is understood that Mr Osborne wanted to delay costing until after the Budget for fear it would be stymied by Mr Darling."

10.15am update:

I am directed to the Treasury's tax ready reckoner from December 2009, which suggests that the cost would actually be more like £5 billion, according to the third line of this table:

Jonathan Isaby