George Osborne said the cuts can be found this year. He said Gordon Brown’s National Insurance rise was “the economics of the madhouse.”
The shadow chancellor made his announcement a week before Gordon Brown is expected to call the general election and on the eve of a high profile television debate with his Labour and Liberal Democrats counterparts.
The move is significant because the Conservative faithful have been crying out for a Tory tax cut to rally the party’s supporters and potential voters at a time when the polls having been causing anxiety among the party’s high command.
Mr Osborne said: “Labour will kill the recovery with their tax on jobs. We will cut Labour waste to stop it. Seven out of 10 working people will be better off with the Conservatives.”
He said the change in NI will save taxpayers earning between £7,100 and £45,400 up to £150 a year and will save employers money in reduced contributions.
The 1p NI rise on people earning more than £20,000 announced by Chancellor Alistair Darling in 2008 and 2009 is due to come into effect in April 2011 and forms a centrepiece of the Government's programme to rein in Britain's record deficit.
The Tory proposals involve raising the primary threshold for employees by £24 a week and the upper earnings limit by £29 a week, as well as raising the secondary threshold at which employers start paying national insurance by £21 a week.
Mr Osborne said that he had identified savings - £12bn in total, of which £6bn will go towards the NI cut – with the help of Peter Gershon and Martin Read. Both men have drawn up detailed plans for Whitehall savings in recent years.
He said: “Peter Gershon and Martin Read have come back to us and told us that they believe that a sum of £12 billion pounds can be saved from the total of government department budgets in 2010.
“Both say explicitly that this can be done without ‘reducing the quality of front line services’. And they have set out the ways in which these savings can be achieved quickly, ‘with the right political will and managerial focus’.”
The Conservatives said Mr Darling did not intend to start cutting this spending until 2011. A Conservative government would begin in 2010.
They identified £12 billion in savings which could be made across Government spending - half of it coming from the health, overseas development and defence budgets.
The remaining £6 billion will come from other departments and will be used to reduce Government borrowing - estimated at £167 billion this year - in place of the revenues which ministers expect to receive from the National Insurance hike.
Philip Hammond, the shadow chief secretary to the treasury, said that savings would be found by halting planned IT contracts and scrapping some existing ones. Other existing Whitehall contracts would also be reviewed and renegotiated to try and find other savings, he added.
Mr Osborne said savings on health and overseas aid would be recycled to the front line, while there would be no cuts in Ministry of Defence budgets until a strategic defence review to be held later this year.
But he said all other departments would be expected to cut back on waste - covering areas like administration, procurement, energy bills and staff sickness - as soon as the Tories came to office.
He added: "Not a single penny will come from the frontline services that people depend on.”
Mr Osborne condemned Mr Darling’s planned NI rise and claimed it was the economics of the “madhouse.
He said: “Labour’s National Insurance increase is a tax rise on working people who earn above £20,000 – roughly half of the working population. It is a tax rise on almost all jobs. It has been described by the CBI as a “serious mistake [that] will hold back job creation and growth”.
The Small Business Federation calls it “an attack on jobs” that “will cause deeper unemployment”, and cost 57,000 jobs in small and medium sized businesses alone. Quite frankly, it is the economics of the madhouse.
David Frost, the director-general of the British Chambers of Commerce, said: "George Osborne's commitment to roll back National Insurance contributions increases for employers is an important step in the right direction.
"However, the job is not yet done. Despite these positive proposals, companies up and down the country will still face higher costs to keep people in work from April of next year.
But Liam Byrne MP, the Chief Secretary to the Treasury, said: “Two months ago the Tories told us that not doing more on the deficit was ‘moral cowardliness’. Since then, they've repeated promises for married couples, pledged tax giveaways for the richest estates and promised to sell off the banks at a 'discount' rate - rather then getting taxpayers' money back.
“And just last week they were implying billions extra to increase personal allowances. They have entirely lost sight of cutting the deficit. Rather than making more promises he can't afford, the test for George Osborne is to tell people how he'll pay for the ones he's got.”
Source : telegraph