Alistair Darling's announcement that National Insurance is to increase has been criticised as an attack on job creation.
In a surprise relevation as part of his Pre-Budget Report, the chancellor said NI contributions from employers, employees and the self-employed will rise by 0.5% from 2011, an increase on top of the 0.5% announced in 2008. Darling admitted that it was a "difficult decision" but claimed it was crucial to pay for extra funding for health services, school and the police. The change is likely to raise raise around £3bn a year for the Treasury.
Business experts however reacted angrily.
"Raising National Insurance is an attack on jobs and shows a real lack of vision from the government on tackling the key challenge of rising unemployment," said John Wright, national chairman of the Federation of Small Businesses (FSB).
"In a survey of FSB members this year, 44% said a cut in payroll taxes would help them take on more staff, so this is extremely damaging for employment in the UK.
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