NI rise could cost firms £120m

BUSINESSES across Greater Manchester will fork out an additional £120m a year if a proposed increase to the National Insurance (NI) contributions rate planned for April 2011 goes ahead.

The proposals have resulted in business groups across Britain uniting to promote an internet petition that calls for the proposed 1% increase to be scrapped.

The petition, found in full at www.no-nics-rise.co.uk, calls the proposals a ‘tax on jobs’ which could ultimately result in higher unemployment.

The petition was signed by the leaders of the British Chambers of Commerce (BCC), British Retail Consortium (BRC), Confederation of British Industry (CBI), Chartered Institute of Personnel and Development (CIPD), Forum of Private Business (FPB), Federation of Small Businesses (FSB), Institute of Directors (IOD), and the Recruitment Employment Confederation (REC).

Greater Manchester Chamber of Commerce’s head of business and economic policy, Brian Sloan said that it is very important that business across the region are aware of the potential ramifications of the proposed increase.

He said: “Greater Manchester Chamber of Commerce has estimated that the proposed 1% increase in employer’s National Insurance Contributions in April 2011 will cost businesses across Greater Manchester around £120m a year.

“The proposed rise is already causing businesses to rethink their recruitment plans, so not only is this a tax on jobs it is undermining the recovery.

“The £120m might alternatively be used by businesses for investment to help Britain compete as the global economy recovers.”

The online petition states: “We, the undersigned, call upon the government to reverse the 1 percentage-point employer National Insurance Contributions (NICs) increase planned for April 2011.

“Businesses across the country know that it is 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.

“We urge the government to work with business groups to find alternative ways to close the UK’s budget deficit – beginning with a credible plan to reduce inefficiency in public sector spending.

“Any government has to realise that additional taxes on businesses, especially small-and medium-sized companies, must be a last resort, not an easy way forward.

“These contributions are in effect simply a payroll tax and from our perspective, further rises in NI mean fewer jobs, more people signing on, and a slower recovery for UK plc.”