Tory manifesto wins round City

BUSINESS gave a cautious thumbs up to the Tory manifesto yesterday, but economists criticised the party for failing to explain how it will repair the battered public finances.

David Cameron, who unveiled the manifesto at a glitzy launch in Battersea power station, said he was issuing “the biggest call to arms the country has seen in a generation”.

At the heart of the 120-page-document, entitled “Invitation to Join the Government of Britain”, was a promise to bring about an “unprecedented redistribution of power” that would give communities more control over public services.

The manifesto also pledged “urgent action” to eliminate the bulk of the structural budget deficit in the next parliament, by cutting £6bn of government waste, freezing public sector pay for a year, withdrawing some benefits for middle income families and raising the retirement age.

In a bid to win the support of business, the Tories reiterated their promise to scrap part of Labour’s planned hike in National Insurance and confirmed plans to lower the headline rate of corporation tax.

There were some policies that were less business-friendly, however, such as a £1bn levy on banks that could be brought in without global agreement.

And a pledge to introduce a cap on non-EU economic migrants also met with short shrift in some parts of the City.

John Cridland, deputy director-general of the CBI, welcomed plans to cut corporation tax and to reverse the National Insurance rise, although he expressed unease about the scrapping of the retirement age and the bank levy. Director-general of the Institute of Directors Miles Templeman said the “direction and tone” of the manifesto were “very welcome”, and applauded its “desire to shrink the state and create space for enterprises to grow”.

But Baroness Jo Valentine, chief executive of City lobby group London First, said she was concerned about plans to introduce a cap on skilled migrants from outside the EU.

“Anything which intentionally or unintentionally constrains the flow of highly skilled labour in and out of London and the South East is economically unhelpful,” she said, adding that London’s global talent was one of its major attractions.

Robert Chote, director of the Institute for Fiscal Studies, hit out at the Tories for failing to explain how they will reduce the deficit. “This was no more explicit about how much more ambitious [they] would be than the government in reducing the deficit over the medium term,” he said.