A recent study by the British Chambers of Commerce (BCC) tracked the additional costs that any employer can expect to deal with in the coming years.

From April 2010 to April 2014, the cumulative net cost to business of new employment regulations and taxes will be £25.6bn. This estimate was created using the government’s own figures – very often an underestimate of the true costs involved. It also illustrates just how burdensome the 1% increase in employer national insurance contributions (NICs) will be for business. More than £14bn of the total cumulative costs comes as a result of that rise.

The NICs change is scheduled to take place alongside three major changes to employment legislation in 2011: the Agency Workers Directive, the dual discrimination clause in the Equality Bill, and the right to request time off for training (for companies with fewer than 250 staff).

Theses changes, and the NICs rise in particular, could harm economic recovery and future growth. The BCC has now teamed up with other leading business organisations to launch a petition, calling for this rise to be cancelled. Our message is clear: this must be done at the earliest opportunity. The petition will be presented to government and opposition parties to demonstrate the strength of feeling within the business community that this is not the right time to increase business taxes, nor is it right to use NICs to fill the hole in the public finances.

In a recent BCC survey, about one-quarter of respondents stated that they would absorb the NIC increase by either reducing the workforce or limiting staffing levels. This would severely impact on the ability of the private sector to drive economic growth. Furthermore, the effect such behaviour would have on unemployment is deeply worrying. As well as affecting productivity, reducing the size of the workforce has a wider social impact.

Support the campaign

Personnel Today is also supporting the campaign to reverse the NI increase planned for April 2011. To sign up, or for more information, visit the dedicated petition website at www.no-nics-rise.co.uk

Business organisations are realistic; there are tough choices ahead on both taxation and public spending given the state of the UK’s public finances. A clear, detailed and credible plan to reduce the deficit is an essential first step.

This petition calls on the government to enter into a dialogue with business organisations to explore the best way forward. Additional taxes on business must be a last resort, not an easy way forward.

The petition has been signed by the leaders of the BCC, British Retail Consortium, Confederation of British Industry, Chartered Institute of Personnel and Development, Forum for Private Business, Federation of Small Businesses, Institute of Directors, and the Recruitment Employment Confederation.

Abigail Morris, policy adviser, British Chambers of Commerce