BUSINESS leaders and economists rounded on Labour’s election manifesto yesterday, accusing the party of refusing to face up to the terrible state of the public finances.
Gordon Brown, who unveiled the manifesto at a hospital in Birmingham, claimed an historic fourth term for Labour would lead to a “fairer, greener … and more prosperous” country. Key policies included a rise in the minimum wage in line with earnings and longer paternity leave.
The party also said it would overhaul the takeover code by raising the threshold of support to two thirds of shareholders. And it will introduce a public interest test for energy and utility companies.
The manifesto included a pledge not to raise income tax for basic or higher rate payers in the next parliament, but critics pointed out that Labour reneged on a similar promise it made in 2005 by introducing the 50p rate.
However, the party refused to rule out hiking VAT in the future, although it did promise not to introduce the tax on food or children’s clothing.
While there were few new spending pledges, the 76-page document offered no detail on how Labour plans to halve the country’s yawning £170bn deficit over the next four years, save for £10bn in “efficiencies”.
Robert Chote, director of the Institute for Fiscal Studies, said voters looking for an indication of how the government will repair the public finances would have been “disappointed”.
“The party listed plenty of new things it would like to do, but was no clearer about where the spending cuts would fall. And it listed a few tax increases that it promised not to implement, but left the door wide open to many others,” he said.
John Cridland, the deputy director-general of employers’ group the CBI, also called on the party to set out “a clear and robust plan for restoring the public finances” and said it should attempt to balance the deficit earlier than proposed.
And he called on the party to drop plans to increase the minimum wage, arguing it “was a matter best left to the independent Low Pay Commission”.
Director general of the Institute of Directors Miles Templeman also expressed concern over the party’s minimum wage proposals, claiming they would “compound” higher costs for businesses resulting from the increase in National Insurance.
He added: “ We simply can’t see how the deficit is going to be tackled quickly enough if the government is only prepared to identify as little as £10bn of spending reductions.”
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Osborne, who has partially blamed the FSA for the banking crisis, plans to divide its powers between the Bank and a new consumer protection agency.