National Insurance (NI) rises will cost jobs, the senior Treasury minister has admitted.
Stephen Timms, the financial secretary to the Treasury, said the 1% rise set to take place in April 2011, would have an “impact” on employment, although the effect would be “limited”.
Timms’ comments contradicted those of chancellor Alistair Darling last week when he said there would be no job losses as a result of the rises, the Daily Telegraph reported.
The Federation of Small Businesses has said the NI increase would cost 57,000 jobs among its members, while the British Retail Consortium has warned the proposal would cost the retail sector £220m a year.
Meanwhile, the boss of Marks and Spencer (M&S) accused Gordon Brown of treating 60 leading business figures as “dupes” over the letter they signed supporting Conservative plans to stop the NI increases, which they referred to as a “tax on jobs”.
Brown said the employers had been deceived by the Tories.
Stuart Rose, the chairman of the high-street retailer, said the prime minister had insulted the intelligence of business leaders in the row over their opposition to the planned rises.
Rose said: “I don’t think it’s helpful to dismiss 60 people saying we are dupes. If I had been the prime minister I might have said ‘I don’t agree with them, they are entitled to their point of view, let’s have a debate about it’. I would not just say that they have been misled. To mislead one person is possible – to mislead 60 is quite difficult.”
He added: “As the people directly responsible for paying taxes in all sorts of forms, but particularly this form, we see [the proposed NI increase] as a barrier on new jobs, and that is what we wanted to highlight.”
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Rose said that the NI increase would cost M&S £10m a year.
Another 13 business leaders have now backed Conservative plans to reduce the proposed rise, taking the number who have signed a letter sent to 81.
