Conservative leader David Cameron is to call for a 1p cut in national insurance to help small businesses during the economic downturn.
Conservative leader David Cameron is calling for a 1p cut in national insurance to help small businesses during the economic downturn.
He will propose the cut lasting six months for firms with four staff or fewer, ahead of holding a summit in Westminster for small business leaders.
He proposed the cut lasting six months for firms with four staff or fewer, ahead of holding a summit in Westminster for small business leaders.
Meanwhile, Labour is considering delaying a planned expansion of flexible working to help businesses.
Meanwhile, Labour is considering delaying a planned expansion of flexible working to help businesses.
A top forecaster has said the UK economy is already in recession.
A top forecaster has said the UK economy is already in recession.
The Ernst & Young Item Club said the economy had "deteriorated dramatically" in the last three months, and predicted a decline in investment and rising unemployment.
The Ernst & Young Item Club said the economy had "deteriorated dramatically" in the last three months, and predicted a decline in investment and rising unemployment.
It predicted that economic growth would decline by 1% next year before recovering in 2010, when it would see 1% growth.
It predicted that economic growth would decline by 1% next year before recovering in 2010, when it would see 1% growth.
Ideas battle
'Tough' times
"Labour and the Tories are competing for the prize of being the party with the best ideas for helping us through the economic slowdown," says BBC political correspondent James Landale.
Mr Cameron said small businesses were the "lifeblood of the economy" and needed help.
"This downturn is quite tough and everyone knows it's going to get tougher," he told BBC's Breakfast.
The Tories say their 1p national insurance cut could save a small business as much as £600, which for example could help pay the interest on an outstanding loan.
The Tories say their 1p national insurance cut could save a small business as much as £600, which for example could help pay the interest on an outstanding loan.
The party says the tax cut will cost the Treasury £225m and can be paid for out of its existing commitment to cut complex tax reliefs and allowances.
The party says the tax cut will cost the Treasury £225m and can be paid for out of its existing commitment to cut complex tax reliefs and allowances.
Mr Cameron's House of Commons meeting with business leaders will consider further measures to support what he has called the economy's "lifeblood".
Mr Cameron also said he wanted a six-month VAT holiday for small and medium-sized firms and called on local authorities to pay small businesses within 20 days for their services, rather than 30.
Chief Secretary to the Treasury Yvette Cooper said she was confused over how the Tories planned to pay for the national insurance cut.
She told BBC Radio's Five Live increasing tax elsewhere in the business system "seems to me like putting taxes up".
Meanwhile Labour is considering delaying its plans to give flexible working rights to all parents with children under 16, in a move that will help businesses but anger many Labour MPs, our correspondent adds.
Meanwhile Labour is considering delaying its plans to give flexible working rights to all parents with children under 16, in a move that will help businesses but anger many Labour MPs, our correspondent adds.
According to the Independent, a review has been ordered by Business Secretary Lord Mandelson of plans including an expansion of flexible working for those with children and an extension of maternity leave from 39 to 52 weeks.
According to the Independent, a review has been ordered by Business Secretary Lord Mandelson of plans including an expansion of flexible working for those with children and an extension of maternity leave from 39 to 52 weeks.
Spending boost
Spending boost
The Tories have already called for a VAT holiday for small and medium-sized firms.
Shadow chancellor George Osborne said deferring VAT bills for six months would offer small businesses some immediate relief.
And Mr Cameron earlier called on local authorities to pay small businesses within 20 days for their services, rather than 30.
Chancellor Alastair Darling has said the government plans to use public spending to boost the economy.
Chancellor Alastair Darling has said the government plans to use public spending to boost the economy.
"You will see us switching our spending priorities to areas that make a difference - housing and energy are classic cases where people are feeling squeezed," he said.
"You will see us switching our spending priorities to areas that make a difference - housing and energy are classic cases where people are feeling squeezed," he said.
There are also suggestions that large-scale building projects will be brought forward to boost jobs.
But Mr Cameron criticised the government's plan to bring forward several major public service projects to help stimulate the economy.
Mr Osborne complained that the chancellor was speculating about the timing of "big capital projects" that could take years to develop.
"If the government goes on a spending splurge, paid for by another borrowing splurge, everyone knows that would mean not only higher taxes, but it might also mean that the Bank of England wouldn't be able to cut interest rates as fast as everyone would like," he said.
"That's not going to help small businesses struggling this winter," he said.
Are you a small business owner that could be affected by this call? Send us your comments and experiences using the form below.
Are you a small business owner that could be affected by this call? Send us your comments and experiences using the form below.
