Tories plan National Insurance giveaways

Tory plans for a £2,500 national insurance tax break to encourage employers to take on new staff has won immediate plaudits from some business leaders but run into criticism from others and from Prime Minister Gordon Brown.

The proposals were unveiled by Tory leader David Cameron as all three major parties backed tax cuts in a bid to head off a looming slump.

Earlier Liberal Democrat shadow chancellor Vince Cable, the only senior political leader to forecast the economic crisis, called in a Commons debate for the equivalent of a 4p cut in income tax to be funded by tax rises for the wealthy and a crackdown on tax avoidance.

Brown placed himself firmly in support of a worldwide fiscal stimulus for the global economy in his Guildhall address and at his monthly Press

Conference in Downing Street, fuelling speculation there will be proposals for UK tax cuts in the Autumn Statement, with speculation these will include delaying increases in car tax.

Cameron said his proposal would cost £2.5 billion but be funded from savings resulting from lower unemployment, with an average cost to the taxpayer for each unemployed person of £8,000 a year.

The concession would be available to companies taking on staff who had been unemployed for three months and restricted to firms that have not laid people off in the previous three months or for three months after claiming the credit, and subject to a cap of 20% of a business's work force.

He also promised to freeze Council Tax for two years, 'take family homes out of inheritance tax' and allow businesses to delay VAT payments for up to six months.

Mr Brown claimed the cuts were not fully funded, would be expensive and would not be successful.

And Engineering Employers Federation chief economist Steve Radley said the NICS incentive missed the mark because the number one issue for firms is the need to maintain cashflow.

But CBI deputy director general John Cridland said these 'imaginative proposals' would help some businesses keep people in work.