National insurance reversal plans for low earners backed by top businesses

Marks and Spencer, Sainsbury’s and Diageo are among the top UK companies that have backed Conservative plans to reverse the government’s planned national insurance rise for low earners.

In a letter to the Daily Telegraph, 23 of the country’s businesses, which together employ 500,000 people, have endorsed shadow chancellor George Osborne’s pledge to prevent the 1% hike from 2011 for those earning under £45,400 a year.

The bosses of the firms said the 1% increase planned from April next year was a “tax on jobs” and would “endanger” economic recovery.

The letter comes days after the Chartered Institute of Personnel and Development backed the Tory plans for national insurance.

Osborne has claimed seven out of 10 workers would be better off under the plans, saving £150 a year. Employers would also save money through reduced contributions.

Nine of the 23 signatories to the letter are from FTSE 100 companies and five are in the FTSE 250.

Signatories to the letter include Sir Stuart Rose, executive chairman of M&S, and Paul Walsh, chief executive of Diageo – both on the prime minister’s Business Council – as well as Sir Anthony Bamford, chairman of JCB; Sir Christopher Gent, chairman of GlaxoSmithKline; Simon Wolfson, chief executive of Next, and Lord Harris, the chairman and chief executive of Carpetright.

The letter said: “The government’s proposal to increase national insurance, essentially placing an additional tax on jobs, comes at exactly the wrong time in the economic cycle.”

Osborne announced the plan to reverse the national insurance hike on Monday. Labour immediately claimed it was an “unfunded promise”.

But businessmen in the letter said: “In the last two years, businesses across the country have cut their costs without undermining the service they provide to their customers. It is time for the government to do the same. Few would argue that the State cannot improve, in the last few years the private sector has improved its productivity by around 20% while productivity in the public sector has moved backwards by 3%.”

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