Osborne used the morning of the Channel 4 debate against chancellor Alistair Darling and Liberal Democrat Vince Cable to launch his initiative. He said the threshold for the planned hike in National Insurance contributions (NICs) will be raised by £24 a week, while the upper earnings limit will rise by £29 a week.
“Compared to life under Gordon Brown, every National Insurance payer earning between £7,100 and £45,400 will be up to £150 better off,” Osborne said.
The Tories plan to fund the cuts through £6bn of public spending efficiencies. The plans were denounced by Labour as “back of the fag-packet figures”, though they were met with open arms by members of London’s business community, who said avoiding increased contributions from employees and employers would boost jobs at a time of need.
CBI director-general Richard Lambert said the Tory plans were “welcome” and would help both large and small businesses.
Miles Templeman, director general at the Institute of Directors, agreed. He said: “The NIC hike is a tax on jobs and... it was a mistake, particularly in a period of high unemployment.”
Tim Linacre, chief executive of stockbroker Panmure Gordon, said: “This is absolutely the right thing to do – it sends the message that getting Britain working again is of paramount importance.”
But other City figures warned the move would fail to repair the UK’s damaged reputation as a destination for global business. Baroness Valentine, chief executive of London First, said: “This is a small step in the right direction, but it may be little more than a blip when seen on the scale of the UK’s tax competitiveness.”