Tories in no new taxes pledge to business

The Tories have already promised to axe Gordon Brown's plan to raise National Insurance next year, describing it as "Labour's tax on jobs".

Ken Clarke, the former Chancellor, said: "We have to keep taxes as low as possible and not look to business taxation as a source of fresh revenue during a recovery because anything that increases business cost is plainly harmful to the prospects of recovery".

In a wide-ranging interview, Mr Clarke spoke about the importance of reshaping the UK's economy, the role of government in supporting industry and the failure of the regional development agencies in bridging the divide between the North and the South.

He said: "I hope we are going to be the most pro-business government since the war."

Mr Clarke added "We obviously have to rebalance the economy. We have become dangerously dependent on financial services. Manufacturing as a proportion of GDP has fallen faster under Labour than at any time in our history. It's got to be innovative, hi-tech and high value-added manufacturing because the economy of the future will not be just a revival of the past."

To achieve this, he said the Tories would promote science, engineering and technology in schools, universities and business, bring in tax incentives for venture capitalists and business angels and invest in infrastructure.

Mr Clarke said Britain must benefit from ambitious plans to build massive offshore wind farms in the North Sea.

He said a Conservative government would "probably" have to offer incentives to international conglomerates to site new facilities in the UK, as Labour has done, but insisted he would need to see business plans beforehand.

Mr Clarke said: "In some of these things you have to offer a grant to lower the cost of the capital because if you don't other governments will. I don't approve of that approach, but I am not naive. A British government has to make sure the conditions here are as attractive as they would be in rival locations in Western Europe."

He added: "My main emphasis is in making it as attractive as possible for private investors and to enable people to raise money in commercial ways than I am attracted by the politicians and civil servants moving in themselves.

"It goes back to the biggest problem for small business right now which is the lack of ordinary credit from the banks. That plainly needs loan guarantees from the government to the banks in support of commercial lending so we can start to get back to some normal commercial relationship.

"Some sort of loan guarantee from government is required for a time as we ensure that we get back to recovery. Because I'm not even certain the recession's over yet.

"I hope it is, it looks alright, but it's terribly fragile and uncertain."

The Tories, who have been urging the loan guarantee scheme for more than a year, would offer "a targeted and tailored" scheme to SMEs, which, unlike big companies, are unable to access the bond markets, said Mr Clarke.

The 69-year-old MP acknowledged the view that Yorkshire Forward is regarded as one of the best regional development agencies in England, but he said like all RDAs it would not survive in its present form under a Conservative government.

He also said regional development agencies have failed in their aim to narrow the gap between the economy in the South East and the rest of the UK.

"That gap has got wider and wider and it's a very serious problem," he said.

Listen to the interview at www.yorkshirepost.co.uk/businesstalk