National Insurance

In the great scheme of eliminating the deficit, which is so frightening in terms of the austerity required that politicians can only bring themselves to talk of halving it or reducing it, the reduction planned by the Tories in the proposed NI hike is small beer. Yet it has become a great set piece battle, like the siege of an unknown town in a war. If the town falls the aggressor has won the whole war. If the defenders hang on, they will go on to win the war. Stalingrad is a good example.

If Cameron can make it stick that his plan to cut NI will actually help the economy and preserve jobs, he will have the initiative to win. If Brown can show that there is no means to pay for the cut, other than to cut programmes and services which will cost jobs and therefore it is pointless, a fatal blow will have been struck to the Tories’ economic credibility. If the Lib Dems can create the fear that the Tories really plan a hike in VAT (the Treasury’s preferred option overridden by Brown), they will open a new front for them to exploit with great effect.

At the end of the day the bald facts are these. The deficit has to go. Tax rates are near their effective peak. There will have to be very big cuts. Cuts mean jobs. Every reduction in public spending means down the line a loss of jobs, some in the public sector and some, as a knock on, in the private sector. Because none of the politicians will come clean (Cameron is elegant in his finesses, Brown is stubborn in his stonewalling), whoever wins and has to tell the country what it is really in for, will face the backlash of a part duped or wholly deceived electorate, making it very difficult to govern. The leaders are running the kind of campaign which makes sure that whoever wins, finds himself drinking from a poisoned chalice. Political death will follow quickly.