Lord Mandelson has claimed the Conservatives ‘tricked’ some of the UK’s biggest business names into signing a letter backing the Tory plan for National Insurance if they come to power.
The Labour plans involve a 1% rise on NI for employers, sparking claims of a Labour ‘tax on jobs’, which the Tories say they would reverse if they win the election.
EasyJet founder Sir Stelios Haji-Ioannou and Marks & Spencer executive chairman were among the 23 business leaders to sign a letter backing the Tory promise to reverse the government’s planned 1% NI increase for anyone earning less than £45,400 a year.
David Cameron called the letter, which said the Labour action would "endanger" the economy and be a "tax on jobs", a "significant" moment in the election campaign.
But the business secretary today lashed out at the Tories saying the gathering of business support involved a "cynical deception" because it could not be achieving without raising VAT.
"Of course there are some in business who are going to support what appears to be a pain-free tax cut. I mean, who wouldn’t, if offered that?," said Lord Mandelson. "But the point is, this is not pain-free and Mr Cameron and Mr [George] Osborne are peddling a deception."
Two of the bosses supporting the Conservatives immediately responded to Lord Mandelson’s claims.
"Of course we have not been deceived," said Simon Wolfson, chief executive of retailer Next. "The principle is a very simple one. It is a question of, do we pay for government profligacy through increased taxes or do we urge them to save money in a way that businesses have?"
Kingfisher boss Ian Cheshire also reacted saying: "It’s a little patronising to suggest that we’ve been deceived. This isn’t a political point, it’s a business issue – whichever way you look at it, it’s a tax on jobs."
Cameron was questioned about Lord Mandelson’s accusations during a campaign visit to a B&Q store in west London.
"Our plans don’t involve an increase in VAT," he said. "We say it’s wasteful spending that’s cut, rather than putting up taxes, as the government suggest."
"Labour, today, to say somehow Britain’s business leaders have been deceived is patronising, wrong, will backfire, and shows that their plans are in meltdown," he added.
