The proposals for the Conservatives on tax in terms of a National Insurance rebate for employers hiring new workers have not gone down too well. On the one hand, employers are pointing out that the resultant fiscal stimulus would be insufficient. On the other hand, economists have been reminding us of the 'dead weight' or 'additionality' problem which always rears its head when any kind of subsidy (which a tax rebate in effect is) is proposed.
This means that you are paying for things that would happen anyway. An employer needs to take on a new worker, but collects £2,500 when s/he passes 'go'.
It now seems likely that Labour will outflank the Conservatives by offering bigger tax cuts. At some point the money will have to be repaid. And what worries the Conservatives is that they may be in government by then.
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