Conservatives plan to stop 1% National Insurance hike

THE Tories have outlined plans to block some of next year’s planned National Insurance tax rises.

The move follows Chancellor Alistair Darling’s announcement that there would be a rise in National Insurance for both employers and employees. The 1p hike, affecting anyone earning more than £20,000, is due to come into effect next April.

But Shadow Chancellor George Osborne announced today that his party’s plans to block the hike would benefit anyone earning up to £45,400, although the new rate would apply to higher earners.

Damian Waters, the CBI’s regional director for the North West, said: “This is not about party politics – here at the CBI we’ve been talking to all the political parties about the topic.

“Our concern is that any increase to National Insurance will be a tax on jobs by no other name.

“And at a time when the country is emerging from recession, that the last thing that’s needed.”

Dr Brian Sloan, head of business and economic policy at Greater Manchester Chamber of Commerce, said: “Today’s announcement by the Conservatives that employers would not pay the extra 1% on the employer’s element of National Insurance Contributions between £5,700 and £20,800 will go some way to avoiding the damaging consequences that this tax on jobs will have.

“Employers faced with this tax increase from April 2011 are already rethinking their future recruitment plans, this tax break would make more money available to businesses for investment in job and wealth creation.

“The Chancellor in his Budget statement last week highlighted the need for the private sector to create jobs – taxing businesses that might otherwise have used the money for investment is simply not going to achieve that.”

A survey last month by the Chambers of Commerce revealed that 38% of businesses would hold back wage increases, 19% would limit staffing levels and 7% would cut the size of their workforce.

The Chambers have been asking members to sign a petition opposing the increase at www.no-nics-rise.co.uk.

The British Chambers of Commerce said scrapping the rise should be paid for by a 1% rise in VAT.