Business coalition: "Say no to employer National Insurance Contributions increase"
Monday, 1 Mar 2010
The UK’s leading business groups have formed a unique coalition promoting an internet petition (www.no-nics-rise.co.uk) that calls for the 1% employer National Insurance Contributions increase - planned for April 2011 - to be scrapped.
The rise would cost businesses in Yorkshire & Humber £340m a year. Businesses will seek to absorb the rise in a number of different ways, with a Chamber survey last month revealing that 38% would restrain wage growth and 27% would limit staffing levels or reduce their workforce.
Unemployment in Yorkshire & Humber stood at 240,000 (9.1% unemployment rate) in the 3 months to December 2009, an increase of 11,000 on the previous 3 months and 65,000 on the same period the previous year. Tackling the legacy of unemployment will be one of the big post-recession challenges, and will be made more difficult with the NICs rise.
The petition, found in full at the dedicated website, says:
“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.
“The respected and independent Institute for Fiscal Studies has commented that 'employer [NI] contributions bear no relation to benefits provided under the NI scheme. These contributions are in effect simply a payroll tax'. From our perspective, further rises in NI mean fewer jobs, more people signing on, and a slower recovery for UK plc.
The case is clear. No NICs increase - no tax on jobs.”
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).
Nick Pontone, Director of Policy at Yorkshire & Humber Chambers of Commerce said:
“We agree that the Government needs to take strong action to reduce the eye-watering deficit in the public finances but national insurance is totally the wrong place to start. It’s a tax on jobs which should be the last resort not the first response. Control of public spending should be the first priority and account for the bulk of deficit reduction.”
“The fact that the UK’s major business organisations have come together behind this campaign sends a powerful message and we would urge every business from Yorkshire & Humber to add their support to the petition.”
“Unemployment has risen by 65,000 in Yorkshire during the past year, and the national insurance hike would threaten the ability of our businesses to get the region back to work. The cost of this measure to Yorkshire’s economy would be £340m a year, and that’s a price we can ill afford as firms try to repair the damage of this recession.”