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Labour: People 'worse off' despite tax break changes

Labour's vice chairman has criticised the government's move at giving National Insurance breaks for businesses, saying that households will be on average £1,000 "worse off" next year.

Michael Dugher said: "David Cameron lives on another planet. His claims that people are better off show how out of touch he really is."

Labour's Vice Chair Michael Dugher. Credit: Labour Party

"He talks about tax changes but fails to mention that figures from the independent Institute for Fiscal Studies show that by next year households will be on average almost £1,000 a year worse off because of changes since 2010," Mr Dugher said.

Read: Businesses eligible for National Insurance break

"This comes on top of the fall in real wages that means working people are £1,600 a year worse off than they were when David Cameron entered Number 10."

Cameron visits butchers to promote NI tax break

Mr Cameron visited McKanna Meats in Bloomsbury, central London, and hand delivered a letter which urges the company to check whether it is entitled to the £2,000 National Insurance break.

Read: Businesses eligible for National Insurance break

David Cameron inside

He spent about five minutes chatting to a partner in the butcher's, Graham Morley, and also bought some sausages. Speaking afterwards, Mr Morley said he was not sure how much difference the tax break would mean to his business.

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Prime Minister: Keep more of what you earn

Prime Minister David Cameron will address the Conservative Party Spring Forum today, following a four-day campaign to raise awareness of the Government's new tax cuts.

He is expected to say:

From tomorrow: millions of people will open their pay packets to find they are paying less tax - or no income tax at all - and that's because we are raising the tax threshold.

So you will not pay income tax on a single penny you earn up to £10,000.

Also from tomorrow: almost every business and charity in the land that employs someone will get a tax cut too.

I have written to more than a million of them to say: keep more of what you earn, grow, invest, take on more staff - because we are cutting your National Insurance bills by up to £2,000.

– Prime Minister David Cameron

Businesses eligible for National Insurance break

Nearly two million businesses and charities are being urged to check whether they are entitled to a £2,000 National Insurance break that comes into effect this weekend.

Nearly two million businesses and charities may be entitled to a £2,000 National Insurance break that comes into effect this weekend. Credit: PA

The new Employment Allowance, which comes into effect tomorrow, provides a reduction of up to £2,000 each on employers' National Insurance contributions for an estimated 1.25 million companies.

David Cameron has issued nearly two million letters to the businesses and charities that may be eligible for the break, as well as raising awareness of this weekend's increase to £10,000 in the threshold at which workers start paying income tax.

Labour claims that, despite these tax cuts, the average British household will be £974 a year worse-off by the time of next year's general election as a result of tax and benefit changes introduced by the coalition.

The Prime Minister's mailshot was issued on 10 Downing Street headed notepaper funded by the taxpayer rather than the Conservative Party, as the advisory letters are being treated as part of the Government's efforts to publicise its policies and not as party political literature.

Employers' NI contributions axed for under-21s

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National Insurance axed for the Under 21s (for employers).

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Employers' National Insurance contributions abolished for workers aged under 21. Osborne 'big shout going out' to Tory MPs who've campaigned

Late payment 'serious issue' for small businesses

The Confederation of British Industry's (CBI) has said government plans to hand a £2,000 national insurance cut to businesses and begin consultations on cutting slow payment of invoices could help businesses experiencing cash flow difficulties.

Katja Hall, chief policy director, commented:

Late payment is a serious issue for all businesses but particularly for smaller firms, as cash flow is their life blood. Businesses already have a number of routes for recourse if they are paid late, but the reality is that few choose to act on late payment for fear of fall-out with their customers.

– Katja Hall, CBI chief policy director

Read: National insurance cuts will 'save businesses millions'

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National insurance cuts will 'save businesses millions'

Prime Minister David Cameron says the National Insurance Contributions Bill, a plan to hand a £2,000 national insurance cut to businesses and begin consultations on cutting slow payment of invoices, would save 1.25 million businesses £2,000 per year.

He added that it would mean 450,000 businesses will have their national insurance bills eliminated entirely.

An ambitious and thriving small business sector is vital for steering the economic recovery in the right direction and helping us to succeed in the global race.

We are determined to do everything we can to ensure that our small firms can be successful and prosperous and people can fulfil their aspirations.

Last week, we helped people get on the housing ladder and own shares. This week, we're helping small businesses start and expand. This Government is 100% backing people who work hard and want to get on in life and we're going to finish the job we started.

– Prime Minister David Cameron

The consultation on late payment will review whether the Prompt Payment Code can be strengthened, consider whether new legislation or penalties are needed, and look at what can be done to increase transparency.

PM's national insurance tax cut for small businesses

David Cameron will mark the introduction of the National Insurance Contributions Bill today.
David Cameron will mark the introduction of the National Insurance Contributions Bill today. Credit: Niall Carson/PA Wire/Press Association Images

Ministers will today launch in the Commons plans to hand a £2,000 national insurance cut to businesses and begin consultations on cutting slow payment of invoices.

David Cameron will mark the introduction of the National Insurance Contributions Bill with a tour of small businesses in the east of England, insisting the Government is keen to do everything it can help to help firms succeed.

The tax cut is due to be in place by April next year and the Government said 90% of the benefit would be felt by firms with fewer than 50 employees.

A consultation on ways to end late payment is also being launched, Mr Cameron said, because the problem can have a "devastating effect" on small and medium sized firms.

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