Business alliance urges scrapping of NIC rise

2 March 2010

A coalition of the UK's leading business groups has set up an internet petition calling for the planned 1 per cent increase in employers' National Insurance Contributions to be dropped.

The rise is due to come into effect in April 2011.

The petition acknowledges the need to repair public finances but argues that the hike in NICs is a "tax on jobs" and would "discourage companies of all sizes from taking on new staff at a critical point in our economic recovery".

The petition also points to the views of the Institute for Fiscal Studies, an independent think tank, which described employer NI contributions "as bearing no relation to benefits provided under the NI scheme . . . these contributions are in effect simply a payroll tax".

While calling on the government to "work with business groups to find alternative ways to close the UK's budget deficit", the alliance said it is imperative the government understands that "additional taxes on businesses, especially small-and medium-sized companies, must be a last resort, not an easy way forward".

The rise in NI would result in fewer jobs and a slower recovery for UK plc, the groups concluded.

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).