A raft of business groups have started a petition against the government’s planned 1% increase in National Insurance contributions, which they claim will force employers to recruit fewer staff and even lead to job cuts.
The petition, which was launched yesterday, was backed up with a letter to the Daily Telegraph, calling on the government to work with them to find alternative ways of closing the UK’s budget deficit.
The letter said that businesses across the country understood that it was imperative for the government to begin the difficult job of repairing the public finances. “But this NICs increase is a ‘tax on jobs’ and will discourage companies of all sizes from taking on new staff at a critical point in our economic recovery,” it claimed.
Additional taxes on businesses, and especially small-to-medium companies, “must be a last resort, not an easy way forward”, the letter added.
The business groups involved comprise the Chartered Institute of Personnel and Development (CIPD), the British Chamber of Commerce (BCC), the CBI, the British Retail Consortium, the Forum of Private Businesses, the Federation of Small Businesses (FSB), the Institute of Directors and the Recruitment and Employment Confederation (REC).
The BCC believes that employers face a potential bill of £14 billion between 2010 and 2014 if National Insurance contributions are increased from April 2011 as scheduled. The FSB claims that 57,009 jobs in small businesses could be lost as a result of the move, while the CIPD claims that it will lead to 12% of employers taking on fewer staff and 8% cutting posts.
Kevin Green, chief executive of the REC, said: “2010 is witnessing the first stirrings of a recovery in the labour market, with employers starting to feel more confident about recruiting. Increasing taxes on business will choke off recovery and will hinder getting people back into work.”