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Tories 'plan to cut business tax' Tories 'plan to cut business tax'
(30 minutes later)
David Cameron is due to unveil plans to cut business tax as the main parties fight it out over how to help companies and individuals through a recession. David Cameron is unveiling plans to cut business tax as the main parties fight it out over how to help companies and individuals through a recession.
The Tories will call for a cut in the amount companies pay in national insurance if they take on staff who have been jobless for three months.The Tories will call for a cut in the amount companies pay in national insurance if they take on staff who have been jobless for three months.
They would use cash that would have been spent on unemployment benefit, and say the scheme would be self financing.They would use cash that would have been spent on unemployment benefit, and say the scheme would be self financing.
It would create 350,000 jobs and cut firms' tax burden by £2.6bn, they say.It would create 350,000 jobs and cut firms' tax burden by £2.6bn, they say.
David Cameron told the BBC that, in effect, companies would receive a proportion of the benefit payment in the form of a tax break. David Cameron said that, in effect, companies would receive a proportion of the benefit payment in the form of a tax break.
'Fiscally responsible'
He told BBC Radio 4's Today programme: "We are basically saying that instead of paying for benefits, what we would like to do is take that money and give it to employers if they take people off the unemployment register."
He said it costs the taxpayer £8,000 when someone goes on benefit and the Conservative scheme would see about a third of that - £2,500 - used to fund the NI cut.
No Tory promise can be taken seriously while their economic strategy remains incoherent Stephen Timms, Treasury minister
"It is fiscally responsible because the money is only spent if someone comes off the unemployment register ... The saving is made in the current year and the spending is in the current year."
He said the scheme had been done in the US and Canada and said the government should implement it "now" as it was most effective "at the beginning of a recession".
Gordon Brown has hinted that might be possible tax cuts in the pre-Budget report, expected to take place next week.Gordon Brown has hinted that might be possible tax cuts in the pre-Budget report, expected to take place next week.
The prime minister has said he is looking at all options to stimulate the economy, including tax cuts and increases in public spending, as the debate over responses to the downturn heats up.The prime minister has said he is looking at all options to stimulate the economy, including tax cuts and increases in public spending, as the debate over responses to the downturn heats up.
Quick responseQuick response
He has not provided any details of what the government plans but, shortly after the Tory announcement, he may come under pressure to do when he holds his monthly Downing Street news conference from 0930 GMT. He has not provided any details of what the government plans but, shortly after the Tory announcement, he may come under pressure to do so when he holds his monthly Downing Street news conference from 0930 GMT.
The Liberal Democrat leader, Nick Clegg, is also due to join the fray, giving more details of the tax breaks his party wants to give lower and middle earners, funded by closing tax loopholes used by the wealthy and pension allowances for higher rate taxpayers.The Liberal Democrat leader, Nick Clegg, is also due to join the fray, giving more details of the tax breaks his party wants to give lower and middle earners, funded by closing tax loopholes used by the wealthy and pension allowances for higher rate taxpayers.
The Tories' measure will be funded by cuts in spending on unemployment benefits rather than an increase in borrowing and will, the party says, be "fiscally responsible". FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
No Tory promise can be taken seriously while their economic strategy remains incoherent Stephen Timms, Treasury minister
The Tory leader has accused Labour of "complete confusion" over how to deal with the downturn, shifting from support for a "Keynesian" boost in public spending to backing for tax cuts.The Tory leader has accused Labour of "complete confusion" over how to deal with the downturn, shifting from support for a "Keynesian" boost in public spending to backing for tax cuts.
But Labour said the Tories' response to the crisis was "incoherent".But Labour said the Tories' response to the crisis was "incoherent".
"No Tory promise can be taken seriously while their economic strategy remains incoherent," said Treasury minister Stephen Timms."No Tory promise can be taken seriously while their economic strategy remains incoherent," said Treasury minister Stephen Timms.
"Their incoherence would be a risk to British jobs and economic stability.""Their incoherence would be a risk to British jobs and economic stability."
Waiting game International action
In his annual Mansion House speech at the Lord Mayor's Banquet on Monday, the prime minister said it was necessary to maintain spending - and to increase borrowing to do so - to support the economy through its current troubles.In his annual Mansion House speech at the Lord Mayor's Banquet on Monday, the prime minister said it was necessary to maintain spending - and to increase borrowing to do so - to support the economy through its current troubles.
But he also hinted at possible tax cuts, praising the economic stimulus measures put forward by the US and Germany and calling for "concerted, international" action to stimulate the economy.But he also hinted at possible tax cuts, praising the economic stimulus measures put forward by the US and Germany and calling for "concerted, international" action to stimulate the economy.
The Lib Dems have consistently called on the government to cut taxes on low and middle incomes Nick CleggThe Lib Dems have consistently called on the government to cut taxes on low and middle incomes Nick Clegg
The Daily Telegraph reports that one of the key elements of the government's tax-cutting package will be a decision to postpone planned increases in vehicle excise duty - a move which its headline describes as a "U-turn" on a "poll tax on wheels".The Daily Telegraph reports that one of the key elements of the government's tax-cutting package will be a decision to postpone planned increases in vehicle excise duty - a move which its headline describes as a "U-turn" on a "poll tax on wheels".
The duty increase for higher emissions cars bought between 2001 and 2006 - announced earlier this year - has proved contentious, with the Conservatives describing it as retrospective and unfair.The duty increase for higher emissions cars bought between 2001 and 2006 - announced earlier this year - has proved contentious, with the Conservatives describing it as retrospective and unfair.
Labour has described the report as speculative and said all tax changes must wait until the chancellor's pre-Budget statement when Alistair Darling will update MPs on the state of the public finances.Labour has described the report as speculative and said all tax changes must wait until the chancellor's pre-Budget statement when Alistair Darling will update MPs on the state of the public finances.
The BBC's Nick Robinson said no talk of tax cuts should be taken at face value until the details were forthcoming and people would have to wait several days to learn of Labour's plans.The BBC's Nick Robinson said no talk of tax cuts should be taken at face value until the details were forthcoming and people would have to wait several days to learn of Labour's plans.
The Lib Dems have long called for tax cuts for low and middle income earners to be paid for scrapping tax loopholes for the wealthy.The Lib Dems have long called for tax cuts for low and middle income earners to be paid for scrapping tax loopholes for the wealthy.
The party's leader Nick Clegg said any proposed tax cuts had to be "big, permanent and fair".The party's leader Nick Clegg said any proposed tax cuts had to be "big, permanent and fair".
"The Lib Dems have consistently called on the government to cut taxes on low and middle incomes," he said."The Lib Dems have consistently called on the government to cut taxes on low and middle incomes," he said.
"It is high time ministers started to listen.""It is high time ministers started to listen."
The Tory proposals come as a poll for the Times suggested their lead over Labour has fallen sharply in recent weeks - from 15 points a month ago to six points now.The Tory proposals come as a poll for the Times suggested their lead over Labour has fallen sharply in recent weeks - from 15 points a month ago to six points now.