David Maddox: Lose backing of business, and you risk losing country

THE increase in National Insurance looks set to be far more damaging to Labour than even the cancellation of the 10p tax rate.

Whereas the 10p rate hit Labour's core support and upset its backbenchers, the National Insurance rise will have a far wider effect and has infuriated one of the most important sections of the voting public.

A brief history lesson on elections shows us why.

When Tony Blair took Labour to victory in 1997, and then a decade on when Alex Salmond led the SNP to their historic win in 2007, both had the strong backing of business.

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Both men realised that the opinion of the business community and its most successful figures was not something to be sniffed at.

But now Labour under Gordon Brown appears to have set itself against the business community.

And the "don't patronise us" retorts by some of Britain's most prominent businessmen, in response to criticism from Lord Mandelson and Alistair Darling, have handed the Tories an electoral gift and made the key Labour figures look ill-informed.

The lessons of the past show that when business loses confidence in a party, that party finds itself on the sidelines.

Labour took 18 years from 1979 to shake off its anti-capitalist image and only managed to win power again because the business community no longer had any confidence in the Tories after Black Wednesday. But there is worse for Labour in this debate.

The increase in National Insurance makes them look disingenuous about their claim that they want to create and support more jobs.

The National Insurance rise is a direct tax on jobs because it makes it more expensive for employers to take people on.

This makes it much more difficult for business to grow and help get Britain out of the downturn, even though this is Mr Darling's stated aim.

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And so, on the day of the Budget, shadow chancellor George Osborne said that his priority would be to reverse the rise in National Insurance.

You may question Mr Osborne's figures and estimates on how he will pay the 6billion for that reversal.

But this week he won the argument and managed to spark a war between ministers and business leaders.